GDE LLC (formerly Anglia Autoflow North America LLC) v Anglia Autoflow Ltd
| Jurisdiction | England & Wales |
| Judge | Miss Julia Dias |
| Judgment Date | 31 January 2020 |
| Neutral Citation | [2020] EWHC 105 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: LM-2017-000198 |
| Date | 31 January 2020 |
[2020] EWHC 105 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Miss Julia Dias QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: LM-2017-000198
Mr Craig Ulyatt (instructed by Ashtons Legal) for the Claimants
Professor Jonathan Harris QC (Hon) and Mr Adrian de Froment (instructed by Birketts LLP) for the Defendant
Hearing dates: 19, 20, 27 November 2019, 16, 17 December 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Miss Julia Dias QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Miss Julia Dias QC (sitting as a Deputy Judge of the High Court):
Introduction
The First Claimant (“GDE”) is a US company incorporated on 21 April 2009 in Georgia, originally under the name of Anglia Autoflow North America LLC. The Second Claimant (“Mr Goffe”) is and was the only member and shareholder of the company. The Defendant (“AAL”) is an English company which manufactures machinery and associated products for the poultry processing industry.
The underlying dispute between the parties arises out of an Agency Agreement concluded on about 9 April 2009 whereby the Defendant appointed a company to be incorporated by Mr Goffe (in the event, GDE) as its commercial agent in various territories including Canada, the United States, Mexico and the Caribbean. It is unnecessary to go into the details of the dispute. It is sufficient for present purposes to note only (1) that the Claimants' claim is for unpaid commission and damages for alleged repudiatory breach of the Agency Agreement by AAL; and (2) that AAL admits non-payment of the invoices but denies that the non-payment was repudiatory. AAL asserts that in so far as any amounts were due and owing to Mr Goffe/GDE, it is entitled to set off its own claim for damages for breach of the agreement.
The parties are also in dispute as to the governing law of the Agency Agreement by which these claims and cross-claims should be determined. AAL alleges that the governing law is that of Ontario while the Claimants allege that the Agency Agreement is governed by English law. The point is of critical importance because the Claimants concede that, if AAL is correct, their claim is time-barred under Ontario law.
In the light of that concession, HHJ Rawlings ordered at a CMC held on 24 May 2019 that the following two questions be tried as preliminary issues:
i) What is the law governing the Agency Agreement?
ii) If necessary to resolve the first issue, at the time that the Agency Agreement was entered into, where was the Second Claimant's habitual residence/principal place of business and/or the First Claimant's central administration/principal place of business?
This is the trial of those issues.
The Agency Agreement
The material terms of the Agency Agreement were as follows:
“1. Anglia Autoflow Ltd hereby grants the right for the name Anglia Autoflow North America LLC to be used by the agent, an independent company to be set up and owned by Peter Goffe. Anglia Autoflow Ltd understands that Peter Goffe will cease his current employment and will commence working full time for Anglia Autoflow North America LLC at which point the agency will start.
2. Anglia Autoflow North America LLC to be the exclusive agent for Anglia Autoflow Ltd for the territories of Canada, Caribbean Islands and United States of America.
Anglia Autoflow North America LLC to be a non-exclusive agent for Anglia Autoflow Ltd for the territory of Mexico.
3. The effective commencement date of the agency to be 10 April 2009 and will run for an initial period of 3 years and thereafter may be continued.
After the initial period stated above, the agency may be discontinued on 6 months notice in writing by either party.
…
5. Anglia Autoflow Ltd normally achieves terms with customers of:
30% payable with order,
60% payable against shipping documents,
10% payable on satisfactorily completion [sic] i.e. after commissioning.
All contracts being placed direct between the customer and Anglia Autoflow Ltd and any alternative payment conditions would need to be mutually agreed before the customer signs the contract.
All quotation prices, and customer payments being made in local currency.
6. A sales commission, of 10% of the equipment nett ex works price, England, charged to the customer, will be paid by Anglia Autoflow Ltd to Anglia Autoflow North America LLC. Anglia Autoflow Ltd will forward to Anglia Autoflow North America LLC copies of all invoices raised on customers – be they for spares, deposits with order, progress payments etc.
…
All sales commission payments to be made upon receipt of an invoice from Anglia Autoflow North America LLC, into their bank account as directed. This commission payable to Anglia Autoflow North America LLC upon receipt of settlement, in full, from the customer.
…
8. Anglia Autoflow Ltd. currently manufactures modules frames and plastic drawers in Canada. In the event that Anglia Autoflow Ltd, and Anglia Autoflow North America LLC, make a joint decision to source items of Anglia Autoflow Ltd equipment (such as module frames) in any of the other territories in order to reduce freight costs etc., a separate agreement, and understanding, will need to be mutually agreed. This being on the principle that Anglia Autoflow North America LLC would still receive a minimum sales commission of 10% based on the nett ex factory price, charged to the customer, of the equipment sold.
9. Anglia Autoflow Ltd will also pay a commission of 10% to Anglia Autoflow North America LLC on all spare parts sold ex England to customers in any of the territories during the course of this agency – this calculated on the ex works England price. This commission payable to Anglia Autoflow North America LLC upon receipt of settlement, in full, from the customer…
10. Both parties have discussed and have agreed that close co-operation will be necessary, particularly in the early stages of this agreement. Anglia Autoflow Ltd will supply full documentation and information to Anglia Autoflow North America LLC and will also provide extensive sales support by joint visits to potential customers in any of the territories…
11. In the event of serious disputes, both parties agree to subject themselves to the jurisdiction of the English Courts.
…”
The Rome Convention: relevant provisions
It is common ground that the governing law of the Agency Agreement is to be determined in accordance with the provisions of the Rome Convention which was incorporated into English law by section 2 of the Contracts (Applicable Law) Act 1990 and continues to apply to all contracts concluded prior to 17 December 2009.
The Rome Convention provides in material part as follows:
“Article 3
Freedom of choice
1. A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract. …
Article 4
Applicable law in the absence of choice
1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that other country.
2. Subject to the provisions of paragraph 5 of this Article, it shall be presumed 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 has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party's trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.
…
5. Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.
…
Article 18
Uniform interpretation
In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application.”
It is not in dispute (i) that the performance which was characteristic of the Agency Agreement was that of the agent; (ii) that the agent contemplated by the Agency Agreement was GDE; but (iii) that the contract was concluded prior to GDE's incorporation by Mr Goffe. This gives rise to interesting and difficult questions as to whether, if there is no choice of law under Article 3(1), the presumption in Article 4(2) applies and, if so, how.
The Claimants' primary case was that:
i) The parties had made a tacit or implied choice of English law for the purposes of Article 3(1) of the Rome Convention by virtue of their express agreement to English jurisdiction in clause 11 of the Agency Agreement.
ii) In the alternative, if there...
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