Bols Distilleries BV and another v Superior Yacht Services Ltd

JurisdictionUK Non-devolved
JudgeLord Rodger of Earlsferry
Judgment Date11 October 2006
Neutral Citation[2006] UKPC 45
CourtPrivy Council
Docket NumberAppeal No 82 of 2005
Date11 October 2006
(1) Bols Distilleries trading as Bols Royal Distilleries
(2) Unicom Bols Group Spz.o.o.
Appellants
and
Superior Yacht Services Limited
Respondent

[2006] UKPC 45

Present at the hearing:-

Lord Hoffmann

Lord Hope of Craighead

Lord Scott of Foscote

Lord Rodger of Earlsferry

Lord Walker of Gestingthorpe

Appeal No 82 of 2005

Privy Council

[Delivered by Lord Rodger of Earlsferry]

1

This appeal concerns the jurisdiction of the Supreme Court of Gibraltar to hear a case concerning an alleged contract relating to the construction and operation of a racing yacht. The parties are said to have been a Gibraltar company, on the one hand, and a Dutch and a Polish company on the other. The Gibraltar company is Superior Yacht Services Ltd ("SYS") which is the respondent in the appeal. The Dutch company is Bols Distilleries BV (trading as Bols Royal Distilleries) ("BRD") and the Polish company is Unicom Bols Group Sp z.o.o ("UBG"). The Dutch and Polish companies, which their Lordships refer to collectively as "the Bols companies", are the appellants. SYS claims inter alia a declaration that it is the owner of the yacht and damages for breach of contract by reason of wrongful and early termination of the contract.

2

Article 2(1) of Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters provides:

"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…."

3

The Bols companies are domiciled in the Netherlands and Poland respectively. They assert, accordingly, that by reason of article 2(1), they are not subject to the jurisdiction of the Gibraltar courts. SYS relies, however, on clause 15 of the alleged agreement between the parties which is in these terms: "This Agreement shall be governed by the laws of Gibraltar and the parties hereby submit to the jurisdiction of the courts of Gibraltar." On that basis SYS contends that article 23(1) applies and the Gibraltar courts have jurisdiction. The critical question is whether the court can be satisfied that there is an agreement, in writing or evidenced in writing, conferring jurisdiction on the courts of Gibraltar. On the basis of clause 15, both Schofield CJ, sitting in the Supreme Court, and the Court of Appeal (Staughton P, Stuart-Smith, and Aldous JJA) held that there is such an agreement, in writing or evidenced in writing, and that article 23 therefore applies so as to confer jurisdiction on the Supreme Court of Gibraltar. The Bols companies appeal on the ground that, in reaching their decision, the Court of Appeal applied the wrong test.

4

Before turning to that issue, their Lordships must explain some of the background to the dispute. At all material times Bols, the well-known brand of vodka, was manufactured and distributed by BRD and by UBG which was the Polish division of BRD. For some years the two companies promoted their brand by operating ocean-going yachts which took part in high-profile races and other events. In 1998 UBG employed Gordon James Wallace Kay, a professional yachtsman, to manage and operate their first yacht, "Lodka Bols". With the encouragement of the Bols companies, however, on 5 January 1999 Mr Kay arranged for SYS to be incorporated in Gibraltar. It was thought to be more expedient for the business of managing and operating the yacht to be arranged through a company, rather than for UBG and BRD to employ Mr Kay and his crew directly. Following incorporation, SYS managed and operated the yacht Lodka Bols. Under the management of SYS, the yacht was placed first in its class in the 2001-2002 Sydney-Hobart race. A few months later, in July 2002, that yacht was sold.

5

Meantime, in 2000 the president of UBG, Stefan Laux, approached SYS about the future of the companies' advertising campaign. SYS responded by offering them first refusal of a project which would involve the Bols brand enjoying what was anticipated to be substantial publicity and international exposure through a three-year campaign based on a new state-of-the-art yacht, Lodka II. The design of the new yacht was to be initiated by SYS. One distinctive feature of the proposal was that, while UBG and BRD would put up the sponsorship funds, SYS would contract for the construction of the yacht and would own it once it had been built. They would operate and race the yacht in accordance with a programme to be agreed with the sponsors.

6

SYS submitted a formal written proposal to UBG in November 2000. This included budget projections for the design and construction costs during the first year and operating costs for the subsequent three years. While the initial response was positive, consideration of the project had to be shelved due to the take-over of the Bols Group by Rémy Cointreau.

7

In September 2001, however, BRD asked SYS to re-present the project to Mr Laux and to Mr Peter O'Connell, a director of BRD who was in charge of marketing the Bols brand internationally. Further discussions took place and on 19 September 2001 Mr Kay sent Mr Laux and Mr O'Connell a provisional contract for the proposed project. The first recital to the agreement recorded that SYS intended to procure the design and construction of a high performance 80 foot racing yacht and that they relied on "the Company" to enter into the agreement for the purpose of financing the cost of the design and construction of the yacht. At this stage "the Company" had not been specified. The next recital referred to the companies which were envisaged as carrying out the design and building of the yacht. The third recital recorded that, in return for the Company's financial support, after the vessel had been constructed SYS would manage it in consultation with, and at the direction of, the Company. SYS would enter it in various specified yachting events and regattas with a view to providing a platform for the promotion of the Company, its logo, brand and certain agreed products. The aim would be to raise the public profile and awareness of the Company, the brand and the agreed products. This agreement still had the distinctive effect that, although the sponsoring company would put up the funds, SYS would become the owner of the new yacht: in return SYS would have to operate it for a period of three years in accordance with the provisions of the agreement. This agreement contained Clause 15 on jurisdiction which their Lordships have already quoted in para 3 above.

8

Over the following weeks discussions on a variety of points continued against a background of financial and political pressures on UBG, partly due to the policy of the Polish government on the advertising of alcohol. These pressures were felt acutely in relation to the Lodka Bols yacht that was due to take part in the Sydney to Hobart race in December of that year. One major decision which was taken on the new yacht was to change the proposed designers and builders. As these discussions went on, Mr Kay was becoming increasingly anxious that, if the final decision to proceed with the project was not taken fairly quickly, the new yacht would not be finished in time to take part in the Sydney to Hobart race starting in December 2002. On 29 October 2001 he sent an email to Mr Laux attaching "a slightly amended copy of the contract". It contained the same jurisdiction clause but still did not specify which company was to contract with SYS. It included details of the new designer and builders and also revamped the schedule of the payments to be made to SYS, with a view to reducing the payments in the first year. The contract still envisaged that SYS would own the yacht which the two companies had paid for.

9

This apparent imbalance in the contract, between financing and ownership, was causing concern to Mr Laux. On 6 November 2001 he sent an email to Mr Kay, which ended: "And, my friend, in the end it is a joint venture with UBG having all the risk and you at worst end up with a nice boat that can be used utilised or sold!! I know you are after the real glory and to achieve all the dreamed of results, but ask yourself: You feel this is balanced?" Mr Kay replied the following day that he fully understood Mr Laux's point, but asked him for a counter-proposal which they could discuss at the meeting which they were due to hold in Warsaw.

10

That meeting was eventually held in Warsaw on 19 November and was attended by Mr O'Connell, Mr Laux and Mr Kay. It appears that the question of the ownership of the yacht was discussed but not settled. According to Mr Kay, his position at that time and subsequently was that the question of ownership was not critical but, if SYS was not to own the yacht, it would need to be compensated in terms of additional bonuses under the contract. At the meeting Mr O'Connell indicated to Mr Kay that they would let SYS have a decision on the project within the next two weeks, but by 13 December Mr Kay had still not heard and so he wrote to Mr O'Connell, emphasising the need for an early response. On 15 December, having been unable to contact Mr Kay on his mobile, Mr O'Connell emailed him to say that "Both Stefan and I have discussed Lodka II today. Decision is go." He asked for details in terms of cost "bookings" over the next 24 months. Mr Kay replied that he was...

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