British Sugar Plc v Fratelli Babbinin di Lionello Babbini & CSAS and Others

JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

Introduction

This judgment is concerned with an application on behalf of the Part 20 defendant, BF Engineering SpA ("BF") for a declaration that this court has no jurisdiction to entertain the claim made in the Part 20 claim form issued on 26 February 2004 on behalf of Fratelli Babbini di Lionello Babbini & Co SAS ("Babbini") and Signor Lionello Morando Babbini. Consequent upon the declaration sought orders were also sought that the Part 20 claim form and the service thereof upon BF be set aside.

It is necessary to set out some of the background to the application. By an agreement made at the beginning of 1997 British Sugar plc ("British Sugar") agreed to purchase from Babbini a pulp press ("the press") intended for use in the processing of sugar beet at British Sugar's factory at Newark in Nottinghamshire. The model designation of the press was PB48S. It was envisaged that Babbini would manufacture the press for delivery to British Sugar. The press needed to incorporate a gearbox ("the gearbox"). By an agreement in writing ("the gearbox contract") dated 31 January 1997 and made between Babbini and BF BF agreed to supply the gearbox to Babbini. The press incorporating the gearbox was duly delivered to British Sugar and put into service. On or about 19 December 2000 the press failed whilst in use. It seems that the immediate cause of the failure was a failure of the gearbox.

By a claim form issued originally on 29 January 2003 proceedings were commenced on behalf of British Sugar against Babbini, Signor Babbini and two other parties. Babbini was the first defendant and Signor Babbini in his personal capacity was the fourth defendant. The two other parties are not material to the application with which this judgment is concerned. One of the claims made in the action was for damages in respect of the failure of the press on or about 19 December 2000. The action was defended, but was ultimately settled by an order made by consent on 28 October 2004 under which Babbini agreed to pay a total of £930,000 to British Sugar. The consent order recorded that the agreed sum, not all of which was referable to the claim in respect of the failure of the press on or about 19 December 2000, had been paid before the date upon which the order was sealed or was to be paid out of monies in court. Although Signor Babbini was a defendant in the action in a personal capacity, under the terms of the consent order the payment agreed to be made was made on behalf of each of the first, second and fourth defendants and there was no continuing actual or contingent liability of Signor Babbini in his personal capacity to British Sugar. As I understood it, the sums paid in settlement of the claims of British Sugar were in fact provided by Babbini.

The procedural history of the action commenced on behalf of British Sugar was somewhat tortuous. It is not necessary to go into detail, but the requirement of the defendants in the main action to serve a defence was deferred because of an attempt, ultimately unsuccessful, on the part of the defendants to obtain summary judgment against British Sugar. The Part 20 claim form was issued prior to the service of the defence of the first, second and fourth defendants in the main action and thus did not require the permission of the court. However, the application with which this judgment is concerned was made on 24 May 2004.

The application dated 24 May 2004 was supported by a witness statement dated 21 May 2004 made by Mr Nicholas Bingham, a partner in the firm of solicitors acting on behalf of BF. It was also supported by a witness statement of Professor Tito Ballarino, Professor of International Law (Public and Private) at the University of Padua. Professor Ballarino is also a practising avvocato. The witness statement of Professor Ballarino was directed to putting before the court evidence of the law of Italy on a number of issues. As matters unfolded, the evidence of Professor Ballarino was answered on behalf of Babbini and Signor Babbini by a witness statement of Professor Domenico Borghesi, Professor of Civil Procedural Law at the University of Modena and also a practising avvocato. The evidence of Professor Borghesi drew forth a response from Professor Ballarino in a further witness statement. Professor Borghesi in his turn made a further witness statement. Once it was apparent that Professor Ballarino and Professor Borghesi took different views on some questions it was necessary to consider how those differences could be resolved. I therefore directed that each of them should attend to give oral evidence and be cross-examined as to their respective opinions on the matters as to which they disagreed. In the event each did attend the hearing of the application. However, Mr Raymond Cox QC, who appeared together with Mr Edward Levey on behalf of Babbini and Signor Babbini, elected not to call Professor Borghesi to give evidence, and thus not to rely upon the opinions contained in his witness statements. Mr Simon Adamyk, who appeared on behalf of BF, did call Professor Ballarino, whose witness statements thus became part of the evidence before me. Mr Cox decided to cross-examine Professor Ballarino briefly on one point, to which I shall refer further later in this judgment. Insofar as any question of Italian law is relevant to any issue which I have to decide in respect of the present application, I take the material law to be as stated by Professor Ballarino. I do not do that with any reluctance. Although my opportunity to see and to hear Professor Ballarino give evidence was brief, I was impressed by him. Not only that, but insofar as I was able to form a preliminary view from reading his witness statements, I found his analysis of the relevant law of Italy convincing.

The material terms of the gearbox contract

What I have described as the gearbox contract was in fact, from an English law perspective, a document which looked like an order placed by Babbini with BF. It was a document in a standard printed form with blanks completed as thought appropriate for the purposes of the particular transaction. At the bottom of the first page of the document commenced the setting out of "Condizioni Generali d'Acquisto", which expression was translated as meaning "General Purchase Conditions". Those were standard printed conditions. That which was relevant to the application with which this judgment is concerned was clause 8, to which I shall refer in this judgment as "the forum clause". That clause was in these terms:

"COMPETENZA

Per ogni controversia l'autorita giudiziaria esclusivamente competente e quella di FORLI."

That clause was translated on behalf of BF as meaning:

"JURISDICTION

For any dispute, the court of exclusive jurisdiction is that of Forli."

I do not think that that translation, as a translation, was disputed on behalf of Babbini and Signor Babbini. It was repeated, albeit without the word "exclusive", by Mr Cox in his skeleton argument at paragraph 15. However, there was a difference between Mr Cox and Mr Adamyk as to the effect of the forum clause, whatever the best way of rendering it in English. Mr Adamyk submitted that jurisdiction meant jurisdiction in the sense in which that expression was used in the English language text of Council Regulation (EC) No 44/2001 ("the regulation"). Mr Cox submitted that the forum clause was what he described as a "competence clause".

It was common ground that the proper law of the gearbox contract was the law of Italy.

What Mr Cox meant by describing the forum clause as a "competence clause" can best be explained by reference to some passages in the second witness statement of Professor Ballarino. The expression "competenza" is used in a technical sense in Italian law. As Professor Ballarino said:

"5. Under Italian procedural law, especially the Italian Civil Procedure Code, the word "competenza" is used to define the Italian court in which specific proceedings can be commenced. According to the prevalent definition in the academic opinion of "competenza", this is the jurisdiction given to each office which forms part of judicial power. These offices are civil judges, criminal judges and administrative judges. Each of the offices is empowered within the limits set out by law. When a judge sei[s]ed is lacking the required "competenza", it is possible to apply for his judgment to be set aside. In some cases it is said that the lack of "competenza" amounts to a lack of jurisdiction. For example, administrative judges cannot pronounce a criminal sentence. This would be perceived as a lack of "jurisdiction-competence" and this would be one example of the two words being used jointly.

6. The various factors which are relevant in deciding whether a particular tribunal has competence include the following. Civil competence is apportioned according to different criteria, creating a "vertical" and a "horizontal" system. The vertical system is based on the...