England and Wales High Court (Technology and Construction Court) Decisions

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Cite as: [2000] 2 Lloyd's Rep 689, [2000] EWHC Technology 103, [2000] EWHC 103 (TCC)

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LaFarge Plasterboard Ltd v. Fritz Peters & Co.Kg [2000] EWHC Technology 103 (10th May, 2000)

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
HIS HONOUR JUDGE PETER BOWSHER Q.C.

B E T W E E N:

LAFARGE PLASTERBOARD LIMITED

Claimant

and

FRITZ PETERS & CO. KG

Defendant

Case Number: HT 99/158

Date of Hearing: 31 March, 2000

Date of Judgment: May, 2000

Timothy Otty for the applicant/defendant (Solicitors: Morgan Cole)

Nicholas Stewart Q.C. for the respondent/claimant (Solicitors: Kennedys)

JUDGMENT

To be treated as given in open Court

I direct that no further note or transcript be made of this judgment

The Judgment of His Honour Judge Peter Bowsher is as follows:-

THE APPLICATION

1. This action is brought by a Claim Form issued out of the Registry of the Technology and Construction Court on 22 September, 1999.

2. The Claimant is an English company which manufactures gypsum plasterboard.

3. The Defendant is a German company, domiciled in Germany which manufactures and supplies liner paper for gypsum plasterboard.

4. By this action the Claimant claims damages "for breach of a written or oral contract and/or breach of duty of care arising out of the supply of lining paper by the Defendant to the Claimant on various contracts during the period 1995 and 1996.

5. The Claim Form was served on the Defendant in Germany.

6. On 20 December, 1999, the Defendant’s English solicitors filed an Acknowledgement of Service giving notice of intention to contest the jurisdiction of the Court.

7. The Defendants now apply for an order declaring that the Court has no jurisdiction and setting aside the Claim Form and its service.

THE ISSUES

8. The Claim Form was served out of this Jurisdiction in reliance on Rule 11(2):

"(2) A claim form may be served out of the jurisdiction on a defendant without the permission of the court provided that each claim against that defendant is either -

(a) a claim which by virtue of the Civil Jurisdiction and Judgments Act 1982 the court has power to hear and determine, made in proceedings to which the following conditions apply -

(i) no proceedings between the parties concerning the same cause of action are pending in the courts of any other part of the United Kingdom or of any other Convention territory;

and

(ii) either the defendant is domiciled in any part of the United Kingdom or in any other Convention territory, or the proceedings begun by the claim form are proceedings to which Article 16 of Schedule 1, 3C or 4 refers, or the defendant is a party to an agreement conferring jurisdiction to which Article 17 of Schedule 1, 3C or 4 to that Act applies;"

9. The issue before me depends on the Brussels Convention, 1968, which was applied to English Law by the Civil Jurisdiction and Judgments Act, 1982.

10. The question is whether under the terms of the Brussels Convention 1968 ("the Convention") the English courts have jurisdiction over this dispute.

11. On this application the Claimant does not dispute that the Defendant is domiciled in Germany for the purposes of Article 2 of the Convention.

12. Accordingly on the facts of this case, unless there is an agreement for exclusive jurisdiction of the English courts under Article 17 of the Convention the Defendant must be sued in Germany by virtue of Article 2.

13. Article 2 of the Convention provides that:

"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the Courts of that State."

14. The Convention provides for certain exceptions to that over-riding principle. Counsel for the Claimant makes it plain that he does not rely on the exceptions in Articles 5 and 6. The Claimant does rely on Article 17.

15. Article 17 of the Convention, as amended, is in the following terms:-

"If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either -

(a) in writing or evidenced in writing, or

(b) in a form which accords with practices which the parties have established between themselves, or

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

16. The Claimant’s case is that the parties contracted on the basis of the Claimant’s terms and conditions printed on the back of its EC Purchase Order, containing in clause 18 the following:

"These terms and conditions and any Contract incorporating the same shall be governed by the laws of England and both parties submit to the exclusive jurisdiction of the court of England."

17. The Claimant contends that that term was a part of the agreements between the parties and that it satisfies conditions (a) and (b) of Article 17. The Claimant does not rely on condition (c).

18. The Defendant:

(a) denies that Clause 18 of the EC Purchase Order formed part of any agreement between the parties; and

(b) contends that if it was part of any contract it does not satisfy any of the conditions (a), (b) or (c) of Article 17.

THE FACTS

19. In early 1995, the Defendant approached the Claimant requesting the opportunity to supply liner paper for the Claimant’s plasterboard. Meetings and discussions between the parties followed. It is not suggested that at those meetings there was any mention of any standard conditions of trading by either party. Some letters concerning those meetings have been put in evidence. Any mentions of terms were limited to price, quantity and quality.

20. In its business, the Claimant orders goods on a printed form known as an EC Purchase Order (ECPO). On the back of that form, under the heading "Terms of Purchase", printed in English in minute type are a number of terms including the following:-

"1. Application of Terms

This document sets out the terms and conditions on which the addressee ("the Supplier") named in the Purchase Order overleaf ("the Order") agrees to supply to Lafarge Plasterboard Ltd ("the Company") the goods described in the Order ("the Goods") to the exclusion of any other terms, warranties, representations, written or oral, express or implied, binding on the Company whether made before or after acceptance. An Order constitutes an offer by the Company to purchase the Goods upon the terms herein. Acceptance shall be accomplished by the Supplier’s return of a signed copy or acknowledgement of the Order or by the Supplier commencing delivery of the Goods in either event before expiry of the offer.

18. Law

These terms and conditions and any Contract incorporating the same shall be governed by the laws of England and both parties submit to the exclusive jurisdiction of the Courts of England. Nothing herein shall prejudice any rights which the Company will otherwise be entitled under the general law and in particular the Sale of Goods Act 1979 provided always that the Schedules to the Uniform Laws on International Sales Act 1967 are hereby excluded."

21. Those printed terms also included other terms as to quality that are relied on by the Claimant in the Particulars of Claim as terms breached by alleged deficiencies in the quality of the paper supplied.

22. There was nothing on the face of the ECPO drawing attention to the fact that there were conditions printed on the back.

23. The evidence before me also refers to another printed form used by the Claimant, a European Consignment Note. There was nothing on the face of that document stating that there were conditions on the back. There were conditions on the back of the Consignment Note. Included in those conditions was a term in English as follows:-

"The contract shall be governed by English Law. Nothing herein shall prejudice a similar right to which the Company will otherwise be entitled under the general law and in particular the Sale of Goods Act, 1893."

That term says nothing about the jurisdiction of any Court, and in argument before me, Counsel for the Claimant does not rely on it. Counsel for the Defendant, however, draws attention to the difference between the two conditions as to choice of law and jurisdiction and to other differences between the terms on the back of each of the Claimant’s forms.

24. In a witness statement dated 28 March, 2000 Mr. Nigel Sweet, the Claimant’s

Purchasing Manager wrote that he was instructed by Mr. Kevin Duffy, the Claimant’s Production Manager, to send a Purchase Order for trial material to the Defendant. Counsel for the Defendant stresses that Mr. Sweet was not instructed to send the Claimant’s Terms and Conditions to the Defendant, only to send a Purchase Order.

25. In his witness statement, Mr. Sweet further stated that:

(a) He sent by post on 28 March 1995 to Mr Noss of the Defendant, a completed EC Purchase Order for a purchase of raw material, and he produced a copy of his covering letter. With the same letter he sent a blank European Consignment Note.

It had been explained to the Defendant that the Consignment Note was to be filled in and given to the driver collecting the goods from the Defendant’s factory in Germany.

(b) Thereafter orders were sent by fax. Only the face of the ECPO was faxed, but the whole top copy was sent by post thereafter marked "Order Confirmation".

(c) On receipt of the faxed copy, it was the Defendant’s practice to post to the Claimant an Order Confirmation on the Defendant’s printed form.

26. The letter of 28 March, 1995, was in the following terms:-

"Dear Sir,

Attached is the Purchase Order to cover the material required for delivery as per your meeting with Harald Lysdahl and Kevin Duffy.

Could you please arrange transport for us from Peters to Lafarge. We can accept delivery any time between 8 am and 2 pm, Monday to Friday.

It is very important that the enclosed Lafarge Plasterboard European Consignment Note Document is fully completed and that it is sent with the goods, failure to do so will result in us not being able to allow goods on site. This is due to the regulations that have been enforce[d] on us by British Customs.

Please could you identify all material as ‘Trail Paper’."

27. That letter of 28 March, 1995, was received by the Defendant on 6 April 1995. In a witness statement dated 30 March, 2000, Claudia Ende, responsible for the Defendant’s sales of liner paper, said that no Purchase Order or Consignment Note was received with that letter. The letter was treated as an order and processed without a Purchase Order Number (by contrast with the paperwork on other transactions which referred to the Claimant’s Purchase Order Number).

28. In her witness statement, Claudia Ende also referred to a previous order made by the Claimant by fax on 27 March, 1995, a free of charge sample delivery. The Claimant’s solicitor, Mr. Bultman produced a copy of that fax, which was not on the Claimant’s printed form and made no reference to any contractual terms.

29. Claudia Ende in her statement added:

(a) All subsequent orders were made by fax.

(b) No original Purchase Orders were ever received and there is none on the Defendant’s files.

(d) The Claimant’s terms and conditions are unknown to the Defendant’s sales section to this day.

30. The Defendant’s solicitor Mr. Bultman said that he was informed by the Defendant’s General Manager, Mr Breucher, that the Defendant never received a copy of the Claimant’s terms and conditions and first read them in the Claimant’s Particulars of Claim.

31. It is common ground, that after the two initial orders, the Claimant placed orders by sending by fax an order written on the front of the Claimant’s ECPO but without the printed terms on the back. The Defendant had a stack of the Claimant’s Consignment Notes. On each delivery, the Defendant filled in a Consignment Note and gave it to the Claimant’s driver, the delivery being ex works.

32. On receipt of the Claimant’s order by fax, the Defendant by post sent an Order Confirmation on a printed form. On the back of that form were printed, in German, also in minute type, standard conditions. In translation clauses 1 and 13 of those conditions were as follows:-

"1: For all business transactions between us and our clients the following terms shall apply. The content of the contract shall be determined exclusively by our written confirmation of order and our Terms and Conditions of Contract. Verbal agreements and sub-agreements shall only be valid if they have been incorporated into our confirmation of order. Contracts between us and our clients shall come only into existence through our confirmation of orders. Client’s terms and conditions shall not apply even if we have not repudiated them;

13. For all our business and rights and duties flowing from this contract as well as delivery and payment the place of performance is Gelsenkirchen. The Court of Krefeld shall have exclusive jurisdiction in all these cases on the condition that nevertheless we are entitled to invoke any other Court which may have legal jurisdiction; this rule as to jurisdiction applies also to claims on cheques. In our relationship with our Client German law is to be applied".

33. Mr. Sweet says that after sending an order by fax, he or a colleague would always send by post the top copy of the order form marked in manuscript "Order Confirmation", so that within days of the fax, the Defendant would receive the hard top copy order form with the printed conditions on the back. Claudia Ende says the Defendant never received an order by post and never received the Claimant’s terms.

34. There were 48 orders placed by the Claimant.

THE AGREEMENTS PLEADED

35. By the Particulars of Claim, the Claimant alleges:-

"Each of the Individual Orders was accepted by Peters on the basis of Lafarge’s written terms and conditions when, in accordance with the term pleaded in paragraph 5.1.1 above [condition 1 of the Claimant’s Terms of Purchase] Peters commenced delivery of each one of the Individual Orders ("the Individual Supply Contracts")."

STANDARD OF PROOF

36. If this action proceeds in this court, one of the issues to be decided would be whether the parties contracted on the terms of the Claimant’s printed conditions. Those conditions go to liability as well as to jurisdiction. At the trial, that issue would be determined on the balance of probabilities. It is common ground that some lower standard of proof is required on the present application but unfortunately there is room for argument as to what that standard should be.

37. The Defendant has a basic right under Article 2 of the Convention. The burden is on the Claimant to show that the exception provided by Article 17 applies. The standard to be applied in the discharge of that burden has been argued by Counsel at some length.

38. Section 3 of the Civil Jurisdiction and Judgments Act, 1982 provides:

"(1) Any question as to the meaning or effect of any provision of the Brussels Convention shall, if not referred to the European Court in accordance with the 1971 Protocol, be determined in accordance with the principles laid down by and any relevant decision of the European Court.

(2) Judicial notice shall be taken of any decision of, or expression of opinion by, the European Court on any such question.

(3) Without prejudice to the generality of subsection (1), the following reports (which are reproduced in the Official Journal of the Communities), namely-

(a) the reports by Mr. P. Jenard on the 1968 Convention and the 1971 Protocol; and

(b) the report by Professor Peter Schlosser on the Accession Convention; and

(d) the report by Mr. Martino de Almeida Cruz, Mr. Manuel Desantes Real and Mr. P. Jenard on the 1989 Accession Convention,

may be considered in ascertaining the meaning or effect of any provision of the Conventions and shall be given such weight as is appropriate in the circumstances."

The Report by Mr. Jenard describes in some detail the amendment of Article 17 of the Convention by later Treaties to give that article greater flexibility and to give expression to certain decisions of the European Court.

39. In considering the decisions of both the European Court and of the English Courts, it is important to bear in mind that Article 17 of the Brussels Convention is mandatory in its terms. Article 5 begins, "A person ... may ... be sued", and Article 6 begins, "A person ... may also ... be sued". By contrast, Article 17 provides that where parties have made an agreement that a court or the courts of a Contracting State are to have jurisdiction, then, provided the agreement satisfies certain formal requirements, that court or courts "shall have exclusive jurisdiction".

40. The mandatory nature of Article 17 should also be borne in mind when considering English authorities on the application of Order 11 of the Rules of the Supreme Court. When considering applications under Order 11, the court exercises a general discretion as to forum conveniens as well as considering whether requirements of the Rule are satisfied. As Lord Goff made clear in Seaconsar Far East Limited v. Bank Markazi [1994] AC 438 different standards of proof are required in respect of different requirements of the order. To prove jurisdiction the plaintiff must show "a good arguable case", but to satisfy the requirement of Rule 4 of Order 11 that the plaintiff has a good cause of action he need only show that there is a serious issue to be tried. Mr. Nicholas Stewart Q.C. for the Claimant in this case submitted that it was not necessary for the Claimant to show that the Claimant’s arguable case was much better than the Defendant’s arguable case. In this connection, it is of interest that Lord Goff when citing the decision of the House of Lords in Vitkovice Horni v. Korner [1951] AC 869 (a decision on the standard of proof required to establish whether jurisdiction had been sufficiently established under Order 11 rule 1(1)) compared the expression " a good arguable case" with other expressions used by their Lordships, "a strong case for argument" and "a strong argument". Lord Goff commented, "There is no reason to suppose that there is any material difference between these various expressions, from which is derived the ‘good arguable case’ test which has been applied in innumerable cases since".

41. In Canada Trust Co. v. Stolzenberg [1998] 1 WLR 547, Waller L.J. considered earlier authorities in the light of the Seaconsar Case. Canada Trust was a case on the Lugano Convention and R.S.C. Order 11 rule 1(1)(c), but Waller L. J. took the opportunity to reconsider an earlier decision of his at first instance regarding Article 17 of the Brussels Convention.

42. At page 555, Waller L. J. interpreted the "good arguable case" term in a manner strongly relied on by Mr. Timothy Otty for the Defendant:

"Lord Goff was not concerned to explore in the Seaconsar case [1994] 1 W.L.R. 438 the application of the standard "good arguable case" to all various factors that can arise. It is I believe important to recognise, as the language of their Lordships in Korner’s case [1951] A.C. 869 demonstrated, that what the court is endeavouring to do is to find a concept not capable of very precise definition which reflects that the plaintiff must properly satisfy the court that it is right for the court to take jurisdiction. That may involve in some cases considering matters which go both to jurisdiction and to the very matter to be argued at the trial, e.g. the existence of a contract, but in other cases a matter which goes purely to jurisdiction, e.g. the domicile of a defendant. The concept also reflects that the question before the court is one, which should be decided on affidavits from both sides and without full discovery and/or cross-examination, and in relation to which therefore to apply the language of the civil burden of proof applicable to issues after full trial is inapposite. Although there is power under Ord. 12, r. 8(5) to order a preliminary issue on jurisdiction, as Staughton L.J. pointed out in the Attock Cement Co. case [1989] 1 W.L.R. 1147, 1156D, it is seldom that the power is used because trials on jurisdiction issues are to be strongly discouraged. It is also important to remember that the phrase which reflects the concept "good arguable case" as the other phrases in Korner’s case "a strong argument" and "a case for strong argument" were originally employed in relation to points which related to jurisdiction but which might also be argued about at the trial. The court in such cases must be concerned not even to appear to express some concluded view as to the merits, e.g. as to whether the contract existed or not. It is also right to remember that the "good arguable case" test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a "trial". "Good arguable case" reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.

The civil standard of proof has itself a flexibility depending on the issue being considered and the concept "good arguable case" has a similar flexibility. It is natural, for example, in a case concerned with a contract where the jurisdiction depends on whether the breach took place within the jurisdiction, but where the issue to be tried will be whether there was a contract at all, not to wish to give even the appearance of pre-trying the central issue, even though the concept of being satisfied must apply both to the existence of the contract and the place of the breach. It is equally natural for the court in the process of being satisfied to scrutinise most jealously that factor which actually provides jurisdiction. It is equally natural that where the foundation of jurisdiction is domicile, i.e. an issue that will not arise at the trial, that particular scrutiny of the material available takes place in the context of the limitations applied to an interlocutory process."

Mr Otty stresses the words "‘Good arguable case’ reflects in that context that one side has a much better argument on the material available." It is not open to Mr. Stewart to argue, as he did that to require "a much better argument" is the same as or higher than applying the balance of probabilities.

43. Waller L. J. then discussed decisions of the Court of Appeal in Tesam v. Schuh Mode Team [1990] I. L. Pr. 149 and Mölnlycke A. B. v. Procter and Gamble Ltd [1992] 1 WLR 1112 and disapproved of some of the terms there used. At page 558 he said:

"In the light of the Seaconsar case [1994] 1 A. C. 438 it seems to me that in the Order 11 context it can now be seen that it was probably inappropriate to use the phrase "serious question to be tried" as if it was equated with "good arguable case". The Seaconsar case demonstrates that what has to be sufficiently shown for the purpose of establishing jurisdiction both in relation to the argument as to whether the contract existed or not (which may arise more fully at the trial) and as to where the breach took place (which will not) has to be shown to the standard of a "good arguable case". As further appears from the Seaconsar case, that is a threshold below "proved on a balance of probabilities," because that is the civil burden after a full trial, but higher than "serious question to be tried," which relates of the plaintiff’s claim relative to the contract. But, as I have sought to stress, "good arguable case" is a concept with some degree of flexibility depending on the issue."

44. Finally, Waller L. J. considered the position regarding Article 17 of the Brussels Convention. At page 559 he said:-

"I ought finally to refer to a decision of my own relied on by Mr. Hochhauser, I.P. Metal Ltd. v. Ruote O.Z. S.p.A. [1993] 2 Lloyd’s Rep. 60, and to the ruling of the Court of Appeal refusing leave to appeal from that decision, I.P. Metal Ltd v. Ruote O.Z. S.p.A.(No. 2) [1994] 2 Lloyd’s Rep. 560. That case was concerned with article 17 (agreements as to jurisdiction) and as to whether that article, if applicable, in effect overrode articles 21 and 22. I expressed the view that article 17 did override, but that the English court would want to be as clear as possible, and at least form the view that it was highly likely that if the matter were tried out the plaintiff would succeed in his argument on the jurisdiction clause, before concluding that article 17 applied. I was referred to the Tesam [1990] I.L.Pr. 149 and Mölnlycke [1992] 1 W.L.R. 1112 cases and Mr. Gaisman for the plaintiffs in that case was seeking to persuade me that "a good arguable case" was the appropriate test. I rejected "good arguable case" as the appropriate test when dealing with article 17, and preferred what I conceived to be a higher test because the question of whether there was a consensus within the terms of that article was likely only to be of relevance when jurisdiction was being decided. In addition, I applied what I conceived to be a higher test, because I was dealing with a situation in which another court was seised and where it was being argued that it was that court which should decide the question of jurisdiction, not the English court. When leave to appeal was refused Saville L.J. referred to my formulation "highly likely," but I do not read the judgment as approving or disapproving of the words I used.

I, too, was dealing with the matter without the benefit of Lord Goff’s analysis in the Seaconsar case [1994] 1 A.C. 438. I think I was probably wrong to reject "good arguable case" as being the appropriate test. I say "probably" because the court may be in a slightly different position when faced with whether article 17 should apply and override article 21 or 22 than it is when considering whether it has jurisdiction under articles 5 or 6. But I rather suspect that in truth "good arguable case" is the appropriate standard which I should have adopted, and that I failed to appreciate that that language would have enabled me to take the attitude that I did."

Waller L.J. there said only that he thought he was "probably" wrong to reject the "good arguable case" test. His reason for rejecting that test at first instance in I.P. Metal was because he felt a more stringent test was required because another court was already seised of the matter and hence the question was not whether Article 17 applied simpliciter as in the present case, but whether Article 17 applied so as to over-ride Articles 21 and 22. I understand Waller L.J. to be saying that the flexibility of the "good arguable case" test, to which he had earlier referred, could have been employed by him in the I.P. Metal Case. I think it must follow that when, as here, one is considering Article 17 without the complication of another court being seised of the case, there is no difficulty in saying that the "good arguable case" test is to be applied.

45. However, whatever the test for the standard of proof, there will be difficulties in applying that test in pre-trial hearings where, as here, there is a direct conflict of evidence in the affidavits of the opposing parties and it would be undesirable for there to be cross-examination on the written evidence.

46. It seems to me that the requirement of the formalities specified in Article 17 is designed to help the Court in its difficulties. Counsel here suggested that I should first look to see if there is an agreement applying the well known common law principles and then to consider whether that agreement satisfies the formalities required by Article 17. The better approach however, in my view, is to look first at the formal requirements of Article 17 to see whether by the route of those formal requirements a consensus can be established. Only if a consensus, an agreement, can be established by that route does Article 17 apply to give jurisdiction. In the event that one cannot find that a consensus has been established by that route, one would then be able to answer the question as to jurisdiction without trespassing on the function of the ultimate trial court in deciding whether an agreement was proved by some other route in relation to the merits of the case. On the other hand, if the formal requirements of Article 17 are satisfied, there is unlikely at the trial on the merits to be much of an issue as to whether there was an agreement.

47 There are helpful decisions of the European Court on the formalities required by Article 17.

48. The first decision to which I refer was, as appears from the judgment, a decision on Article 17 in its original unamended form. In Estasis Salotti v. RUWA [1976] ECR 1831, the judgment included the following at page 1840:-

"On the interpretation of Article 17 of the Convention in general

The first paragraph of Article 17 of the Convention provides: ‘If the parties, one or more of whom is domiciled in a Contracting State, have, by agreement in writing or by an oral agreement confirmed in writing, agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connexion with a particular legal relationship, that court or those courts shall have exclusive jurisdiction’.

The way in which that provision is to be applied must be interpreted in the light of the effect of the conferment of jurisdiction by consent, which is to exclude both the jurisdiction determined by the general principle laid down in Article 2 and the special jurisdictions provided for in Articles 5 and 6 of the Convention.

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 a 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 questions referred to the Court by the Bundesgerichtshof must be examined in the light of these considerations.

On the question referred by the Bundesgerichtshof

The first question asks whether a clause conferring jurisdiction, which is included among general conditions of sale printed on the back of a contract signed by both parties, fulfils the requirement of a writing under the first paragraph of Article 17 of the Convention.

Taking into account what has been said above, it should be stated that the mere fact that a clause conferring jurisdiction is printed among the general conditions of one of the parties on the reverse of a contract drawn up on the commercial paper of that party does not of itself satisfy the requirements of Article 17, since no guarantee is thereby given that the other party has really consented to the clause waiving the normal rules of jurisdiction.

It is otherwise in the case where the text of the contract signed by both parties itself contains an express reference to general conditions including a clause conferring jurisdiction.

Thus it should be answered that where a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing under the first paragraph of Article 17 of the Convention is fulfilled only if the contract signed by both parties contains an express reference to those general conditions.

The second question asks whether the requirement of a writing under the first paragraph of Article 17 of the Convention is fulfilled if the parties expressly refer in the contract to a prior offer in writing in which reference was made to general conditions of sale including a clause conferring jurisdiction.

In principle, the requirement of a writing under the first paragraph of Article 17 is fulfilled if the parties have referred in the text of their contract to an offer in which reference was expressly made to general conditions including a clause conferring jurisdiction.

This view of the matter, however, is valid only in the case of an express reference, which can be checked by a party exercising reasonable care, and only if it is established that the general conditions including the clause conferring jurisdiction have in fact been communicated to the other contracting party with the offer to which reference is made.

But the requirement of a writing in Article 17 would not be fulfilled in the case of indirect or implied references to earlier correspondence, for that would not yield any certainty that the clause conferring jurisdiction was in fact part of the subject-matter of the contract properly so-called.

Thus it should be answered that in the case of a contract concluded by reference to earlier offers, which were themselves made with reference to the general conditions of one of the parties including a clause conferring jurisdiction, the requirement of a writing under the first paragraph of Article 17 of the Convention is satisfied only if the reference is express and can therefore be checked by a party exercising reasonable care."

49. The words underlined by me in that citation in my view support what I have said about this approach to be adopted by the court.

50. The judgment in Salotti also contains the important requirement directly relevant to the present case that:

"where a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing under the first paragraph of Article 17 of the Convention is fulfilled only if the contract signed by both parties contains an express reference to those general conditions."

Even accepting the Claimant’s evidence at its highest and ignoring the conflicting evidence, the Claimant does not satisfy that requirement of Salotti and so, on the unamended version of Article 17, the Claimant’s case in this application must have failed unless there is some principle to mitigate the strictness of the decision in Salotti:.

51 The Claimant relies on the decision of the European Court in Segoura v. Bonakdarian [1976] ECR 1851. In that case, after the parties concluded an oral contract of sale, the vendor stated that he wished to rely on his general conditions of sale (which included a clause conferring jurisdiction) and later confirmed the contract in writing to the purchaser annexing his general conditions of sale. The ruling of the Court, again based on the original form of Article 17, was:

"In the case of an orally concluded contract, the requirements of the first paragraph of Article 17 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters as to form are satisfied only if the vendor’s confirmation in writing accompanied by notification of the general conditions of sale has been accepted in writing by the purchaser.

The fact that the purchaser does not raise any objections against a confirmation issued unilaterally by the other party does not amount to acceptance on his part of the clause conferring jurisdiction unless the oral agreement comes within the framework of a continuing trading relationship between the parties which is based on the general conditions of one of them, and those conditions contain a clause conferring jurisdiction."

52. The Claimant relies on that ruling, contending that there was a continuing trading relationship between the parties based on the general conditions of one of them. That reliance on Segoura is flawed. Firstly, in Segoura there was an oral agreement, and different requirements apply to oral agreements. Secondly, although there was a continuing trading relationship between the parties, it cannot be said that the relationship has been shown to be based on the general conditions of one of them when one party habitually (on the Claimant’s evidence) sent to the other two sets of conditions (one on the back of the ECPO and the other on the back of the Consignment Note) and the other party habitually sent a third set of conflicting conditions. Thirdly, as was explained in the judgment, the continuing trading relationship concept was based on the requirements of "good faith". In the judgment the Court stated:

"It follows from the foregoing, in both of the alternative cases suggested by the Bundesgerichtshof, that a unilateral declaration in writing such as the one in the present case is not sufficient to constitute an agreement on jurisdiction by consent.

However, it would be otherwise where an oral agreement forms part of a continuing trading relationship between the parties, provided also that it is established that the dealings taken as a whole are governed by the general conditions of the party giving the confirmation, and these conditions contain a clause conferring jurisdiction.

Indeed, in such a context, it would be contrary to good faith for the recipient of the confirmation to deny the existence of a jurisdiction conferred by consent, even if he had given no acceptance in writing."

It was submitted by Mr. Otty, and I agree, that the concept of good faith is not unlike our concept of estoppel. So, for example, if a party relied on the other party’s terms for some such purpose as terms of payment, it would be contrary to good faith for the party so relying on the terms to deny the existence of a jurisdiction given by the same terms. There is no suggestion of such an element in the present case.

53. One therefore turns to examine whether the Claimant can pray in aid any words added by amendment to the Convention. The Claimant relies on Article 17(b) and disavows reliance on 17(c). Article 17(b) refers to an agreement "in a form which accords with practices which the parties have established between themselves".

54. It is evident from section 6 of the report of Mr. De Almeida Cruz and Mr. Desantes Real and Mr. Paul Renard that Article 17(b) was added to take account of such decisions as Segoura to which express reference was made in their Report. Accordingly, for the reasons already given when I was discussing Segoura the addition of Article 17(b) does not carry the matter any further in favour of the Claimant.

55. The Claimant also relies on the decision of the European Court in F. Berghoefer Gmbh v. ASA case 221/84. That also was a ruling on the validity of an oral jurisdiction agreement confirmed in writing by one party only and judgment restates the law to which I have already referred. The judgment contains the following:-

"According to settled case-law (judgment of 14 December 1976 in Case 24/76, Salotti v RüWA, [1976] ECR 1851; judgment of 14 December 1976 in Case 25/76, Segoura v. Bonakdarian, [1976] ECR 1851; judgment of 6 May 1980 in Case 784/79, Porta-Leasing v Prestige International, [1980] ECR 1517; judgment of 19 June 1984 in Case 71/83, Tilly Russ v. Haven en Vervoerbedriif Nova [1984] ECR 2417), the requirements set out in Article 17 governing the validity of jurisdiction clauses must be strictly construed since the purpose of Article 17 is to ensure that the parties have actually consented to such a clause and that their consent is clearly and precisely demonstrated.

It must be pointed out that, unlike the provisions concerning persons domiciled in Luxembourg contained in the second paragraph of Article 1 of the Protocol annexed to the Convention, Article 17 of the Convention does not expressly require that the written confirmation of an oral argument should be given by the party who is to be affected by the agreement. Moreover, as the various observations submitted to the Court have rightly emphasised, it is sometimes difficult to determine the party for whose benefit a jurisdiction agreement has been concluded before proceedings have actually been instituted.

If it is actually established that jurisdiction has been conferred by express oral agreement and if confirmation of that oral agreement by one of the parties has been received by the other and the latter has raised no objection to it within a reasonable time thereafter, the aforesaid literal interpretation of Article 17 will also, as the Court has already decided in another context (see judgment of 19 June 1984, cited above), be in accordance with the purpose of that article, which is to ensure that the parties have actually consented to the clause. It would therefore be a breach of good faith for a party who did not raise any objection subsequently to contest the application of the oral agreement. It is not necessary in this case to decide the question of whether and to what extent objections raised by the other party to the written confirmation of an oral agreement could, in an appropriate case, be taken into consideration."

56. The case of M. S. Tilly Russ [1985] 1 QB 931, cited in Bergerhoefer also includes a useful summary of the relevant law at page 952:

"14. As the court held in its judgments of 14 December 1976 Estasis Salotti di Colzani Aimo e Gianmario Colzani v. Rüwa Polstereimaschinen G.m.b.H. (Case 24/76) [1976] ECR 1831, and Galeries Segoura S.p.r.l. v. Rahim Bonakdarian (Case 25/76) [1976] E.C.R. 1851 and of 6 May 1980 (Porta-Leasing G.m.b.H. v. Prestige International S.A. (Case 784/79) [1980] E.C.R. 1517, the requirements set out in article 17 governing the validity of jurisdiction clauses must be strictly construed since the purpose of article 17 is to ensure that the parties have actually consented to such a clause, which derogates from the ordinary jurisdiction rules laid down in articles 2, 5 and 6 of the convention, and that their consent is clearly and precisely demonstrated.

15. In order to decide whether the conditions laid down in article 17 are satisfied, it is necessary to consider separately whether the agreement of the parties to the choice of jurisdiction was expressed in the form of a written agreement or in the form of an oral agreement evidenced in writing.

16. In the first place, it must be observed that, where a jurisdiction clause appears in the conditions printed on a bill of lading signed by the carrier, the requirement of an "agreement in writing" within the meaning of article 17 of the Convention is satisfied only if the shipper has expressed in writing his consent to the conditions containing that clause, either in the document in question itself or in a separate document. It must be added that the mere printing of a jurisdiction clause on the reverse of the bill of lading does not satisfy the requirements of article 17 of the Convention, since such a procedure gives no guarantee that the other party has actually consented to the clause derogating from the ordinary jurisdiction rules of the Convention.

17. Secondly, if it was established that the jurisdiction clause contained in the conditions printed on a bill of lading was the subject of a prior oral agreement between the parties expressly relating to the jurisdiction clause and that the bill of lading, signed by the carrier, was regarded as the written confirmation of that oral agreement, such a clause would satisfy the conditions laid down in article 17 of the Convention, even if it was not signed by the shipper and therefore bore only the signature of the carrier. In fact, not only is the letter of article 17, which expressly provides for the possibility of an oral agreement evidenced in writing, thereby observed but in addition its function, which is to ensure that the agreement of the parties is clearly established, is also fulfilled.

18. Finally, such a jurisdiction clause not signed by the shipper may still satisfy the requirements laid down in article 17 of the Convention, even in the absence of a prior oral agreement relating to that clause, providing that the bill of lading comes within the framework of a continuing business relationship between the shipper and the carrier, in so far as it is thereby established that that relationship is governed as a whole by general conditions containing the jurisdiction clause drawn up by the author of the written confirmation, in this case the carrier (see Segoura’s case [1976] E.C.R. 1851), and provided that the bills of lading are all issued on pre-printed forms systematically containing such a jurisdiction clause. In those circumstances, it would be contrary to good faith to deny the existence of a jurisdiction agreement."

57. As has repeatedly been said, the requirements of Article 17 must be strictly construed. In order to decide whether the conditions of Article 17 are satisfied it is necessary first to consider whether the agreement was expressed in the form of a written agreement or in the form of an oral agreement evidenced in writing. No oral agreement is alleged in the present case, so the Claimant can only rely on a written agreement. By the Particulars of Claim, the Claimant alleges an agreement partly in writing and partly by conduct, that is, offer in writing accepted by conduct by delivery of the goods. There is no document in which the Defendant has expressed in writing consent to the conditions containing the jurisdiction clause.

58. In the circumstances, can the Claimant rely on "practices which the parties have established between themselves"? Even if one accepts without question the whole of the Claimant’s evidence, I see nothing in the circumstances of this case which make it contrary to good faith for the Defendant to deny the existence of a jurisdiction agreement.

59. Whatever standard of proof is required, and even if it were only at the low level for which Mr. Stewart contends, the Claimant has failed to show that Article 17 of the Convention applies to this case.

60. Accordingly, Article 2 of this Convention applies and the Defendant, being domiciled in Germany, must be sued in the Courts of that State.

61. In reaching this conclusion, I make it clear that I express no view as to:

(a) whether the Claimant can establish by some other route than that prescribed by Article 17 that the parties contracted on the terms of the Claimant’s "Terms of Purchase";

(b) whether the law to be applied by the German court is English law (as required by the Claimant’s "Terms of Purchase") or German law (as required by the Defendant’s terms).

CONCLUSION

62. I find in favour of the Defendant upon its application. I declare that this Court has no jurisdiction over the subject matter of this action. I order that in Claim form and the service of that Claim form be set aside. Subject to any argument to the contrary, it will follow that the Claimants must pay the Defendant’s costs of this application and of the proceedings.