Ravennavi SPA v New Century Shipbuilding Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Jacob,Lord Justice Tuckey |
| Judgment Date | 07 February 2007 |
| Neutral Citation | [2007] EWCA Civ 58 |
| Docket Number | Case No: A3/2006/0999 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 February 2007 |
[2007] EWCA Civ 58
Lord Justice Tuckey
Lord Justice Jacob and
Lord Justice Moore-Bick
Case No: A3/2006/0999
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)
(Mrs. Justice Gloster DBE)
2005 Folio 341
Mr. Alistair Schaff Q.C. and Mr. Richard Waller (instructed by DLA Piper Rudnick Gray Cary UK LLP) for the appellant
Mr. Simon Rainey Q.C. and Mr. James Turner (instructed by Lane & Partners LLP) for the respondent
Background
This is an appeal from an order of Gloster J. made on the hearing of the defendant's application to set aside an order for service of the claim form out of the jurisdiction.
The claimant, Ravennavi S.p.A. (“the Buyer”), is an Italian shipowner; the defendant, New Century Shipbuilding Company Ltd (“the Yard”) is a Chinese shipbuilder. By an Option Agreement dated 12 th December 2003 the Yard granted the Buyer an option, to be exercised by 31 st January 2004, to purchase two new crude and product tankers for delivery by 31 st October and 31 st December 2007 respectively. The option provided, in terms to which it will be necessary to refer more fully in a moment, that the Yard would make earlier delivery dates available to the Buyer, if it became possible to do so. On or about 28 th January 2004 the Buyer exercised its option to buy two new vessels for delivery in October and December 2007, but some months later it obtained reports that the Yard was offering to build vessels for delivery dates earlier than those set out in the option and so a dispute arose between them which eventually gave rise to these proceedings. The substance of the Buyer's claim is that the Yard failed to perform its obligation to make earlier delivery dates available when it became possible for it to do so.
In June 2005 the Buyer made an application to the Commercial Court for permission to serve the claim form on the Yard out of the jurisdiction and on 14 th June 2005 Cresswell J. made an order to that effect. The proceedings were subsequently served on the Yard in China pursuant to that order. However, as the parties later recognised in the course of the hearing before Gloster J., it was not necessary for the Buyer to obtain the court's permission to serve out of the jurisdiction because it is domiciled in Italy and the Option Agreement, on which its claim is based, contains an exclusive jurisdiction clause in favour of the High Court. Accordingly, the case falls within Article 23 of the Judgments Regulation ( Council Regulation (EC) No 44/2001) and CPR rule 6.19(1A)(b)(iii). At the time, however, no one appreciated that that was the case and as a result on 19 th October 2005 the Yard issued an application to set aside the order for service out of the jurisdiction and the service made pursuant to it or, in the alternative, for the action to be stayed for the purposes of arbitration. (The latter application was made on the basis that as a result of the exercise of the option the relationship between the parties was governed by the terms of a shipbuilding contract which included an arbitration clause).
At the hearing of the Yard's application the parties' attention seems to have been directed primarily to the question whether the Buyer's case was strong enough to justify giving permission to serve out of the jurisdiction. The nub of the dispute in this respect was whether the Yard's obligation in the option to make available an earlier delivery date if it became possible to do so continued to exist after the option had been exercised despite the execution of a formal shipbuilding contract which made no mention of any such obligation and contained an “entire agreement” clause. There was some debate about the correct test to apply when considering the merits of the claimant's case for the purpose of an application of this kind and at the end of the hearing the judge gave the parties permission to serve further written submissions dealing with that question. It was in the course of its written submissions that the Buyer pointed out for the first time that it did not need the court's permission to serve out of the jurisdiction. On that basis it submitted that, unless the Yard was willing to have the dispute concerning the construction of the Option Agreement determined as a preliminary issue, the court should confine itself to deciding whether the construction which it put forward had a real, as opposed to a merely fanciful, prospect of success. The Yard was apparently content that the matter should be decided as a preliminary issue and formulated a question for the judge's consideration.
Having raised the prospect of a preliminary issue, however, the Buyer appears to have had second thoughts and sought to persuade the judge not to take that course. Two principal reasons were put forward: one was that all the argument at the hearing had been directed to the question whether the Buyer's construction was sustainable rather than whether it was correct; the other was that it had not had a sufficient opportunity to adduce all the background evidence that would be relevant to the question of construction. In relation to the latter point, however, the Buyer did not provide any indication of what additional evidence there might be that would affect the question and has not done so since. The judge took the view that it was in the interests of the parties and the efficient management of the proceedings for the court to determine the question of construction as a preliminary issue. She therefore formulated and proceeded to decide two questions based on the proposal submitted by the Yard. One of the Buyer's grounds of appeal is that it was unfair for the judge to take that course without giving it an opportunity to address her on it, but Mr. Schaff Q.C. who appeared for the Buyer did not pursue that complaint and I need say no more about it.
The contracts
At this stage it is necessary to refer in more detail to the terms of the option and the relevant shipbuilding contracts. The Option Agreement provided (so far as material) as follows:
“In consideration of the mutual covenants contained herein and payment of US$10 receipt of which is hereby acknowledged, the Seller [the Yard] agrees:
1. to grant the BUYER the option to require the SELLER to design, build, launch, equip and complete up to two (2) 73,400 DWT Crude and Product Oil Tankers (the OPTIONAL VESSELS) to the BUYER or its nominee on terms and conditions of the contracts dated February 13, 2003 and Addenda n º 1 dated 15 th July 2003 and n º 2 dated 12 th December 2003 (the “Shipbuilding Contracts”) between SELLER and the BUYER as amended by the terms and conditions of this OPTION AGREEMENT:
……………… . .
1.3 The SELLER has the option to select one of the following alternative methods of payment security:
(a) The BUYER to supply the SELLER upon Signing Contract an irrevocable Bank Guarantee ……
(b) The SELLER to supply to supply before due date of each instalment to the BUYER separate Refund Guarantee ……
……………… .
4. Delivery of the first vessel of OPTIONAL VESSELS shall be on or before 31 st October, 2007. Delivery of the second vessel of OPTIONAL VESSELS shall be on or before 31 st December, 2007.
Should the Sellers could find any possibility to anticipate delivery of the optional vessel(s) (for instance a previously booked berth becomes free), then the SELLER will grant the BUYER or its nominee the earlier delivery position for the optional vessel(s).
5. On receipt of BUYER'S notice referred to in Clause 3, a Shipbuilding Contract … . . shall be deemed signed and automatically in effect for the OPTIONAL VESSEL between the SELLER and the BUYER or its nominee as aforesaid on the terms of the Shipbuilding Contract dated 13 th February 2003 [and its addenda] duly amended as per Clause 1.3 here above. After declaring the OPTION and on or before 1 (one) month after such declaration, the BUYER shall procure that … . . itself executes formally the Option Shipbuilding Contract(s) as BUYER, for the construction and delivery of the OPTIONAL VESSEL(S) substantially in the form of the Shipbuilding Contracts dated 13 th February 2003 [and its addenda] duly amended as per Clause 1.3 here above.”
For convenience the parties and the judge referred to the two paragraphs of clause 4 as clauses 4(i) and 4(ii) and I shall do the same. The agreement also included in clause 7 an express choice of English law and a High Court exclusive jurisdiction clause.
The Shipbuilding Contract dated 13 th February 2003 to which the Option Agreement referred was a contract between the Buyer and two Chinese companies, China National Machinery Import & Export Corporation and the Yard together acting as seller, for the design, building and delivery of a 73,400 DWT crude and product tanker. It was a lengthy document couched in formal terms and as such was generally typical of such contracts. It contained nineteen separate articles dealing with (among other things) the description and Class of the vessel, price and terms of payment, supervision and inspection of construction, trials, delivery date and warranties of quality. Article XIX contained the following provision:
“ 4. ENTIRE AGREEMENT
This Contract contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this Contract prior to signing...
To continue reading
Request your trial
-
James Kinsella v Emasan AG
...case are different from the type of situation referred to by Lightman J. in Inntrepreneur Pub Co v East Crown. In Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Lloyd's Rep 24, Moore-Bick LJ said:- “The effect of an entire agreement clause …must depend primarily on its terms, sin......
-
Trust Risk Group SpA v AmTrust Europe Ltd
...per Lord Collins. 8 See Mitsui Construction Co Ltd v Attorney-General of Hong Kong (1986) 33 Build LR 1 at 14 9 See Ravennavi SPA v New Centuries Shipbuilding Co Ltd [2007] EWCA Civ 58 at 10 See the cases referred to in Lewison, The Interpretation of Contracts, 5th ed, 67 – 70. [2009] EWC......
-
Garratt v Mirror Group Newspapers
...context of the commercial and factual background known to both of the parties (see Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Lloyds Rep 24 per Moore Bick LJ at para. 12), even if the clause did provide for an entire agreement, the term as to the payment of enhanced redundanc......
-
Mileform Ltd v Interserve Security Ltd
...of the courts to tell them that they do not mean what they have said." 100 Likewise, Moore-Bick L.J. pointed out in Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Lloyd's Rep. 24.: "The effect of an entire agreement clause … must depend primarily on its terms, since it is the lang......