Bols Distilleries (t/a as Bols Royal Distilleries) & Anor . v. Superior Yacht Services Ltd (Gilbraltar)  UKPC 45 (11 October 2006
Privy Council Appeal No 82 of 2005
(1) Bols Distilleries trading as Bols Royal Distilleries
(2) Unicom Bols Group Spz.o.o. Appellants
Superior Yacht Services Limited Respondent
THE COURT OF APPEAL OF
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JUDGMENT OF THE LORDS OF THE JUDICIAL
COMMITTEE OF THE PRIVY COUNCIL
Delivered the 11th October 2006
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Present at the hearing:-
Lord Hope of Craighead
Lord Scott of Foscote
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
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[Delivered by Lord Rodger of Earlsferry]
"Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State."
Article 23(1) provides inter alia:
"If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:
(a) in writing or evidenced in writing...."
"Please find attached revised payment schedule as we discussed in the Warsaw meeting, where this year's costs are reduced as much as possible.
I will show this to Stefan on his arrival.
We will need to address this contract, bonus arrangements and the clear understanding as laid out in the contract of what is excluded with particular reference to graphics and branding."
"As owners of the vessel you will need to address the issue of port of registry, the cost of the project is based on the vessel being flagged in a tax free port. Should you decide to register the boat in a country where tax is payable you will be responsible for this cost.
The issue of ownership and performance bonus are potentially interlinked as we discussed, there are several options here which need to be discussed and resolved, I look forward to your input."
An email dated 17 December from Mr Laux to Mr O'Connell indicates that they had still not finally decided what to do about the ownership of the yacht, but that he preferred that ownership should be with UBG or Rémy Cointreau, or an independent entity.
"I am however very aware that we are no closer in real terms to closing this project. I cc'd you my response to POC and I think that no one is taking this seriously. I do not have invoicing details, a written agreement etc and unless we have these in place, then we have no project. Surely it is the basis of any agreement that it is written and agreed??? Or is this unreasonable. With the constant changes at Bols and movement of the goal posts even with the current project I am unprepared to commit the next 3-4 years of life to a period of constant uncertainty.
I am sure you understand and surely you would feel more comfortable having me under contract......"
"Please see the attached letter as requested. This is a draft, and I have also copied Stefan, for any input that he wishes to add.
(See attached file: Gordon Kay.doc)
In terms of the payment transfer timing, I have to speak with Piotr on Monday to discuss this further, as I have indicated in the letter."
The draft letter attached to the email was from Mr O'Connell to Mr Kay and was headed "Re: Bols Lodka II". It read:
"As per our telephone conversation of earlier to-day, I wish to confirm the decision that we have spoken of in relation to the further development of the 'Bols Lodka II' project.
Thus, by way of this letter, I wish to confirm Bols's commitment to proceeding with the project, as we discussed in Warsaw, and to the Project Schedule as forwarded by you on December 17th 2001.
With specific reference to the Project Payment Schedule, I will confirm the transfer details and timings (in line with your Project Schedule) by Tuesday of next week (January 8th 2002), following discussions with UBG Poland.
I wish you the best of success with the Project, and look forward to continued success in the future."
"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 connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction."
The wording of article 17(1) of the Convention is not exactly the same as the wording of article 23(1) of the Regulation, but it was not suggested that, for present purposes, there was any material difference between the provisions. Article 17(1) refers specifically to the parties agreeing on jurisdiction "by agreement in writing or by an oral agreement confirmed in writing". Article 23(1) simply says that the agreement on jurisdiction "shall be either … in writing or evidenced in writing...." Unlike article 17(1), the later article does not spell out that the agreement which is evidenced in writing is an oral agreement. But plainly that is what is envisaged. Again, neither counsel suggested that the guidance which the Court of Justice had given on the interpretation of article 17(1) of the Convention was inapplicable to the interpretation of article 23(1) of the Regulation.
"In view of the consequences that such an option may have on the position of 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."
For the reasons given by the Court, the policy of the legislation requires that it is "clearly and precisely demonstrated" that the parties actually agreed to any clause conferring jurisdiction. There is a risk that a jurisdiction clause in a standard form contract put forward by one party might be overlooked by the other and the purpose of article 23(1), as of article 17(1), "is to neutralize the effect of jurisdiction clauses that might pass unnoticed in contracts": Partenreederei ms Tilly Russ and Ernest Russ v NV Haven- & Vervoerbedrijf Nova and NV Geominne Hout (Case 71/83)  ECR 2417, 2435, para 24. As the Court had indicated earlier in the same judgment, at p 2432, para 16, fulfilling the requirements of the article will "guarantee that the other party has actually consented to the clause derogating from the ordinary jurisdiction rules of the Convention." In Coreck Maritime GmbH v Handelsveem BV (Case C-387/98)  ECR I-9337, 9371, para 13, the Court summarised its jurisprudence in this way:
"The Court has held that, by making the validity of a jurisdiction clause subject to the existence of an 'agreement' between the parties, article 17 of the Convention 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, and that the purpose of the requirements as to form imposed by article 17 is to ensure that consensus between the parties is in fact established…."
"37 In the area of non-contractual liability, the context in which the questions referred have arisen, the sole object of the Convention is to determine which court or courts have jurisdiction to hear the dispute by reference to the place or places where an event considered harmful occurred.
38 It does not, however, specify the circumstances in which the event giving rise to the harm may be considered to be harmful to the victim, or the evidence which the plaintiff must adduce before the court seised to enable it to rule on the merits of the case.
39 Those questions must therefore be settled solely by the national court seised, applying the substantive law determined by its national conflict of laws rules, provided that the effectiveness of the Convention is not thereby impaired."
It follows that, in deciding whether, on the material placed before the courts of Gibraltar, the plaintiffs have established jurisdiction under the Regulation, the law to be applied is the law of Gibraltar, provided that the effectiveness of the Regulation is not thereby impaired.
"It is I believe important to recognise, as the language of their Lordships in Vitkovice Horni a Hutni Tezirstvo v Korner  AC 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, eg the existence of a contract, but in other cases a matter which goes purely to jurisdiction, eg the domicile of the 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 LJ pointed out in Attock Cement Co Ltd v Romanian Bank for Foreign Trade  1 WLR 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, eg 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, ie 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."
"In a purely internal English case the test of a good arguable case had been laid down by the House of Lords as applicable also in respect of domicile as a ground of jurisdiction: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran  1 AC 438. The question is whether in the context of article 6 the more stringent test of a balance of probabilities should apply. The adoption of such a test would sometimes require the trial of an issue or at least cross-examination of deponents to affidavits. It would involve great expense and delay. While it is true that the jurisdictional issues under the Conventions are very important, they ought generally to be decided with due despatch without hearing oral evidence. In my view Waller LJ's judgment  1 WLR 502, 553-559 correctly explained on sound principled and pragmatic grounds why the defendants' argument is misconceived."
"14 It must be pointed out that … 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 emphasized, it is sometimes difficult to determine the party for whose benefit a jurisdiction agreement has been concluded before proceedings have actually been instituted.
15. 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 …, 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."