Jacobs And Turner Limited V. Celcius Sarl
| Jurisdiction | Scotland |
| Judge | Lord Reed |
| Neutral Citation | [2007] CSOH 76 |
| Docket Number | CA81/06 |
| Date | 25 April 2007 |
| Court | Court of Session |
| Published date | 25 April 2007 |
| OUTER HOUSE, COURT OF SESSION [2007] CSOH 76 | |
| CA81/06 | OPINION OF LORD REED in the cause JACOBS & TURNER LIMITED Pursuers; against CELSIUS sarl Defenders: ________________ |
Pursuers: Cormack, Solicitor Advocate; McGrigors LLP
Defenders: Howlin; HBJ Gateley Wareing (Scotland) LLP
25 April 2007
Introduction
[1] The pursuers are the manufacturers of the "Trespass" brand of sports clothing. They are based in Scotland. The defenders have for many years been their distribution agents in France and Andorra. They are based in France. In October 2006 the defenders began proceedings against the pursuers before the Tribunal de Grande Instance in Annecy, alleging various breaches of the agency agreement, and seeking certain remedies. In December 2006 the pursuers began proceedings against the defenders before this court, alleging various breaches by the defenders of the agency agreement, and seeking certain remedies. A preliminary issue which arises is whether, as the defenders maintain, this court should decline jurisdiction and dismiss the action, or in any event sist these proceedings, in accordance with article 27 or article 28 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
The French proceedings
[2] In the initiating writ in the French proceedings, the defenders state that, subject to the provisions of mandatory French public policy, in particular Law No 91‑593 of 25 June 1991 on Commercial Agents, the law applicable to the relations between the parties is Scots law. The defenders state that they entered into an oral agreement with the pursuers in 1993 to act as the exclusive distributors of Trespass clothing in independent sports shops in France and Andorra. They performed their obligations as distributors through a network of sub-agents, who in turn had exclusive rights in respect of their respective territories.
[3] By way of background, the defenders state that the market for sports clothing is divided into sectors in terms of cost and quality, among other factors. The Trespass range was not aimed at mountaineers or experienced skiers, but at a less specialist and less expensive market. It was also sold in France through supermarket chains and by mail order. The defenders state, in particular, that the products of the pursuers did not compete with sports clothing sold by a company named Filia, of which the defenders' director and shareholder, Mr Ruggeri, was also a director and shareholder.
[4] The defenders state that, during 1994, they sought a written agreement recording their exclusive right to sell Trespass products (and other products of the pursuers) to sports shops in France and Andorra. The pursuers insisted on using their standard form of agency agreement, which contained a non-exclusivity clause. They agreed in writing, however, to confirm the defenders' exclusive right in a back letter, if the defenders signed the standard contract, and to add a schedule to the contract describing the defenders' exclusive customers. The defenders then signed the standard contract, to which a schedule had been added, describing the defenders' territory as "all independent sports retailers including ... Go Sport ..." An identical contact was signed in 1995.
[5] According to the defenders, the pursuers subsequently made various attempts to withdraw the exclusivity granted, by attempting to rely on alleged acts of competition by the defenders, on the basis that exclusivity required the defenders not to represent any products which competed with the Trespass range. On each occasion, the pursuers backed down following correspondence from the defenders or their lawyers, maintaining that there had been no such acts of competition.
[6] In April 2005 the defenders discovered that the pursuers were directly supplying a sports shop in Grenoble. The pursuers then announced that they had entered into an agreement to open a shop there. They also stated their intention to open further shops in Roubaix and Troyes. At about the same time, the pursuers made direct contact with customers of the defenders, and offered to purchase the shop of one such customer, in Chamonix, in order to open a Trespass shop. In January 2006, the pursuers confirmed their intention to sell their products directly through independent sports shops.
[7] The defenders maintain that the pursuers then orchestrated unfounded disputes, in order to induce the defenders to give up their agency voluntarily, or to provide ostensible grounds for terminating the agency contract without having to pay compensation under the national legislation implementing Council Directive No 86/653/EEC of 18 December 1986 on the co‑ordination of the laws of the Member States relating to self-employed commercial agents: that is to say, the Commercial Agents (Council Directive) Regulations 1993 (SI 1993 No 3053) ("the 1993 Regulations"). For example, the pursuers complained that the defenders were not selling certain accessories, when in reality the defenders had found that the accessories in question did not sell well in France, and had therefore made a limited selection of them. The pursuers also complained that sports shops in Courchevel were not selling Trespass products, when Courchevel was a de luxe resort where sports shops did not seek to sell Trespass clothing. The pursuers also complained that the defenders were selling competing products through Filia.
[8] In May 2006, the pursuers informed the defenders of their intention to enter into franchise agreements in France. The defenders had previously been requested to renounce their exclusivity in favour of franchisees.
[9] In the meantime, the Trespass shop in Grenoble had since June 2005 been selling at heavily discounted prices, causing customers of the defenders to cancel or re‑negotiate their orders, or to cease placing orders. Go Sport was one such customer. Another customer complained to the defenders of unfair competition by the shop in Grenoble. The defenders obtained evidence that the shop was operating a systematic practice of selling at discounted prices. As a consequence, the defenders' market in Grenoble was almost completely destroyed. The defenders maintain that the pursuers were supplying the shop at prices which were substantially lower than those at which they supplied other retailers, and that discriminatory pricing of this kind can be the subject of criminal proceedings under French law.
[10] A further problem arose in relation to a new range of sports clothing launched by the pursuers, under the brand name "T-Pass", in the same sector of the market as the Trespass brand. The defenders maintained that the T-Pass range fell within the scope of their exclusive distributorship agreement, but the pursuers advertised (under the name "Trespass") for new agents to distribute the new range, described as being launched by Trespass, in sports shops in France. They offered to allow the defenders to distribute the T-Pass range only on condition that the defenders enter into a non‑exclusive contract in relation to the Trespass range, with a third party. As the defenders declined to enter into such a contract, the pursuers refused to allow them to distribute the T-Pass range, causing the defenders problems with their representatives and customers. The pursuers thereafter refused to supply T-Pass products to the defenders' customers directly. The defenders further complain that the pursuers made it impossible for them to send customers to the pursuers' premises in Scotland, since the pursuers then dealt with them directly, granting them rebates and cutting out the defenders.
[11] The defenders maintain that the actings of the pursuers are in breach of the duty to act in good faith imposed upon them by regulation 4 of the 1993 Regulations, and by clause 6.1.2 of the contract between the parties. They maintain that this is a material breach of contract, justifying the termination of the contract under Scots law. They further maintain that they are entitled to compensation for the loss and damage they have suffered. A number of heads of damage are specified, including loss suffered as a result of the opening of the Grenoble shop and the illegal discriminatory practices from which it benefited, and loss suffered as a result of the loss of customers in consequence of the pursuers' behaviour and as a result of the pursuers' refusal to allow the defenders to sell the T-Pass range. In addition, the defenders maintain that they are entitled, in the absence of any material breach of contract on their own part (en l'absence de faute grave de Celsius), to compensation for the termination of their contract in accordance with the 1993 Regulations.
[12] The defenders invite the French court:
(1) to declare and adjudge that the defenders are exclusive commercial agents of the pursuers;
(2) to record the existence of serious breaches by the pursuers in the performance and good faith of the contract and, as a result, their breach of clause 6.1.2, and also to record that it is impossible for the defenders to proceed with the contract without serious risk;
(3) to order the judicial termination of the contract on the basis of the exclusive breach by the pursuers (prononcer la résiliation judiciaire du contrat d'agent commercial aux torts et griefs exclusifs de Jacobs & Turner);
(4) to order the pursuers to pay the defenders damages for breach of contract;
(5) to order the pursuers to pay the defenders compensation for the termination of the contract;
(6) to order the pursuers to pay the defenders' expenses; and
(7) to order interim enforcement of the judgment.
[13] Defences had not been lodged by the date of the present hearing: they were due on 17 April 2007.
[14] Each of the parties has lodged in the present proceedings an expert opinion on certain issues of French law, dated 22 and 23 February 2007...
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