Amiri Flight Authority v BAE Systems Plc
| Jurisdiction | England & Wales |
| Judge | Tomlinson J,Potter,Mance,Rix L JJ |
| Judgment Date | 17 October 2003 |
| Neutral Citation | [2002] EWHC 2481 (QB) |
| Court | Queen's Bench Division |
| Date | 17 October 2003 |
Queen's Bench Division (Commercial Court)
Court of Appeal (Civil Division).
Tomlinson J; Potter, Mance and Rix L JJ.
Nicholas Underhill QC and Akhil Shah (instructed by Leboeuf Lamb Greene and MacRae) for Amiri.
Michael Crane QC and Bankim Thanki (instructed by Barlow Lyde and Gilbert) for BAE.
Philip Shepherd and Stephen Thompson (instructed by Beaumont and Son) for Crossair.
The following cases were referred to in the judgments:
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co LtdWLR [1983] 1 WLR 964.
Attorney General v Prince Ernest Augustus of HanoverELR [1957] AC 436.
Barrett v Enfield London Borough CouncilELR [2001] 2 AC 550.
Can-Arc Helicopters Ltd v Textron Inc (1991) 86 DLR (4th) 404.
Candlewood Navigation Corp v Mitsui OSK Lines (The Mineral Transporter)ELR [1986] AC 1.
Caparo Industries plc v DickmanELR [1990] 2 AC 605.
Hamble Fisheries Ltd v L Gardner and Sons Ltd (The Rebecca Elaine)UNK [1999] 2 Ll Rep 1.
Hedley Byrne & Co Ltd v Heller & Partners LtdELR [1964] AC 465.
HIH Casualty and General Insurance Ltd v New Hampshire Insurance Co [2001] CLC 1480.
Interfoto Picture Library Ltd v Stiletto Visual Programmes LtdELR [1989] QB 433.
Leigh and Sillavan Ltd v Aliakmon Shipping Co LtdELR [1986] AC 785.
Minories Finance v Arthur YoungUNK [1989] 2 All ER 105.
Murphy v Brentwood District CouncilELR [1991] 1 AC 398.
Nelson (James) & Sons Ltd v Nelson Line (Liverpool) LtdELR [1908] AC 108.
R v A (No. 2)UNK [2001] UKHL 25; [2002] AC 45.
R v SchildkampELR [1971] AC 1.
R v Secretary of State for the Environment, ex parte Spath Holme LtdELR [2001] 2 AC 349.
Simaan General Contracting Co v Pilkington Glass Ltd (No. 2)ELR [1988] QB 758.
Thornton v Shoe Lane Parking LtdELR [1971] 2 QB 163.
W & Ors v Essex County CouncilELR [2001] 2 AC 592.
Contract — Exclusion clause — International supply contract — Purchase of aircraft — Acts of offer and acceptance done in Abu Dhabi — Aircraft delivered in UK — Alleged breach of obligations to supply maintenance programme and ongoing services — Whether claim fell within and barred by exclusion clause — Whether exclusion had to be fair and reasonable — Whether contract was international supply contract — Whether contract provided for goods to be delivered to different state than that in which acts of offer and acceptance done — Whether goods had to be delivered from one state to another — Unfair Contract Terms Act 1977, s. 26.
This was an appeal by the claimant, the Amiri Flight Authority, suing as successor to the Private Department (“PD”) of the Ruler of the United Arab Emirates, from the judgment of Tomlinson J dismissing its claim under CPR, Pt. 24 on the ground that it stood no real prospect of success.
In 1987 the PD bought a BAE-146 aircraft from the first defendant (“BAE”). In accordance with the terms of the contract delivery of the aircraft took place in England. The purchase agreement, signed by PD in Abu Dhabi, provided for BAE to supply the PD with a maintenance programme for the aircraft and with ongoing services in connection with that programme. In 1999 very serious corrosion was found in the aircraft's fuel tanks, caused by microbiological (fungal) contamination. Corrosion by such contamination was a known risk, against which preventive steps can be taken using biocidal agents. Amiri's claim against BAE was that the corrosion occurred as a result of negligence by BAE in relation to the maintenance programme and associated obligations. More specifically, it was 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 was put both in contract, on the basis that there was breach of an implied obligation, and in tort. Amiri alleged negligence in respect of the maintenance programme developed under cl. D.6 of appendix B and in respect of the technical advisory assistance provided thereafter under cl. D.3.
Tomlinson J determined under CPR, Pt. 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 (cl. 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. Amiri appealed arguing that cl. A.10 in appendix C had no relevance or application to a claim for alleged negligence in the course of performance of obligations allegedly arising under pt. D of appendix B.
Held, allowing the appeal in part and remitting the case to the judge:
1. Clause A.10 was clear and unambiguous in its exclusion of liability for the defects which the aircraft was alleged to suffer in consequence of breaches by BAE of its duties under clauses D.3 and/or D.6 of appendix B. If there were any real doubt about its scope, that doubt should be resolved against BAE, since the clause was an exemption clause and put forward and relied on by BAE. But, on reading the contract with appropriate care, there was no such real doubt. The clause expressly covered liability in tort, and the tort claim which Amiri pleaded derived solely from activities said to have been undertaken in the course of fulfilling contractual obligations under the contract. In the circumstances, there was no basis for Amiri's suggestion that its tort claim could survive, if its contact claim was within and barred by cl. A.10. The judge was right that Amiri's claim is barred by cl. A.10 of appendix C to the contract, subject only to the possible application of the Unfair Contract Terms Act 1977.
2. The issue under the Unfair Contract Terms Act 1977 was whether the contract “provides for the goods to be delivered to the [United Kingdom]”, within the meaning of s. 26(4)(c). It was common ground that the acts constituting the offer and acceptance were done in one and the same state, Abu Dhabi in the United Arab Emirates, however, if (as the judge concluded) the words “delivered to” covered not merely goods moved from one state to another, but goods simply delivered “in” one state (here the United Kingdom), then s. 26(4)(c) would apply. On its face, the language of s. 26(4)(c) seemed clear. The words “delivered to the territory of a state” indicated movement from elsewhere into that state, although not accompanied by the further express words “from the territory of another state” which underlined that in the context of s. 26(4)(a). Scrutiny of the background history of the 1977 Act did not indicate that any different intention should be imputed to Parliament from that which seemed to follow from the very simple and ordinary words used. The text being the primary source of interpretation, there were here insufficient contextual or purposive reasons to give it any but its plain meaning. The judge was wrong to hold that the contract was an international supply contract, outside the scope of the controls in the Unfair Contract Terms Act 1977 and the case should be remitted to him to consider the issues arising under the 1977 Act.
(20 November 2002)
Tomlinson J:
1. The claimant Amiri Flight Authority (“Amiri”) is an entity established under the law of the United Arab Emirates. It is akin, although far from identical, to a small private airline, providing aircraft for flights undertaken by local VIPs, sometimes to remote parts. It is said to be (I do not need to decide whether it is) the successor to the rights and obligations of the Private Department (“PD”) of the Ruler of Abu Dhabi. This case is concerned with a contract dated 7 September 1987 pursuant to which the PD purchased from the First Defendant BAE Systems PLC (“BAE”) a BAE 146–100 aircraft together with an associated technical back-up package for the price of US$25,450,000. The aircraft was delivered to the PD in December 1998. The PD's fleet already contained one each of Boeing 707, 737 and 747, two Airbus 300s and three Gulfstream jets and I understand that the fleet has subsequently increased. However for present purposes I must assume that, as is asserted by Amiri, and as I have no reason to doubt, as was known to BAE through its negotiations with it, the PD had only limited technical experience and resources and was unable to undertake all of its own maintenance or any of its maintenance planning. In addition, PD had no experience of operating the BAE 146 aircraft prior to this purchase. One of the contractual obligations undertaken by BAE was the development, in conjunction with the PD, of a Maintenance Programme which was to be finalised three months before the date on which the aircraft was offered by the seller for acceptance by the buyer.
2. It is common ground that all relevant acts of contract formation in the shape of offer and acceptance took place in Abu Dhabi, where the contract was also signed. In accordance with the terms of the contract delivery of the aircraft took place at Hatfield, although it was not then registered. The aircraft was then flown out of the UK to the UAE where it was registered, a process for which a relevant Certificate of Airworthiness for Export was required and for the issue of which provision was made in the contract.
3. From 1991 to 1995 Amiri contracted with various aircraft maintenance providers for the supply of certain maintenance services required by the maintenance programme, provided by BAE. From 1995 the Second Defendant, Crossair, was the company which undertook these services together with the provision of a customised maintenance schedule, which they then updated periodically. The provision of maintenance services by Crossair was formalised by a written agreement with Amiri...
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