Timothy Joseph Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Toulson,Lord Justice Leveson,Lord Justice Lloyd |
| Judgment Date | 22 April 2013 |
| Neutral Citation | [2013] EWCA Civ 365 |
| Docket Number | Case No: A3/2012/1320 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 April 2013 |
[2013] EWCA Civ 365
Lord Justice Lloyd
Lord Justice Leveson
and
Lord Toulson
Case No: A3/2012/1320
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
HHJ Mackie QC (Sitting as a Judge of the Queen's Bench Division)
2011 Folio 104
Royal Courts of Justice
Strand, London, WC2A 2LL
Fergus Randolph QC (instructed by Radcliffes LeBrasseur) for the Appellant
Matthew Parker (instructed by DLA Piper UK LLP) for the Respondent
Hearing dates: 23 January 2013
This appeal concerns the proper law of a commercial agency agreement. The agreement was made between the parties in about 1994 or 1995 and was terminated by the defendant in 2009. Under the Contracts (Applicable Law) Act 1990 the question of its proper law is governed by the Rome Convention ("the Convention"). The Convention has been superseded by the Rome 1 Regulation, but it continues to apply to contracts made after 1991 and before 17 December 2009.
His Honour Judge Mackie QC determined on the trial of a preliminary issue that the proper law of the contract is Spanish law. He rejected the claimant's argument that under article 3 of the Convention the parties had made an implied choice of English law. Under the heading "Freedom of choice", Article 3.1 provides:
"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."
The same provision appears in article 3.1 of the Rome 1 Regulation, except that the phrase "demonstrated with reasonable certainty" has been replaced by "clearly demonstrated". As is explained in Dicey, Morris and Collins' The Conflict of Laws, 15 th ed (2012), chapter 32, footnote 217, the change of language was not intended to involve a change of meaning but was simply intended to bring the English and German text into line with the French text of the Convention.
The judge accepted that if the parties had made a choice of law it would have been English law; but he held that a choice of English law had not been demonstrated "with reasonable certainty … by the circumstances of the case", so as to satisfy the requirements of article 3 as expounded in the Giuliano-Lagarde report to which I refer below.
The judge therefore applied article 4, which lays down the following general principle:
"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."
Article 4 also sets out subsidiary rules for applying the general principle.
The claimant appeals against the judge's decision in relation to article 3. If his argument on that point fails, there is no appeal against the judge's decision that Spanish law was to be applied under article 4.
Facts
The claimant is a citizen of the Irish Republic. Some time between about 1992 and 1994 he was employed as a salesman by a company then known as Extec Screens and Crushers Limited ("Extec"). Extec was incorporated in the UK to manufacture screening and crushing machinery. When the claimant joined the company, it was small but was aiming to expand into European markets. It had started as a relatively unsophisticated family enterprise, whose roots were in Ireland, and its HR procedures were still quite informal. The judge found that there was no evidence that the claimant's original employment contract was in writing. He accepted that the contract was likely to have been governed by English law although there was probably no such express term. It appeared from the evidence that at the beginning of the claimant's employment it was not certain in which country or countries he would be working. After completing his training he was sent to Extec's distributor in Germany as an employed salesman, but that arrangement did not work out well. He was then sent to work in Spain, where the company was developing a market through the salesmanship of a former director, Mr Colin Burns, who had set up his own business as a sales agent for the company in France, Italy and Spain. Thereafter Spain was the claimant's main but not exclusive area of operation.
In about 1994 or 1995 the claimant's contractual relationship with Extec was changed from that of an employee to a sales agent. There was no formal agency agreement, but he was paid commission on sales and his expenses were reimbursed.
As Extec expanded, the share ownership changed. In 2006 the company attempted to rationalise its agency network, offering contracts of employment to its existing agents. Those contracts were expressly governed by English law. In 2007 Extec was acquired by Sandvik AB, a worldwide company based in Sweden. It later changed its name to Sandvik Mining and Construction Mobile Crushers and Screens Limited.
The claimant, like other agents, was offered a contract of employment containing an English law clause, but protracted negotiations did not lead to an agreement.
On 15 May 2008 the defendant wrote formally to the claimant giving notice of termination of his agency with effect from 1 June 2009, but expressing the hope that in the interim a mutually satisfactory employment contract could be negotiated. That hope was not fulfilled and the parties' contractual relationship ended on 1 June 2009.
The claim in these proceedings is for compensation for termination of the claimant's agency pursuant to the Commercial Agents (Council Directive) Regulations 1993. For reasons which are unnecessary to explore, the claimant's claim will be worth more if his contract was governed by English law than if it was governed by Spanish law. That issue was therefore ordered to be determined as a preliminary issue. The claimant's case was that the agency agreement was impliedly governed by English law. The defendant's case was that the claimant could not clearly demonstrate that there had been an implicit choice of law and that the matter was therefore governed by article 4.
The Giuliano-Lagarde Report
Section 3(3)(a) of the 1990 Act provides that the report on the Convention of Professor Mario Giuliano and Professor Paul Lagarde (Official Journal of the European Communities, 31 October 1980) may be considered in ascertaining the meaning or effect of any provision of the Convention, without prejudice to any other matters which may be considered by the court.
In its commentary on article 3, the Giuliano-Lagarde report states:
"1. The rule stated in article 3(1) under which the contract is governed by the law chosen by the parties simply reaffirms a rule currently embodied in the private international law of all the Member States of the Community and of most other countries.
…
3. The parties' choice must be expressed or be demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. This interpretation, which emerges from the second sentence of article 3(1) has an important consequence.
The choice of law by the parties will often be expressed but the Convention recognises the possibility that the Court may, in the light of the facts, find that the parties have made a real choice of law although this is not expressly stated in the contract. For example, the contract may be in a standard form which is known to be governed by a particular system of law even though there is no express statement to this effect, such as a Lloyd's policy of marine insurance. In other cases a previous course of dealing between the parties under contracts containing an express choice of law may leave the court in no doubt that the contract in question is to be governed by the law previously chosen where the choice of law clause has been omitted in circumstances which do not indicate a deliberate change of policy by the parties. In some cases the choice of a particular forum may show in no uncertain manner that the parties intend the contract to be governed by the law of that forum, but this must always be subject to the other terms of the contract and all the circumstances of the case. Similarly references in a contract to specific Articles of the French Civil Code may leave the court in no doubt that the parties have deliberately chosen French law, although there is no expressly stated choice of law. Other matters may impel the court to the conclusion that a real choice of law has been made might include an express choice of law in related transactions between the same parties, or the choice of a place where disputes are to be settled by arbitration in circumstances indicating that the arbitrators should apply the law of that place.
This Article does not permit the court to infer a choice of law that the parties might have made where they had no clear intention of making a choice. Such a situation is governed by Article 4."
Judge Mackie's reasoning
The judge described the claimant's recollection of the inception of the agency as vague. This was hardly surprising since the agency began in 1994 or 1995 and the trial was not until 2012. The judge said that the claimant's accounts of where and how he lived in Spain were improbable, undocumented and changed in the course of his evidence. His claims about the extent to...
To continue reading
Request your trial
- Enka Insaat Ve Sanayi as v OOO Insurance Company Chubb
-
Avonwick Holdings Ltd v Azitio Holdings Ltd
...As Lord Toulson, siting in the Court of Appeal, explained in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd [2013] EWCA Civ 365, [2013] 2 Lloyd's Rep 98 at [32]: “ Logically there may be a certain artificiality in attributing to the parties a tacit choice in circ......
-
GDE LLC (formerly Anglia Autoflow North America LLC) v Anglia Autoflow Ltd
...common law. This was made clear by the Court of Appeal in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd, [2013] EWCA Civ. 365; [2013] 2 Lloyd's Rep. 98 where, at paragraphs 21–27, it pointed out that the common law approach frequently blurred the distinction bet......
-
Bilal Khalifeh v Blom Bank Sal
...essential question is that identified by Lord Toulson in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd [2013] 2 Lloyd's Rep 98, [33]: “On an objective view, the parties must have taken it without saying that their contract should be governed by that law or …. tha......