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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Astilleros Zamakona SA v. Mackinnons [2002] ScotCS 343 (26 August 2002)
URL: http://www.bailii.org/scot/cases/ScotCS/2002/343.html
Cite as: [2002] ScotCS 343, 2002 SCLR 1018
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Astilleros Zamakona SA v. Mackinnons [2002] ScotCS 343 (26 August 2002)
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OUTER HOUSE, COURT OF SESSION |
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CA89/02
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OPINION OF LORD MACFADYEN in the cause ASTILLEROS ZAMAKONA SA Pursuers; against MACKINNONS Defenders:
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Pursuers: Clark; Brodies
Defenders: Howie, Q.C., Henderson Boyd Jackson
26 August 2002
Introduction
[1] The pursuers are a Spanish company who carry on business as shipbuilders. The defenders are a firm of Scottish solicitors. Clients of the defenders, James Duthie & Partners ("Duthies"), entered into a contract with the pursuers in terms of which the pursuers were to build for them a fishing vessel, the MV Sunbeam, in return for payment of a price by instalments. The vessel was built. The present dispute arises out of an ancillary arrangement by which funds representing an unpaid balance of the price, withheld by Duthies on the contention that the pursuers' work on the vessel was in certain respects incomplete and defective, were placed on deposit in the joint names of the pursuers' solicitors, Davies Wood Summers ("DWS") and the defenders as Duthies' solicitors. In this action the pursuers allege that events have occurred which oblige the defenders to procure the release of the deposited funds to the pursuers. They seek an order on the defenders to take such steps as may be required to effect release of the funds, in particular by consenting in writing to such release. [2] An issue has arisen as to whether this Court has jurisdiction to entertain this action. The pursuers aver, and the defenders admit, that the defenders are domiciled in Scotland and on that account subject in general to the jurisdiction of this Court. The defenders, however, contend that the arrangement about the deposited funds forms part of the shipbuilding contract, and that by virtue of a provision of that contract there has been prorogation of the exclusive jurisdiction of the High Court of Justice in London. The defenders' first plea-in-law is to the effect that on that account the jurisdiction of this Court has been excluded, and the action should therefore be dismissed. The pursuers' first plea-in-law is to the effect that the defenders' averments are irrelevant, and they contend in particular that the averments in support of the plea of no jurisdiction are irrelevant, and that that plea should therefore be repelled. The action was appointed to debate on the issue of jurisdiction.The shipbuilding contract
[3] The terms of the contract between the pursuers and Duthies for the construction of the fishing vessel, so far as material for present purposes, are to be found in a document entitled "First Addendum to Shipbuilding Contract" dated 9 October 1997 (No. 6/1 of process, "the shipbuilding contract"), which bears to vary the terms of an earlier contract entered into on 7 November 1995. Article 7, paragraph 1 of the contract provided that the purchase price of the vessel was to be 1,371,000,000 Spanish pesetas. Article 7, paragraph 3 set out the seven instalments in which the price was to be paid. All the instalments except the last one were to be made by drawing against an irrevocable letter of credit. [4] Article 15(a) of the shipbuilding contract provided as follows:"Law of the Contract
The terms and conditions of this Contract and any disputes arising out of or in connection therewith shall be governed exclusively by the High Court of Justice in London according to English Law, to the exclusion of the laws and courts of any other country."
"Any further agreement or addenda signed by both parties to this Contract shall be deemed and considered as embodied in the Contract and shall become an integral part of this Contract."
The security deposit
[6] When the seventh and last instalment of the price of the vessel fell due for payment, Duthies were unable to make payment of it. In security for the outstanding payment they granted in the pursuers' favour mortgages over the vessel and another vessel. However, Duthies made warranty claims against the pursuers under the shipbuilding contract, alleging that certain work on the vessel was unfinished, missing or defective. In February 2001 arrangements were made for a payment of 117,100,000 pesetas to be made towards the final instalment of 137,100,000 pesetas, and in exchange the mortgages were discharged. The balance of 30,000,000 pesetas which remained unpaid was to be put on deposit in what was described as an "escrow account" to await determination of Duthies' warranty claims, and was referred to as the "security deposit". The details of arrangements for resolution of the dispute over the warranty claims and for the handling of the security deposit were contained in two letters sent by DWS to the defenders on 15 February 2001 and endorsed by the defenders. [7] The first of these letters (No. 6/3 of process) was concerned with the dispute resolution procedure to be followed in relation to the warranty claims. In effect it substituted a different one for the one contained in the shipbuilding contract. The letter began: "This letter is to record in writing the dispute resolution procedure that the parties will follow to settle the warranty claims ...". In summary, the arrangements included provision for the holding of two meetings, in accordance with a specified timetable, for the purpose of discussion of settlement of the dispute. In the event that agreement was not reached after the second meeting, there was to be arbitration before a single arbitrator appointed (failing agreement) by the President of the London Maritime Arbitrators Association. If by a specified date agreement to settle had not been reached and the whole security deposit had not been released, the pursuers were to be entitled to serve notice on Duthies to join in appointing an arbitrator. Within fourteen days thereafter, Duthies were to send a statement of claim to the pursuers and their solicitors. Clause 7 of the letter then provided:"If James Duthie & Partners fails to send the Statement of Claim and all such copies to Astilleros Zamakona SA with a full copy to Messrs Davies Wood Summers within 14 days after service of the notice given by Astilleros Zamakona SA under point 6 above, the Security Deposit with all interest accrued mentioned in the exchange of said letters between Davies Wood Summers and Mackinnons dated of even date with this letter will belong to Astilleros Zamakona SA who will be entitled to payment forthwith."
That letter was signed by DWS. A copy of it was endorsed by the defenders in the following terms:
"On behalf of and as instructed by James Duthie & Partners we acknowledge receipt of the letter of which the foregoing is a copy and agree to the terms and conditions contained in it."
That acceptance was signed by the defenders.
[8] The second letter of 15 February 2001 (No. 6/4 of process) set out a detailed narrative of the background. Recital C contained the following passage:"... the balance due of Ptas. 30,000,000 (which together with all interest accrued less any Bank charges or costs is referred to as 'the Security Deposit') has been or is about to be paid by the Owners [i.e. Duthies] into an Account in the name of Davies Wood Summers for behoof of Zamakona and Mackinnons for behoof of the Owners ('the Escrow Account')".
After the narrative, the letter continued:
"Therefor (sic) Zamakona and the Owners have instructed their Solicitors to exchange letters to confirm the terms upon which the Security Deposit is to be held and released.
On behalf of and as instructed by our clients, Astilleros Zamakona SA we hereby confirm the following terms and conditions on which the Security Deposit will be held and released:-
...
- If the Owners do not send a complete Statement of Claim accompanied by copies of all relevant documents to Zamakona with a full copy to Davies Wood Summers within 14 days after the date of service of said notice the Security Deposit with all interest accrued thereon shall forthwith belong to and be released to Zamakona.
...
- Davies Wood Summers and Mackinnons by accepting the terms of this letter on their clients' behalf undertake to take such steps as may be required to effect the release of the Security Deposit in accordance with the terms of this letter notwithstanding any instructions to the contrary received from their respective clients. The Security Deposit shall be held in trust for the purpose of effecting payment in accordance with the terms of this letter and the owners and Zamakona divest themselves of any power to intromit with the Security Deposit otherwise."
That letter too was signed by DWS. On a copy of it the defenders endorsed an acknowledgement in the following terms:
"On behalf of and as instructed by James Duthie & Partners we hereby acknowledge receipt of the letter of which the foregoing is a copy and agree to the terms contained in it."
That acknowledgement was signed by the defenders.
[9] The pursuers aver that on 4 December 2001 they gave written notice to appoint an arbitrator. They aver that Duthies did not serve a statement of claim within fourteen days thereafter. They therefore assert that in terms of Clause 7 of the first letter of 15 February 2001 and Clause 3 of the second letter of the same date the security deposit belongs to them and they are entitled to release of it. They assert further that by Clause 5 of the second letter the defenders are obliged to take the steps necessary to procure the release of the security deposit.
The jurisdiction issue
[10] The claim which the pursuers advance in this action proceeds on the basis of the proposition that by virtue of DWS's second letter of 15 February 2001 and the defenders' acceptance thereof the defenders undertook a contractual, or alternatively unilateral, obligation to the pursuers to release the security deposit in the events which have happened. The defenders' position on the merits of the action is that they dispute that that letter, properly construed, had that effect. They take, however, the preliminary objection that the pursuers' claim, advanced on the basis of an obligation undertaken by the defenders personally in terms of that letter and acceptance, is not one which this Court has jurisdiction to entertain. In support of their plea of no jurisdiction they rely on two considerations, namely (1) that any such obligation undertaken by the defenders was undertaken as part of "a further agreement or [addendum] signed by both parties to [the shipbuilding] Contract", and therefore "shall be deemed and considered as embodied in the Contract and shall become an integral part of this Contract", all in accordance with Article 19 of the shipbuilding contract; and (2) that the present dispute is therefore a "dispute arising out of or in connection with" the shipbuilding contract, and is therefore subject to the prorogation of the exclusive jurisdiction of the English High Court in accordance with Article 15(a) of the shipbuilding contract. The pursuers, on the other hand, contend that the obligation undertaken by the defenders was independent of the shipbuilding contract, and not rendered part of it by Article 19, and that the prorogation of the exclusive jurisdiction of the High Court is therefore inapplicable.
The pursuers' submissions
[11] Mr Clark, for the pursuers, accepted that if Article 15(a) of the shipbuilding contract fell to be applied to the obligation undertaken by the defenders in terms of Clause 5 of the second letter of 15 February 2001, its terms were sufficient to prorogate the exclusive jurisdiction of the High Court, and thus to exclude the jurisdiction of this Court. He submitted first, however, that Article 19 of the shipbuilding contract did not have the effect of making the obligation undertaken by the defenders an integral part of that contract. Moreover, he submitted secondly that it was necessary, if a prorogation clause was to be given effect, for the court to be satisfied that consensus between the parties to the litigation to exclude the jurisdiction of the courts of the defenders' domicile was clearly and precisely demonstrated; and that in this case that test was not satisfied. [12] Mr Clark submitted that the defenders were not parties to the shipbuilding contract, and could not be made parties to it by operation of Article 19 of it. The only parties to the shipbuilding contract were, as its terms made plain, the pursuers and Duthies. Article 19 contemplated further agreements between the two original parties. Although the article does not expressly say so, Mr Clark accepted that it must be construed as applying only to further agreements varying, amending, supplementing or otherwise relating to the shipbuilding contract. Article 19 would not embody into the shipbuilding contract a wholly separate agreement dealing with unrelated subject matter, merely because that "further agreement" was "signed by both parties to [the shipbuilding] Contract". On the other hand, there was nothing in the article to suggest that it was contemplated that a "further agreement" or "addendum" might, so long as it was signed by both parties to the shipbuilding contract, introduce additional parties to that contract and confer rights or impose obligations on them which would then fall to be treated as embodied into the shipbuilding contract. Turning to the two letters of 15 February 2001, Mr Clark accepted that it might well be that the first one (No. 6/3 of process) was a "further agreement" or addendum to the shipbuilding contract, which consequently was embodied into it and became an integral part of it by virtue of Article 19. That letter was concerned principally with the substitution of a different dispute resolution procedure in place of the one provided for in the shipbuilding contract as concluded on 9 October 1997. It did not bear to confer rights or impose obligations on any party other than the two parties to the shipbuilding contract. The second letter (No. 6/4 of process) was, however, in a different position. It too, albeit somewhat repetitively (compare clause 7 of the first letter with clause 3 of the second), bore to regulate the rights and obligations of the parties to the shipbuilding contract. But it plainly went beyond that. The first sentence of Clause 5 plainly sought to impose obligations on DWS and the defenders: "Davies Wood Summers and Mackinnons by accepting the terms of this letter on their clients' behalf undertake to take such steps as may be required to effect the release of the Security Deposit in accordance with the terms of this letter notwithstanding any instructions to the contrary received from their respective clients". That was something separate from the agreement between the pursuers and Duthies constituted by the shipbuilding contract. It involved the undertaking of personal obligations by DWS and the defenders. But that was clearly severable from the modification of the rights and liabilities of the parties to the shipbuilding contract inter se; it did not mean that the defenders became parties to the shipbuilding contract. If that analysis of the second letter of 15 February 2001 was correct, it followed that the obligations thereby imposed on the defenders did not become an integral part of the shipbuilding contract. The prorogation clause therefore had no application to the obligations incumbent on the defenders personally. The averments in support of the plea of no jurisdiction were therefore irrelevant, and that plea should be repelled. [13] The second branch of Mr Clark's argument was founded on the jurisprudence of the European Court of Justice in relation to the prorogation provisions of the Brussels Convention. Since this case was concerned with the allocation of jurisdiction between the courts of Scotland and England, and the conditions specified in section 16(1) of the Civil Jurisdiction and Judgments Act 1982 ("the 1982 Act") were satisfied, the relevant provisions of Schedule 4 to the 1982 Act were applicable. Since this action was signeted on 1 May 2002, the relevant version of Schedule 4 was the one substituted by paragraph 4 of Schedule 2 to the Civil Jurisdiction and Judgments Order 2001 (SI 2001, No. 3929). Paragraph 12(1) of the amended Schedule 4 provides:"If the parties have agreed that a court or the courts of a part of the United Kingdom are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, and, apart from this Schedule, the agreement would be effective to confer jurisdiction under the law of that part, that court or those courts shall have jurisdiction."
In terms of section 16(3)(a), however, of the 1982 Act regard required to be had to Convention jurisprudence. The relevant provision of the Brussels Convention was Article 17 (now superseded by Article 23 of Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). Mr Clark therefore cited a number of decisions of the European Court of Justice concerned with Article 17.
[14] The starting point of this aspect of Mr Clark's submissions was Estasis Salotti v RÜWA Case 24/76 [1976] ECR 1831. That case was concerned with a prorogation clause contained in printed general conditions of contract. The Court, at paragraph 7, after quoting from Article 17, said:"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 [domicile] 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 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 consensus between the parties is in fact established."
(See also Galeries Segoura v Bonakdarian Case 25/76 [1976] ECR 1851, paragraphs 5 and 6).
[15] Mr Clark then turned to cases concerning whether a prorogation clause was effective against a party not privy to the original contract. He relied primarily on Coreck Maritime GmbH v Handelsveem BV Case C-387/98 [2000] ECR I-9337, a case concerned with whether a prorogation clause in a bill of lading could be relied on against a third party bearer of the bill. Reference was made in particular to the following passage in the judgment of the Court:|
"22. |
By its third question, the national court essentially asks whether a jurisdiction clause which has been agreed between a carrier and a shipper and appears in a bill of lading is valid as against a third party bearer of the bill of lading or whether it is only valid as against a third party bearer of the bill of lading who succeeded by virtue of the applicable national law to the shipper's rights and obligations when he acquired the bill of lading. |
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It is sufficient to note that the Court has held that, in so far as the jurisdiction clause incorporated in a bill of lading is valid under Article 17 of the Convention as between the shipper and the carrier, it can be pleaded against the third party holding the bill of lading so long as, under the relevant national law, the holder of the bill of lading succeeds to the shipper's rights and obligations ... |
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24. |
It follows that the question whether a party not privy to the original contract against whom a jurisdiction clause is relied on has succeeded to the rights and obligations of one of the original parties must be determined according to the applicable national law. |
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25. |
If he did, there is no need to ascertain whether he accepted the jurisdiction clause in the original contract. In such circumstances, acquisition of the bill of lading could not confer upon the third party more rights than those attaching to the shipper under it. The third party holding the bill of lading thus becomes vested with all the rights, and at the same time becomes subject to all the obligations, mentioned in the bill of lading, including those relating to the agreement on jurisdiction ... |
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26. |
On the other hand, if, under the applicable national law, the party not privy to the original contract did not succeed to the rights and obligations of one of the original parties, the court seised must ascertain, having regard to the requirements laid down in the first paragraph of Article 17 of the Convention, whether he actually accepted the jurisdiction clause relied on against him. |
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27. |
Accordingly, the reply to the third question must be that a jurisdiction clause agreed between a carrier and a shipper which appears in a bill of lading is enforceable against a third party bearer of the bill of lading if he succeeded to the rights and obligations of the shipper under the applicable national law when he acquired the bill of lading. If he did not, it must be ascertained whether he accepted that clause having regard to the requirements laid down in the first paragraph of Article 17 of the Convention." |
Mr Clark also cited Gerling v Amministrazione del Tesoro dello Stato Case 201/82 [1983] ECR 2503, in which the Court held (in paragraph 20 of its judgment) that:
"where in a contract of insurance a clause conferring jurisdiction is inserted for the benefit of the insured who is not a party to the contract but a person distinct from the policy-holder, it must be regarded as valid within the meaning of Article 17 of the Convention provided that, as between the insurer and the policy-holder, the condition as to writing laid down therein has been satisfied and provided that the consent of the insurer in that respect has been clearly and precisely manifest."
"Community law, in common with English law, regards jurisdiction clauses as ancillary to the substantive provisions of the contract for the purposes of Article 17 ... The incorporation of the terms of one contract into another related contract between different parties raises rather different questions from those which arise when one party to a contract seeks to incorporate by reference a set of standard trading terms. ... In many cases ... in the absence of specific language the Court will not be able to infer with confidence that the parties did intend to incorporate any terms other than those which are germane to their own contract... In each case the Court must construe the language of the contract in the context of its commercial background and ask itself whether a consensus on the subject matter of the jurisdiction clauses is clearly and precisely demonstrated."
(See also Dresser UK Ltd v Falcongate Freight Management Ltd [1992]1 QB 502, per Bingham LJ at 511D; Barratt International Resorts Ltd v Martin 1994 SLT 434.)
[17] In the light of these authorities, Mr Clark submitted that the defenders could only rely on Article 15(a) of the shipbuilding contract in a question between them and the pursuers if it was clearly and precisely demonstrated that there was consensus between the pursuers and the defenders that that Article should apply to such questions. He submitted that there was no clear or precise demonstration of such consensus. On that additional basis, the defenders' averments based on Article 15(a) were irrelevant and the defenders' first plea-in-law should therefore be repelled.The defenders' submissions
[18] Mr Howie, for the defenders, accepted that if, in accordance with the defenders' primary contention on the merits, the second letter of 15 February 2001 imposed no personal obligation on the defenders, the defenders' plea of no jurisdiction could not succeed. He also accepted that if, in terms of that letter, the defenders undertook a personal obligation which was wholly independent of the shipbuilding contract, again the plea of no jurisdiction could not succeed. His contention was that, if the pursuers were right in the only contention on which the action proceeded, namely that the second letter of 15 February imposed a personal obligation on the defenders, that obligation nevertheless arose from a "further agreement signed by both parties to [the shipbuilding] Contract", and therefore fell within the scope of Article 19 of the shipbuilding contract. It followed that Article 15(a) applied, and that the plea of no jurisdiction was well founded. [19] Mr Howie submitted that the pursuers' contention that the obligation undertaken by the defenders was a personal obligation independent of the shipbuilding contract depended essentially on the first sentence of Clause 5 of the second letter of 15 February 2001. In all other respects the form of the letter was indicative of an agreement between the pursuers and Duthies. It did not follow, however, from the contention that that sentence imposed a personal obligation on the defenders, that that obligation did not fall within the scope of Article 19 and so come to be embodied in the shipbuilding contract as an integral part of it. The two letters of 15 February were precisely the sort of further agreement or addendum that was contemplated in Article 19. They required to be read together. The first letter was plainly an addendum to the shipbuilding contract. It was signed on behalf of the pursuers and Duthies. That was sufficient to make it an agreement "signed by both parties" within the meaning of Article 19. It substituted a new form of procedure for the resolution of the disputes which had arisen under the shipbuilding contract for the procedure originally provided in the shipbuilding contract itself. There could therefore be no doubt that that letter fell within the scope of Article 19. The second letter was likewise signed on behalf of (and therefore, within the meaning of Article 19, by) both parties to the shipbuilding contract. As was made clear by the preamble to the letter, it was an integral part of the arrangements by which the bulk of the final instalment of the price was paid, the mortgages were discharged, and the unpaid balance was put on deposit to await the outcome of the dispute resolution procedure in relation to the warranty claims. In so far as the second letter placed personal obligations on the solicitors acting for the parties to the shipbuilding contract, it did so as part of the machinery for making the procedure for resolving the outstanding dispute between those parties effective. The second letter also thus fell within the scope of Article 19. The fact that it involved two additional parties, as well as the original parties to the shipbuilding contract, was not enough to take it outwith the scope of Article 19. The obligations undertaken by the solicitors, DWS and the defenders, if personal to them as the pursuers contended, were nevertheless an integral part of a further agreement between the pursuers and Duthies. It was not realistic to regard them as severable from the agreements amending the shipbuilding contract and thus beyond the scope of Article 19. Clause 5 of the second letter dealt not only with the solicitors' obligations, but also with the agreement by the original parties to the shipbuilding contract divesting themselves of power to intromit with the security deposit. It was plain from the introductory words "On behalf of and as instructed by our clients ...", and the concluding words "Please confirm your clients agreement to the foregoing", that the second letter was primarily part of an agreement between the original parties to the shipbuilding contract. On a sound construction of Article 19 and the letters of 15 February, both of the letters came to be embodied in the shipbuilding contract as an integral part of it. That included any part of the second letter in terms of which, as an ancillary part of the dispute resolution procedure, the defenders and DWS undertook personal obligations. It followed that Article 15(a) applied to the defenders' obligations in relation to the security deposit, and the plea of no jurisdiction was well founded. [20] In response to the second branch of Mr Clark's submissions, Mr Howie submitted that the approach supported by the European jurisprudence (Estasis Salotti and Galeries Segoura) did not differ materially from the approach of Scots law to the question of prorogation. Coreck was concerned with the question of the circumstances in which a third party who was a stranger to the contract containing the original prorogation clause could be compelled to submit to the prorogated jurisdiction. Here the situation was the reverse. The defenders were the strangers to the original contract containing the prorogation clause, yet it was they who sought to found on it. Given that factor, and their role as Duthies' solicitors, there could be no question as to their understanding and acceptance of the effect of Article 15(a). There could be no question as to the pursuers' consent to the prorogation clause in the shipbuilding contract, and if it was right that, on a proper construction of Article 19 and the second letter, the obligation imposed on the defenders by that letter was part of the shipbuilding contract, the pursuers as original parties to the shipbuilding contract could not escape the consequence that the prorogation clause applied to their action against the defenders. The English authorities cited by Mr Clark were not in point. They were concerned with the issue of whether a jurisdiction clause in one contract was incorporated into another. The issue in the present case was whether a subsequent ancillary obligation was drawn back into the original contract containing the jurisdiction clause, so as to become an integral part of that contract and thus be affected by that clause.Discussion
[21] Although the defenders, in their defences on the merits, dispute that the effect of the second letter of 15 February 2001 was to impose on the defenders a personal obligation, it is necessary, for the purpose of considering the question of whether this Court has jurisdiction in this action, to proceed on the hypothesis that that letter did impose such an obligation, because that is the sole basis on which the pursuers' claim against the defenders proceeds. For the purpose of the issue presently before me, therefore, I proceed on the basis that in terms of Clause 5 of the second letter the defenders undertook a personal obligation to take such steps as might be required to effect the release of the security deposit in accordance with the other provisions of the letter. [22] The primary issue therefore comes to be whether on a sound construction of, on the one hand, Article 19 of the shipbuilding contract, and, on the other hand, the second letter of 15 February 2001, the personal obligation undertaken by the defenders in terms of the latter falls to be regarded as having been embodied in and become an integral part of the shipbuilding contract. In my view there is nothing in the shipbuilding contract which precludes that result. Article 19 applies only to "Any further agreement or addenda". Although the point is not spelled out any more explicitly than that, it is in my view clear (and was not disputed by either party) that the further agreement or addendum must be an agreement varying, amending, supplementing or otherwise relating to the shipbuilding contract. In addition, to fall within the scope of Article 19 the further agreement or addendum must be "signed by both parties". Again it was not disputed that an agreement signed by agents on behalf of the parties to the shipbuilding contract would satisfy that requirement. It is undoubtedly correct, as Mr Clark submitted, that the shipbuilding contract, as originally concluded, was a bilateral contract to which only the pursuers and Duthies were parties. I am not persuaded, however, that Mr Clark was correct in his submission that Article 19 could not apply to an agreement signed by the original parties which also involved the imposition of obligations upon additional parties. It seems to me that there is nothing in Article 19 to exclude the possibility of a further agreement, provided it was "signed by [or on behalf of] both parties", and provided it related in the necessary way to the shipbuilding contract, introducing additional parties and placing ancillary obligations on them, and nevertheless coming to be embodied in and an integral part of the shipbuilding contract. [23] The matter therefore, in my view comes to turn on the nature of the additional agreement. It seems to me to be clear on the face of the two letters of 15 February 2001 that they each formed an integral part of an agreed variation of the contractual arrangements between the pursuers and Duthies originally set out in the shipbuilding contract. A dispute had arisen under that contract in terms of which Duthies (a) made warranty claims against the pursuers and (b) on that account sought to retain part of the last instalment of the purchase price. With a view to resolution of that dispute, supplementary terms were agreed (i) altering the dispute resolution procedure originally provided in the shipbuilding contract, and (ii) setting aside funds to be held in neutral hands until either the dispute was resolved, or Duthies defaulted on the dispute resolution procedure. Part of the machinery provided in the latter connection involved the solicitors for the parties to the shipbuilding contract holding the security deposit in an account in their joint names, and undertaking an obligation to release it (if necessary, in face of instructions to the contrary from their clients) to the party ultimately entitled to receive it. The fact that the obligations undertaken by the solicitors were (according to the pursuers' contention) personal obligations undertaken by them does not in my view sever them from the remainder of the arrangements. No doubt in a sense the solicitors' obligations were separate from any obligations incumbent on their respective clients. But in any realistic commercial sense, the solicitors' obligations were mere machinery for implementation of the supplementary agreement between the original parties to the shipbuilding contract. In my opinion it follows that the whole of the two letters of 15 February 2001, including the personal obligations undertaken by DWS and the defenders in terms of Clause 5 of the second letter, fell within the scope of Article 19, and thus came to form an integral part of the shipbuilding contract. In these circumstances, subject to the issue discussed in the following paragraph, I am of opinion that Article 15(a) of the shipbuilding contract applies to the dispute between the pursuers and the defenders which forms the subject matter of this action. [24] In my opinion, in seeking to apply the requirement of the European jurisprudence that a jurisdiction clause must be shown to have been the subject of consensus between the parties (Estatis Salotti, paragraph 7; Galeries Segoura, paragraph 6), it is necessary to recognise that the circumstances of this case differ somewhat from those of any of the authorities cited. Looking at the matter first from the point of view of the pursuers, it is material to note that they were original parties to the shipbuilding contract, of which Article 15(a) forms part. Article 15(a) is part of a specifically drafted contract, not part of an incorporated set of standard conditions. There can therefore in my view be no doubt that the pursuers consented to the incorporation of Article 15(a) in the shipbuilding contract. They must also be taken to have consented to Article 19; and also to the letters of 15 February 2001, which were written by their solicitors on their behalf. If, as I have held, the combined effect of Article 19 and the letters is that the obligations undertaken by the defenders in terms of Clause 5 of the second letter came to form an integral part of the shipbuilding contract, it is not in my view open to the pursuers now to maintain that there is any lack of consensus on their part in respect of the application of Article 15(a) to the present action. Turning to the position of the defenders, it seems to me that two circumstances are of importance. The first is that, although the defenders are the party who were strangers to the original shipbuilding contract, it is they who now seek to found on Article 15(a). The second is that, as solicitors acting for Duthies, one of the original parties to the shipbuilding contract, they are particularly well placed to be aware of the terms and effect of Article 15(a). This is therefore not a case, such as Coreck, where there is any need for concern about ensuring that the third party has accepted the jurisdiction clause before subjecting him to its effect. There is, in my view, no good reason to look for direct evidence of consensus about Article 15(a) between the pursuers and the defenders, where the defenders, although the strangers to the original shipbuilding contract, evince their consent to the application of the Article by seeking to rely on it, and the pursuers, as original parties to the shipbuilding contract, must be taken to have consented to it and to its application in relation to any further agreement which, in accordance with the provisions to which they agreed, became an integral part of the original shipbuilding contract.Result
[25] For these reasons I am of opinion that the pursuers' plea to the relevancy of the defenders' averments in support of their plea of no jurisdiction is not well founded. I shall therefore repel the pursuers' first plea-in-law, so far as directed against the relevancy of those averments, sustain the defenders' first plea-in-law, and dismiss the action. I shall reserve the question of expenses.