Ennstone Building Products Ltd v Stanger Ltd

Under Article 4(2) of the Rome Convention, a commercial contract is presumed most closely connected with the country of the characteristic performer’s principal place of business unless its express or implied terms require performance through another establishment. Parties’ expectation that work will be performed through a particular office is insufficient; performance elsewhere must amount to a breach of contract.

The Article 4(2) presumption is displaced by Article 4(5) only where the evidence clearly shows a closer connection with another country. A tort consisting essentially of negligent advice is committed where the advice is received. English law therefore applied to the contractual and tortious claims.

The claimant, an English supplier of building stone, engaged the defendant testing and consultancy company to investigate staining affecting stone used on a building in Scotland. The defendant’s Glasgow office carried out much of the work and recommended cleaning with oxalic acid. The claimant alleged negligence and breach of contract after the staining recurred.

Judge Kirkham in the Technology and Construction Court held that Scottish law governed both the contract and any duty in tort. The claimant appealed because a shorter Scottish limitation period might bar its claim. The central issues were whether the contractual services were, under the contract’s terms, to be performed through the defendant’s Scottish office, and where the alleged tort of negligent advice occurred.

1. Appeal allowed. Lord Justice Keene held, with whom Lord Justice Potter agreed, that English law governed both claims.

2. Under Article 4(2) of the Rome Convention, the defendant’s English principal place of business created the applicable presumption. The final limb of Article 4(2) applies only where the contract, expressly or by implication, stipulates performance through another place of business. An implied term may suffice, but it must be a term whose breach would result from performance elsewhere. The parties’ anticipation that the Glasgow office and Mr Revie would perform the work did not create such a term.

3. Article 4(5) did not displace that presumption. It must be clearly shown, from all the circumstances, that the contract is more closely connected with another country. The Scottish location of the building and the anticipated Scottish work did not meet that standard. The advice, which was the vital contractual service, was received in England; both companies were English.

4. The alleged tort consisted essentially of negligent professional advice. It was committed where the advice was received, namely England. Alternatively, if the tort were foreign, English law would ordinarily apply under the common-law rules unless clear and satisfying grounds justified the exceptional application of Scottish law. Those grounds were absent.

• Court of Appeal: appeal allowed. English law held applicable to the contractual and tortious claims.
• High Court, Technology and Construction Court: Judge Kirkham, on 20 December 2001, held that Scottish law governed the contract and the alleged duty of care. That determination was reversed.
• High Court, Technology and Construction Court: on 5 October 2001, Judge Kirkham held that the English courts had jurisdiction and were the appropriate forum, without deciding the applicable law.