Medway Packaging Ltd v Meurer Maschinen G.m.b.H. & Company K.G.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE FOX,LORD JUSTICE PARKER,LORD JUSTICE RALPH GIBSON |
| Judgment Date | 03 May 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0503-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 May 1990 |
| Docket Number | 90/0382 |
[1990] EWCA Civ J0503-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR JUSTICE HOBHOUSE)
Royal Courts of Justice,
Lord Justice Fox
Lord Justice Parker
Lord Justice Ralph Gibson
90/0382
1988 No. 1922
MR P. BRUNNER (instructed by Messrs. Hedleys) appeared on behalf of the Appellants.
MR D. MATTHEWS (instructed by Messrs. Middleton Potts) appeared on behalf of the Respondents.
This is an appeal lay the defendants from a decision of Hobhouse J., who refused to set aside the service of the Writ on the defendants in West Germany.
The case is concerned with the construction of Article 5 (1) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters signed in 1968. The Convention is incorporated into English law by the Civil Jurisdiction and Judgments Act, 1982. Section 2 of the Act provides that the Convention shall have the force of law in the United Kingdom.
Article 2 of the Convention provides as follows:
"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State.
Article 3 provides that a person domiciled in a contracting State may be sued in the courts of another contracting State only by virtue of the Rules set out in Sections 2 to 6 of Title 2.
Article 5, which forms part of Section 2 of Title 2, provides:
"A person domiciled in a contracting State may, in an another contracting State, be sued:
(1) in matters relating to a contract, in the courts for the place of performance of the obligation in question;"
The United Kingdom and West Germany were contracting States under the Convention.
The plaintiffs seek damages for breach of contract and they contend that the place of performance of the obligation or obligations in question is the United Kingdom.
The plaintiffs in the Points of Claim plead as follows:
"1. The plaintiffs are an English company, distributors of shrink and stretch-wrapping machines. The defendants are a West German engineering company specialising in the manufacture of film packaging machines.
"2. By an agreement between the plaintiffs and the defendants ('the distribution agreement'), the defendants agreed to appoint the plaintiffs the exclusive distributors of their machinery in the United Kingdom with effect from about 1st February 1981. The express terms of the distribution agreement are evidenced by, inter alia, a memorandum dated 21st August 1980 sent by the plaintiffs to the defendants and/or the course of dealings between the parties from about August 1980 to March 1988.
"3. (This particularises the acts and documents relied upon as constituting the agreement of the terms of an alleged exclusive distribution agreement).
"4. It was a term of the distribution agreement to be implied by reason of business efficacy that it would be terminated by either side on the giving of reasonable notice.
"5. In breach of the exclusive distribution agreement the defendants authorised Rockwell Packaging Machines Ltd. to act as distributors of their machines in the United Kingdom and purported to terminate the distribution agreement without giving reasonable notice:
"(1) the defendants, orally on about 28th February 1988 and/or by a telefax to the plaintiffs dated 8th March 1988 and/or a telex to the plaintiffs dated 9th March 1988, purported to terminate the distribution agreement with effect from 30th June 1988;
"(2) the plaintiffs will contend that in all the circumstances of the case, 12 months notice was reasonable;…………………………
"(3) on a date or dates in and about February 1988 and in any event prior to 28th February and/or 8th and/or 9th March 1988, Rockwell Packaging Machines Limited were and held themselves out as agents of the defendants' machinery in the United Kingdom.
"6. The plaintiffs accepted the defendants' conduct as a repudiatory breach of contract by a telefax dated 18th March 1988.
"7. By reason of the defendants' breach of contract the plaintiffs have suffered loss and damage:……"
The plaintiffs' claim is for about £269, 000. Of that sum, about £237, 000 is attributed to loss of profits for the year to March 1989.
It was common ground that the case must be dealt with on the basis that the plaintiffs must establish a good arguable case. Hobhouse J. held that the plaintiffs have shown that they have a good arguable case that they had a distribution agreement with the defendants which was exclusive, and that they were entitled to reasonable notice of termination. The agreement was informal and undefined. It included an obligation by the defendants to sell goods to the plaintiffs at a 15 per cent. discount and arguably not to sell goods to anyone else in the United Kingdom. By the course of dealings between the parties it was settled from an early stage that the goods sold by the defendants to the plaintiffs were on terms that they were ex-factory in Germany. Consequently, so far as the sale contracts were concerned, the defendants' obligation was to deliver the goods in Germany for onward carriage by the plaintiffs' agents to the United Kingdom. Accordingly, the Judge concluded that the obligations of the defendants under the contract were:
(i) in Germany, to sell goods to the plaintiffs at the15 per cent discount;
(ii) arguably, during the currency of the agreement, not to sell goods to any other United Kingdom importer;
(iii) arguably, to give the plaintiffs reasonable notice before terminating the agreement.
As I understand it, these findings and conclusions of the Judge are not in dispute for the purpose of this appeal. Similarly, it is not in dispute that the relationship between the parties was one of buyer and seller—not principal and agent. These concessions do not alter the fact that the defendants deny that they ever had any continuing obligation to supply goods to the plaintiffs, or that the plaintiffs had any rights of an exclusive nature. These disputes, however, do not (it is accepted), prevent the plaintiffs from bringing an action under the Convention in the jurisdiction of the relevant place of performance. The defendants accept, for the purpose of the present issue, that a distribution agreement existed between themselves and the plaintiffs.
Paragraph 3 of Part I of the Convention provides that any question as to the meaning and effect of any provisions of the Convention shall, if not referred to the European Court, he determined in accordance with the principles laid down by any relevant decision of the European Court. The report of Professors Jenard and Schlosser may also be referred to, but do not, in fact, assist in the present case.
There are three decisions of the European Court to which I shall refer. The first is De Bloos v. Bouyer (1976) 3 E.C.R. 1497. Under an agreement in October 1959 Bouyer ("grantor"), granted to De Bloos ("grantee"), the exclusive right to distribute their produce in Belgium, Luxembourg and the Belgian Congo. The grantee complained of a unilateral breach of the contract without notice by the grantor, and sought damages...
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