Timothy Joseph Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd
| Jurisdiction | England & Wales |
| Judge | HHJ MACKIE QC,HHJ Mackie QC |
| Judgment Date | 15 May 2012 |
| Neutral Citation | [2012] EWHC 1188 (QB) |
| Court | Queen's Bench Division |
| Date | 15 May 2012 |
| Docket Number | Case No: 2011 FOLIO104 |
[2012] EWHC 1188 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Mackie QC
Case No: 2011 FOLIO104
Mr Fergus Randolph QC (instructed by Radcliffes Le Brasseur) for the Claimant
Mr Matthew Parker (instructed by DLA Piper) for the Defendant
Hearing dates: 12, 13, 14 and 28 March 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This has been the trial of a preliminary issue to determine the applicable law of the commercial agency agreement between the parties which operated from 1994 or 1995 until 2009. Is it English law as claimed by the Claimant or Spanish law as claimed by the Defendant? The answer will apparently greatly affect the size of the compensation for termination to which the Claimant is entitled. The claim under English law is put at some Euro 1.5 million.
Background
The Claimant Mr Lawlor is an Irish citizen now apparently based in Andorra. He joined the Defendant as an employed salesman in 1994. After short spells in Germany and in England he moved to Spain at first as an employee but soon as the Defendant's agent in Spain for the sale of mobile screens and crushing equipment. The Claimant has a degree in Spanish and speaks the language well. He was undoubtedly a successful agent. The details of how much time he spent in Spain and elsewhere and when and to what extent his responsibilities extended to other countries are much disputed.
The Defendant's predecessor Extec began in a small way in Ireland but soon became remarkably successful, setting up operations in Swadlincote and elsewhere. Its speed of growth was such that some aspects of the business, for example the organisation of agencies for sales overseas and their contractual structure and of what is nowadays called Human Resources, remained informal and unsophisticated. If there was ever an employment contract between the parties it is lost. There was never a written agreement between the parties recording the terms or the applicable law of their agency. As Extec became ever more successful shares were sold to 3i which, with other shareholders, sold the business in 2007 to Sandvik AB a world wide company based in Sweden. In 2006 the Defendant sought to rationalise its agency network and offered existing agents posts as employees. Despite protracted negotiations agreement could not be reached and eventually the Defendant terminated the agency. Although the Claimant's right to compensation was initially disputed the claim is now conceded in principle.
The Legal Issues
It is common ground that the Claimant acted as a commercial agent within the meaning of Council Directive 86/653/EEC (the 'Directive') and that he is entitled to the appropriate relief for the termination of his agency. The Directive was implemented into English law by the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (the 'Regulations'). It was also implemented into Spanish law.
The Claimant claims that the Regulations apply to his agency because the applicable law of the agency agreement was English law. The Defendant claims that any agency agreement was governed by Spanish law. The preliminary issue for determination by the Court is what was the applicable law of agency agreement.
The applicable law of the Claimant's agency agreement is determined in accordance with the Convention on the Law Applicable to Contractual Obligations 1980 (the ' Rome Convention') as incorporated into English law by the Contracts (Applicable Law) Act 1990. It is common ground that the law will be determined under either Article 3 or Article 4 of the Convention which provide in relevant part as follows:
Article 3
Freedom of choice
1
A contract shall be governed by the law chosen by the parties. The choice must be express 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….
Article 4
Applicable law in the absence of choice
1
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. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that other country.
2
Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party's trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.
5
Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country."
The interpretation of these provisions is helpfully explained by Clarke LJ, as he then was, in Iran Continental Shelf Oil v IRI International corp [2002] EWCA Civ 1024 in a passage which, with respect to the admirable submissions of Counsel on the point, is all I need to consider as regards the general approach;
" [10] Section 2(1) of the Contracts (Applicable Law) Act 1990 ("the Act") provides that:
"… the Conventions shall have the force of law in the United Kingdom."
[11] By s 1 of the Act it is provided that the term "Conventions" in the Act refers to a series of international conventions, including the Rome Convention. As the judge observed, certain provisions of the Rome Convention were excluded from the incorporation of its terms into English law, but these are not relevant for present purposes. Section 3(3) of the Act provides:
"Without prejudice to any practice of the courts as to the matters which may be considered apart from this subsection –
(a) the report on the Rome Convention by Professor Mario Giuliano and Professor Paul Lagarde which is reproduced in the Official Journal of the Communities of 31st October 1980 may be considered in ascertaining the meaning or effect of any provision of that Convention; …"
The fundamental principle of interpretation is stated in art 18 of the Convention as follows:
"In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application."
[14] In Samcrete Egypt v Land Rover Exports Ltd [2001] EWCA Civ 2019, Potter LJ (with whom Thorpe LJ agreed) quoted art 18 in para 24 of his judgment and observed, in para 25, that it was suggested at para 32–078 (p 1223) of the 13th edition of Dicey & Morris on the Conflict of Laws:
"… that the question of interpretation should be looked at from a broad Convention-based approach, not constrained by national rules of construction."
[15] He expressed his agreement and, in para 26, approved my own view expressed in Egon Oldendorff v Libera Corp [1996] 1 Lloyd's Rep 380 at 387, where I said:
"It is indeed appropriate to adopt a purposive approach and not to construe the Convention in a narrow literal way."
Although those views were expressed in the context of article 3, they seem to me to apply equally to article 4: see also to the same effect Plender & Wilderspin on the European Contracts Convention (2001) at para 2–01. I should perhaps stress that in applying article 4 an English court should not be influenced by the old common law approach to the proper law of the contract because the nature of the enquiry under article 4 is fundamentally different: see e.g. Credit Lyonnais v New Hampshire Insurance Co [1997] 2 Lloyd's Rep 1."
It is common ground that there was no express choice of law in this case. The Claimant says there was an implied choice but the Defendant disputes that. The Defendant's primary case is that the parties did not choose any particular law to govern the agency agreement and that the applicable law has to be determined under Article 4. In the alternative, if the parties did choose the law applicable to the agency agreement under Article 3 of the Convention, they chose Spanish law and not English law. The Claimant says that if there was no implied choice then English law applies following the application of Article 4.
The parties rely on, among things, passages in the Giuliano-Lagarde Report ("the Report") which are best set out in full now rather than cited in bits and pieces when discussing the competing submissions. The Report must be read in context but the particularly relevant passages in the section on Articles 3 and 4 are as follows:
Article 3
"3. The parties' choice must be express 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 express but the Convention...
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