Commercial Marine and Piling Ltd v Pierse Contracting Ltd

The Hon. Mr Justice Ramsey :

Introduction

This is an application by which the Defendant Irish Company, Pierse Contracting Limited (“Pierse Ireland”), challenges the jurisdiction of these courts in relation to a claim brought by the Claimant, Commercial Marine & Piling Limited (“CMP”), in relation to a guarantee.

Background

In February 2007, Pierse Contracting Limited (“Pierse UK”), an English company with the same name as the Defendant Irish company, was retained as main contractor by Belfast Harbour Commissioners to construct a new ferry terminal in the Port of Belfast. The project included piling work.

Pierse UK instructed CMP to submit a quotation for the piling work which CMP subsequently provided. Following discussions Pierse commenced piling work in March 2007.

By letter dated 20 March 2007 Pierse Ireland provided CMP with a “Parent Company Guarantee” (“the Guarantee”) signed by Mr Fearghal O'Nolan, the finance director of Pierse Ireland. The Guarantee was in the following terms:

“In consideration of Commercial Marine & Piling Limited undertaking to trade with Pierse Contracting Limited (UK), we, Pierse Contracting Limited hereby guarantee to pay such money as may be due to Commercial Marine & Piling Limited from Pierse Contracting Limited (UK) if there should by [sic] any default by Pierse Contracting Limited (UK) in payment of such money to Commercial Marine & Piling Limited.”

A dispute arose between Pierse UK and CMP over the balance of sums due to CMP for the piling work. On 30 October 2008 CMP commenced proceedings (“the first action”) in the Technology and Construction Court against Pierse UK claiming a sum of £759,554 on a quantum meruit on the basis that there was no concluded sub-contract; alternatively £937,270.03 if there was a sub-contract.

Also on 30 October 2008 Campbell Hooper, CMP's solicitors at the time, sent a letter to Pierse Ireland enclosing a copy of the claim in the first action. They referred to the Guarantee and put Pierse Ireland on notice that if Pierse UK failed to satisfy any sums due to CMP, CMP would look to Pierse Ireland to fulfil their obligations to CMP.

In the first action directions were given on 19 December 2008 leading to a trial date in November 2009. Pleadings were exchanged but on 13 May 2009 CMP was informed that the directors of Pierse UK had decided to take steps to place the company into creditors' voluntary liquidation. In due course, Pierse UK failed to comply with an Unless Order in the first action and by Order dated 17 July 2009 Pierse UK's defence and counterclaim was struck out and judgment was entered against them for £862,005.43.

In the meantime on 30 April 2009 Campbell Hooper wrote to Pierse Ireland noting that Pierse UK's Solicitors had come off the record. They said that, given the current situation, CMP intended to call on the Guarantee and that they were preparing to issue legal proceedings against Pierse Ireland: “for the purpose of 1) determining your liability for the unpaid sum of £759,554, plus statutory interest; and 2) an order for a declaration by the High Court that under the above guarantee, you will be required to pay such sum.”

They asked Pierse Ireland to inform them whether they would be instructing solicitors “in this jurisdiction”, that is England and Wales, to accept service of the proposed proceedings.

There was no response and on 11 May 2009 Campbell Hooper wrote again to Pierse Ireland saying that they had instructions to issue proceedings and asked whether Pierse Ireland had instructed lawyers to accept service.

On 15 May 2009 A&L Goodbody, Irish Solicitors, wrote to Campbell Hooper and asked them to provide details regarding the alleged default of payment by Pierse UK. They confirmed they had authority to accept Irish High Court proceedings under the Guarantee.

On 21 May 2009 Campbell Hooper issued the Claim Form against Pierse Ireland in these proceedings in the Technology and Construction Court (“the second action”) in which they sought sums due under the Guarantee. The Claim Form was served on Pierse Ireland and by application dated 26 June 2009 Pierse Ireland sought a declaration that the Courts of England and Wales do not have jurisdiction to hear the claim in the second action.

The Application

On this application Alexander Robson, on behalf of Pierse Ireland, submitted that this court does not have jurisdiction and that:

(1) The presumption under Article 1 of Council Regulation 44/2001 (“the Jurisdiction Regulation”) is that persons domiciled in a Member State shall, whatever their nationality, be sued in the Courts of that Member State. In this case the presumption was that Pierse Ireland would be sued in Ireland.

(2) Article 5(1) of the Jurisdiction Regulation, relied upon by CMP, provided that in matters relating to a contract, a person may be sued in the place of performance of the obligation in question, this not being a contract for the sale of goods or provision of services.

(3) The “obligation in question” is the obligation on Pierse Ireland to pay CMP under the Guarantee and the place of performance of that obligation is to be decided in accordance with the law governing that obligation according to the conflict of law rules of the court seized, that is this court.

(4) The proper law had to be determined by the Contracts (Applicable Law) Act 1990, enacting the Rome Convention which provides at Article 4(1) that the contract shall be governed by the law of the country with which it is most closely connected.

(5) Under Article 4(2) there is a presumption that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract of the contract has its central administration. For Pierse Ireland that is Ireland as the characteristic performance is that of the guarantor under a guarantee and Pierse Ireland's central administration is in Dublin. The proper law is therefore Irish law.

(6) Under Irish Law there is authority for the place of performance being the creditor's location in relation to a contract for the sale of goods: Unidare plc and Unidare Cables Ltd v. James Scott [1991] IR 88. In this case it is submitted that the place of performance of the obligation under the Guarantee is Ireland.

(7) Accordingly, under the relevant applicable Irish law the place of performance is Ireland so that under Arts 1 and 5(1) of the Jurisdiction regulation, the place where Pierse Ireland may be sued is Ireland.

In response Mr Simon Lofthouse QC, on behalf of CMP, submitted that

(1) Under Article 5(1)(a) of the Jurisdiction Regulation Pierse Ireland may be sued in England and Wales because that is the “place of performance of the obligation in question”.

(2) The Guarantee included two obligations: an obligation on CMP to trade with Pierse UK and an obligation on Pierse Ireland to pay monies that may be due in default of payment by Pierse UK.

(3) The former obligation has no connection with Ireland and was to be performed in England.

(4) The place of performance of the second obligation was also in England. Under English law he referred to The Eider [1893] P119 at 136; Agnew v Länsförsäkringsbolagens AB [1990] SLT 584 and Dicey & Morris on the Conflicts of Laws (14th edition) at 11–203.

(5) That under Irish law the position was the same as set out in the Unidare case and there was no need therefore to decide whether English or Irish law applied.

(6) To the extent that it was necessary to decide whether English or Irish law applied, English Law applied because under Article 4(5) the presumption relied on by Mr Robson under Article 4(2) was to be disregarded “if it appears from the circumstances as a whole that the contract is more closely connected with another country” and in this case the contract was more closely connected with England and he relied on Samcrete Egypt Engineers and Contractors SAE v. Land Rover Exports Ltd [2001] EWCA Civ 2019.

In reply, Mr Robson referred to the decision by Peter Leaver QC in Britten Norman Ltd v. State Ownership Fund of Romania (6 July 2000) in which he had to decide the place of performance of a guarantee and held that the liability was to make payment at the place where the demand was made and where the liability crystallised, and that the demand was made to the bank in England.

In relation to the application of Article 4(5) of Schedule 1 to the Contracts (Applicable Law) Act 1990, I was also referred to the decision of the Court of Appeal in Ennstone Building Products Ltd v Stanger Ltd [2002] EWCA Civ 916.

I now turn to consider those arguments.

The Jurisdiction Regulation

Article 2 of the Jurisdiction Regulation provides “subject to this regulation, that persons domiciled in a Member State shall, whatever their nationality, be sued in the Courts of that Member State.” Applying the provisions of Article 60 to the domicile of Pierse Ireland this would mean that Pierse Ireland was to be sued in Ireland.

Article 5(1)(a) of that regulation also provides that “A person domiciled in a Member state may in another Member state, be sued … in matters relating to a contract, in the Courts for the place of...