Amiri Flight Authority v BAE Systems Plc

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Mance,Lord Justice Rix,Lord Justice Potter
Judgment Date17 Oct 2003
Neutral Citation[2003] EWCA Civ 1447
Docket NumberCase No: A3/2002/2693

[2003] EWCA Civ 1447

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM TOMLINSON J

(QUEEN'S BENCH DIVISION

COMMERCIAL COURT)

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Justice Potter

Lord Justice Mance and

Lord Justice Rix

Case No: A3/2002/2693

Between:
Amiri Flight Authority
Appellant
and
Bae Systems Plc
Respondent

Nicholas Underhill QC & Akhil Shah (instructed by Messrs LeBoeuf, Lamb, Greene & MacRae) for the Appellant

Michael Crane QC & Bankim Thanki QC (instructed by Messrs Barlow, Lyde & Gilbert) for the Respondent

Lord Justice Mance
1

The appellant claimant, the Amiri Flight Authority, sues as successor to the Private Department ("PD") of the Ruler of the United Arab Emirates. The PD in 1987 bought a BAE-146 aircraft from the first defendant, the respondent to this appeal ("BAE"). The purchase was pursuant to a contract in writing dated 27 th September 1987, which (it is suggested) was in BAE's standard form and was (it is common ground) drafted entirely by BAE and signed by the PD in Abu Dhabi on the day after BAE had submitted it to PD there. The contract provided for BAE to supply the PD with a maintenance programme for the aircraft and with ongoing services in connection with that programme.

2

In 1999 very serious corrosion was found in the aircraft's fuel tanks, caused by microbiological (fungal) contamination. Corrosion by such contamination is a known risk, against which preventive steps can be taken using biocidal agents. Amiri's claim against BAE is that the corrosion occurred as a result of negligence by BAE in relation to the maintenance programme and associated obligations. More specifically, it is said that the original programme made no provision at all for biocide treatment, and that, although the programme was subsequently revised and amended at various dates between 1989 and 1998 to provide for such treatment, the provision made was inadequate. The claim is put both in contract, on the basis that there was breach of an implied obligation, and in tort.

3

Tomlinson J determined under CPR Part 24 that Amiri's claim stood no real prospect of success and dismissed it, on the basis that (a) it fell within an exclusion clause (at clause A.10 of Appendix C to the contract) and (b) the contract was an international supply contract within the meaning of s.26 of the Unfair Contract Terms Act 1977, so that the exclusion clause could not be subject to any requirement of fairness or reasonableness under that Act. Tomlinson J gave permission to appeal, and both points come before us now.

4

I start by setting out certain relevant parts of the contract:

"Object

2.1 The Seller agree to sell and the Buyer agrees to buy one (1) aircraft.

2.2 The aircraft shall:

2.2.1. be constructed to the standard defined in the Specification; …..

Aircraft Supply Programme

7.1 The Seller shall offer the Aircraft for acceptance at its works within the following period from the date the buyer complies with the provisions of Clause 5.1.1. Subject to the provisions of this Contract the final working day of such period shall be due Date of Offer for the Aircraft…

Aircraft Acceptance Procedure

12.1 Seller shall offer the Aircraft for acceptance at its works in the United Kingdom and notify the Buyer at least 21 days before the estimated Date of Offer of the Aircraft and shall give to the Buyer not less than 7 days notice of the confirmed Date of Offer of the Aircraft.

Transfer of Title and Collection

13.1 On the delivery date, the Buyer shall execute and deliver to the Seller the Certificate of Acceptance for the Aircraft and shall pay to the Seller the balance of the Invoice Price for the Aircraft. Thereupon the Seller shall deliver the Aircraft to the Buyer and title to and risk in the Aircraft shall pass by delivery from the Seller to the Buyer.

Customer Support Services

14. The Seller shall provide the training courses, operations support, technical representation, and technical manuals listed in the Appendix B, which is by this reference incorporated herein.

Warranty

17. The Seller's Aircraft Warranty is set out in Part A of the Product Support Assurances attached hereto as Appendix C which is by this reference incorporated in this Contract. The Seller and the Buyer agree to be bound by all parts of such Product Support Assurances as though they were set forth in full in this Contract.

Spares

18.8 The Buyer shall accept all Spares supplied by the Seller subject to the conditions of the Seller's Spares Warranty set out as Part C of the Product Support Assurances attached hereto as Appendix C.

Applicable Law

25.1 This Contract shall be governed and construed in all respects in accordance with the laws of England and the Buyer hereby submits to the jurisdiction of the English Courts."

5

Appendix A contains the Specification referred to in clause 2.2.1. Appendix B, incorporated by clause 14, is headed Customer Support Services. It commences:

"The Seller shall provide to the Buyer at no additional charge except where otherwise stated, the services herein defined to assist the Buyer in the introduction of the Aircraft into service and in its continued operation in service with the Buyer.

This Appendix comprises:

PART A

Ground Training

PART B

Flying Training

PART C

Operations Support

PART D

Technical Representation

PART E

Technical Data and other documents"

6

Under clause A.2 the training was to include refresher courses for both pilots and maintenance engineers during 18 months following delivery of the aircraft. Under clause A.8 the training programme for maintenance engineers was to include time on the BAE simulator for training in fault identification and engine running. Under clause D.2 BAE was to "furnish field support representation to advise the Buyer on the maintenance and technical operation of the Aircraft". Clauses D.3 and D.6 provide:

"Additional Technical Support

D.3 The Seller shall provide technical advisory assistance with respect to the Aircraft and all accessories, equipment and parts installed in the Aircraft at the time of delivery. Such technical assistance shall include:-

(a) Analysis of and comment on any service or operational difficulty experienced by the Buyer in order to determine the nature and cause of such difficulty and to suggest the solution thereof.

(b) Analysis and comment on the Buyer engineering releases relating to structural repairs not covered by the Seller's Structural Repair Manual.

Maintenance Planning

D.6 The Seller in conjunction with the Buyer will develop a Maintenance Programme to be finalised three months before Date of Offer of the Aircraft."

i) Appendix B contains no exclusion clause, but it contains the following indemnity clause:

"Indemnity

D.9 The Buyer hereby indemnifies and holds harmless the Seller and technical representatives, engineers, instructors and other personnel against any claims, demands or expenses whatsoever without limitation which may be made against the Seller or it's technical representatives, engineers, instructors or other personnel and which may arise either directly or indirectly out of the maintenance and technical operation of the Aircraft during the period or periods referred to in paragraphs D.2 and D.7 or out of any other services provided under this Part D."

7

Appendix C, incorporated by clause 17 of the contract, is headed Product Support Assurances, and commences:

"The Seller makes to the Buyer the assurances herein contained in respect of the Aircraft in service with the Buyer

This Appendix comprises

PART A

Aircraft Warranty

PART B

Supplier Warranty

PART C

Spares Warranty"

Appendix C Part A includes the following:

"2. The Seller warrants that subject to all the conditions of this warranty all parts of the Aircraft shall conform to any applicable specifications referred to in this contract at the Date of Offer and shall be free from fault due to:

2.1 Defective material or

2.2 Defective workmanship or

2.3 Defective design on the part of the Seller having regard to the state of the art at the date of such design.

3. The Buyer's remedy and the Seller's obligations under this warranty shall be limited to faults which:

3.1 are discovered by the Buyer within 24 months of the Date of Offer of the Aircraft in which the fault occurs, and

3.2 are notified by the Buyer to the Seller on a Warranty Report Form (of which a specimen is annexed as schedule C/A.1) within 30 days of each such discovery, and

3.3 are proved by the Buyer to the Seller's satisfaction to be within the terms of this Warranty.

4

This Warranty shall not extend to:

4.1 Normal wear and tear. The Buyer acknowledges that this results in a life expectancy of less than 24 months for some parts.

4.2 Any parts not manufactured by the Seller or to it's detailed design, but it shall extend to any workmanship on the part of the Seller in installing any such part in the Aircraft.

4.3 A part regarded as faulty for the sole reason only that some modification, alteration or replacement thereof is required by a change in regulation on the part of an airworthiness authority after acceptance of the Aircraft.

4.4 Parts or equipment damaged as a result of a fault in another part.

5. If any part is proved to be faulty and within the terms of this Warranty, the Seller at its option shall:

5.1 Repair or rectify the part without charge, or

5.2 Replace such part with a similar part free from fault, and any part so replaced shall become the property of the Seller, or

5.3 Reimburse the Buyer's costs in rectifying the fault in accordance with paragraph 8 below, or

5.4 In respect of faults in design, replace such part...

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1 firm's commentaries
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