Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV

Hearing date: Wednesday 21st November

Approved Judgment

A Introduction

This is an appeal with leave of Flaux LJ given on 15 ^th February 2018 against an Order of Mr Peter Macdonald Eggers QC, sitting as a deputy Judge of the High Court. By that Order the Judge declared that the court had no jurisdiction to try the claim of the appellant against the Third and Fourth Defendants. The pleadings and the service of them out of the jurisdiction were set aside.

The appeal raises a point of law as to the test to be applied on an application to set aside jurisdiction and, in particular, whether the test has two discrete parts or one part with composite ingredients. The appeal focuses also upon the substantive meaning of the phrases “ good arguable case” and “ much the better argument” which are or have been part of the test for establishing jurisdiction and as to the approach that courts should adopt when applying those tests. In addition, the appeal considers the approach that courts should adopt when, as will usually be the case at the interim stage when a jurisdiction challenge is launched, the evidence before the Court is incomplete. Two judgments of the Supreme Court were intended to put to rest the many arguments that have surrounded the application of the test for jurisdiction: Brownlie v Four Seasons Holdings International [2017] UKSC 80 (“ Brownlie”), and, Goldman Sachs International v Novo Banco SA [2018] UKSC 34 (“ Goldman Sachs”). However, as the arguments advanced during this appeal demonstrated, the attempts at clarification have served to raise a series of new arguments.

Over and above issues as to the applicable test the appellant argues that, irrespective of the test to be applied, the Judge erred in his analysis of the evidence and that he should have found that the case for jurisdiction was made out.

A. The facts

The facts are complex. They are set out fully in the Judgment. It is necessary to summarise the evidence in some detail to identify those features of the evidence which played a part in the argument.

The dispute

The appellant (the “appellant” or “Claimant” in the proceedings) commenced proceedings for sums alleged to be due under a contract for works performed by the appellant to the accommodation areas of a cantilever jack-up rig, the Atlantic Tiburon 1, (“the Rig”). The works included the removal and disposal of various items, the abatement of asbestos, the supply and installation of insulation, and refurbishment. The claim was for US$2,353,794.42.

The Claimant initially sued four defendants: (i) AMS Drilling Mexico SA de CV (“AMS Mexico”); (ii) Atlantic Marine Services BV (“AMS”); (iii) Atlantic Tiburon 1 Pte Limited (“AT1”): and (iv) and Ezion Holdings Limited (“Ezion”). The Claim Form and the Particulars of Claim were served on AT1 and Ezion in Singapore under CPR rules 6.33(2)(b)(v) and 6.33(2A).

The appellant contends that the Court has jurisdiction to determine the claim against AT1 and Ezion under Article 25 of the Brussels I Regulation (Recast) (Regulation (EU) 1215/2012) (“ the Recast Brussels Regulation”). It is said that the relevant contract contains an English exclusive jurisdiction clause and the relevant contract was concluded by AMS Mexico and/or AMS on behalf of AT1 and/or Ezion as undisclosed principals and, it follows, the contract, including its jurisdiction agreement, bound AT1 and Ezion.

AT1 and Ezion challenged jurisdiction arguing that they did not act as undisclosed principals, and neither were therefore party to the contract under which the claim was made. AMS and AMS Mexico do not challenge jurisdiction. It appears however that they are in financial difficulties.

Before the Judge below it was common ground that the gravamen of the issue was whether AT1 and Ezion were party to the jurisdiction agreement contained in the contract in question. The facts relevant to this appeal are those by which AT1 and Ezion were involved in the works performed on or in connection with the Rig and whether they suffice to establish, according to the proper test, whether they acted as undisclosed principals.

The Purchase Order

The relevant contract was evidenced by a Purchase Order dated 16th August 2013 (“the Purchase Order”) which identified the Claimant as the “ Vendor” and was signed by Mr Jody Baker of AMS (the Second Defendant). The Purchase Order stipulated that invoices were to be addressed to AMS Mexico (the First Defendant) marked for the attention of the Rig (“ Atlantic Tiburon 1”). Delivery of the services was to be at the Rig's Project Office located at Terminal J Ray McDermott de Mexico, in Puerto Industrial de Altamira, Altamira Tamaulipas, Mexico. The reference to “ Atlantic Tiburon 1” in the Purchase Order is to the Rig (not AT1). There is no dispute about this.

Under the Purchase Order 30% of the price would be paid upfront and the residue (ie 70%) invoiced against bi-weekly documented progress. This was to be signed by “ the AMS project manager”. Indeed, all documents supporting an invoice had to be signed by “ the AMS project manager”. Terms and conditions of business printed on the Purchase Order (described as “ Terms & Conditions of Business AMS BV”) applied. These included an entire agreement clause in clause 1:

“1. Agreement

These Terms and Conditions of Business together with this Purchase Order constitute the entire agreement between Atlantic Marine Services BV and its various affiliates and subsidiaries (hereinafter collectively referred to as “the company”[)] and supplier stated in the Purchase Order, (the Seller), for the execution of the work/supply of the goods described in the Purchase Order. Each order by the Company for goods from the Seller shall be deemed to be an offer by the Company to purchase goods/services subject to these Terms & Conditions. Variations or changes to the Purchase Order or these Terms & Conditions shall only be effective if made in writing specifically for such purpose and signed by a duly authorised representative of both parties …”

Clauses 10 and 11 concerned default and termination, and suspension:

“10. Default and Termination …

10.2 In the event that, in the Company's sole opinion, the Seller[']s default shall be deemed not capable of remedy to the Company's satisfaction, the Company shall have the right to terminate the Purchase order in part or whole by notice in writing to the Seller …

11. Suspension

The Company may at any time at its sole option suspend the performance of all or part of the Purchase order by giving written notice to the Seller … The Company will grant no compensation or extension of time for any suspension that might result from an act or default caused by the Seller …”

Clause 13 concerned ownership:

“13. Ownership

13.1 Title to the goods shall pass from the Seller to the Company upon the earlier of: (a) delivery by the Seller and receipt of the goods accepted by the Company; (b) payment, either partial or in full; (c) for designs, drawings, technical information and data when prepared by the Seller …”

Clause 17 concerned assignment and subcontracting:

“17. Assignment and Subcontracting …

17.4 The Purchase Order/Contract shall enure to the benefit of and be binding upon the successors of the Company and the Seller …”

Clause 21 specified English law as the governing law and the exclusive jurisdiction of the High Court in London:

“21. Governing Law

These Terms & Conditions and any Purchase Order shall be governed by and construed and interpreted in accordance with the laws of England and Wales and the parties hereto irrevocably submit to the exclusive jurisdiction of the High Court in London for the resolution of any disputes arising in connection with the supply of goods under these Terms & Conditions and the relevant Purchase Order/Contract”

The Claimant argues that ATI and Ezion, as undisclosed principals, are bound by clause 21.

The services to be provided under the Purchase Order

The background to the services provided by the Claimant to the Rig were set out in witness statements prepared by Mr Luis Fernando Pereira Cozzoli (“Mr Pereira”), the Deputy Director of the Claimant, and Mr Cheah Boon Pin (“Mr Cheah”), Group Financial Officer at Ezion and a director of AT1.

The registered owner of the Rig was AT1, a wholly owned subsidiary of Ezion. In early 2012 representatives of Treatmil Holdings Ltd, (the parent company of AMS Mexico and AMS) (“Treatmil”) and Traxiar Ventures Ltd (an associated company) (“Traxiar”) agreed with Ezion that it would assist in providing rigs for projects with oil majors. It was to arrange financing and would acquire a rig through a special purpose vehicle (“SPV”) which would then demise charter the rig to AMS or a nominee company. Financing costs were to be reimbursed through the payment of charter hire income paid to the SPV from the earnings made by Treatmil and Traxiar, with the income being paid into an escrow account.

An opportunity arising related to a contract with Pemex Exploracion y Production (“PEP”) to operate the Rig as a...