Compania Naviera Micro S.A. v Shipley International Inc. (Parouth)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE ACKNER,LORD JUSTICE MAY |
| Judgment Date | 24 June 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0624-6 |
| Docket Number | 82/0295 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 June 1982 |
[1982] EWCA Civ J0624-6
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM
THE COMMERCIAL COURT
(MR JUSTICE BINGHAM)
Royal Courts of Justice
Lord Justice Waller
Lord Justice Ackner
Lord Justice May
82/0295
1981 C No 7656
MR P. GROSS (instructed by Messrs Elborne Mitchell & Co.) appeared on behalf of the Appellants.
MR A. LONGMORE (instructed by Messrs Allen & Overy) appeared on behalf of the Respondents.
)
I will ask Lord Justice Ackner to deliver the first Judgment.
On the 8th October last year Mr Justice Parker gave leave to serve the Writ in this action out of the jurisdiction. On the 19th March of this year Mr Justice Bingham set aside that leave, but gave leave to appeal to this Court against that decision, taking the view that there was a novelty about the problem which confronted him.
The Plaintiffs are a Panamanian company; they are the owners of a vessel called "parouth" which is registered under the Greek flag, is managed by a Belgian company; the Defendants are freight forwarders. They are incorporated in the State of Florida, United States of America. There is, as has been conceded in this case, a strong international flavour about the dispute. The intended shippers were German; the cargo was intended to be shipped from Germany; the intended destination of the cargo was Mexico, and the freight is to be paid in Belgium in American dollars.
The facts which give rise to this appeal can be quite shortly stated. The Defendants were approached by Celka Trading Corporation to try and find a vessel for transporting this cargo from Germany to Mexico—as I have indicated for a Mexican company called I.C.A. The Defendants asked Dutch brokers to assist in the search, and negotiations took place regarding the possibility of chartering the Plaintiffs' vessel, "Parouth". There is exhibited to our bundle, as it was before the learned Judge, a considerable number of telexes covering these negotiations.
The Plaintiffs' case is that a charterparty was concluded and the Defendants failed to produce a cargo. The contention of the Defendants is that there never was a concluded contract; alternatively, if there was a concluded contract, it was made by brokers who were not acting for them or, alternatively, had no authority and there is no basis, they contend, for any suggestion that they held those brokers, S.B.S. out as having authority.
The contract which is relied upon arises out of telexes, and in paragraph 3 of the Points of Claim it is alleged that the terms of the charterparty are evidenced by a telex from S.B.S. to the Defendants dated 1st September 1981 and apparently sent on the 2nd September 1981. In that telex it is provided that there should be arbitration and that arbitration should take place in London. I am not quoting what was said but that is the purport of the telex.
It was conceded before the learned Judge that there was a good arguable case that there was a binding contract between the parties, and if there was such a contract (and I stress the word "if"), then there was a good arguable case that that contract had as its proper law English law by reason, of course, of the arbitration provision to which I have just drawn attention.
Mr Longmore's submission before Mr Justice Bingham is concisely set out in the learned Judge's clear note of judgment and it is this: That Mr Longmore submitted that the very issue between the parties was whether there was a contract and therefore it would be quite wrong to allow the arbitration clause to weigh in the Plaintiffs' favour. It begs the question whether the Plaintiffs are right. He submitted that the arbitration clause should be treated as a neutral factor and that in those circumstances there was no real English link. Accordingly, in the light of the other features of the contract to which I have referred, the Defendants should be sued where they can be served, namely in Florida.
That submission, it is clear, was accepted by the learned Judge because he said this: "Although the Defendants accept there is an arguable case, they do not accept that there was any contract. If one dismisses the weight of 'arbitration London', one is thrown back on the prima facie rule". I interpose there to say that that rule, in brief, can be summarised as saying that one should consider very carefully whether, in the exercise of one's discretion, one should permit service out of the jurisdiction even though the requirements of Order 11 are complied with.
The learned Judge continues: "None of the links is very potent and there is no English link".
On the application for leave to appeal he commented that there was an oddity in the case, namely that the link with the jurisdiction was actually the centre of the dispute and he, the learned Judge, had not come across that type of case before and there did not appear to be any reported case. He accordingly gave leave to appeal.
It is clear that the learned Judge's attention was not drawn to the principle enunciated in Dicey & Morris's "The Conflict of Laws" and I refer to the current 10th Edition Rule 146 at page 775 which is in these terms: "The formation of a contract is governed by the law which would be the proper law on the contract if the contract was validly concluded".
Dicey then goes on to discuss that principle in some detail referring to one English authority in which that principle is to some extent illustrated and dealing with the academic and philosophical criticisms that can be made. Mr Longmore says of course that that principle is a well understood and accepted one and although it was not referred to by either Counsel—Mr Gross was not in the Court below—it must have been in everybody's mind.
With great respect, I am wholly unconvinced by that proposition. The parts of the Judgment to which I have referred indicate quite clearly to my mind that the application of the putative proper law seems to have escaped everybody's attention in the Courts below.
It is now accepted in this Court, and clearly was not so accepted in the Court below by Mr Longmore, that if this case is heard then the probabilities are that the putative proper law, namely English law, will be applied to resolve the issue: Was there a binding contract between the parties? The learned Judge was, therefore, in my judgment in error in saying that he must treat the arbitration clause as neutral; the arbitration clause had the important result of making the proper law of this dispute probably (and I put it no higher than is necessary) English law.
What made this case a case to which Order 11 Rule 1(1)(f) applied was that it was arguably a contract which by its terms or implication was governed by English law. Therefore the learned Judge, by reason of not having his attention directed to this principle, wrongly reached the conclusion that...
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