British Sugar Plc v Fratelli Babbini di Lionello Babbini & CSAS & Ors

Under art 23 of the Council Regulation (EC) No. 44/2001, a clause selecting a particular court in a Member State may confer exclusive jurisdiction over disputes with an international dimension even though the clause does not expressly mention international disputes. The question is assessed when jurisdiction arises in actual proceedings, not when the contract is made. The clause is construed as an autonomous European concept, although the proper law of the contract may inform that construction. Formal requirements must be strictly applied, but the clause itself is not to be given an artificially narrow construction. Where a contractual jurisdiction clause within art 23 applies, it takes precedence over the third-party jurisdiction conferred by art 6(2). Once the original proceedings have ended, art 6(2) no longer supplies a basis for continuing separate third-party proceedings.

British Sugar had brought proceedings concerning the failure of a pulp press against Babbini and others. Babbini subsequently issued Part 20 proceedings against BF Engineering, the supplier of the press gearbox, relying on art 6(2) of the Council Regulation (EC) No. 44/2001. The gearbox contract, governed by Italian law, contained an Italian-language clause providing that, for any dispute, the court of exclusive jurisdiction was that of Forli.

The main action was settled by consent on 28 October 2004. BF then applied for a declaration that the court had no jurisdiction over the Part 20 claim and sought to set aside the claim form and service. The central issues were whether the forum clause fell within art 23 and, alternatively, whether the Part 20 claim could continue after the main proceedings had ended.

1. The application succeeded. The court granted BF the declaration and consequential relief sought.
2. Article 23 applied to the forum clause. The court proceeded on the agreed basis that a clause within art 23 takes precedence over art 6(2). The approach to whether an agreement confers jurisdiction was the autonomous approach identified in Powell Duffryn Plc v Petereit [1992] ECR I-1745.
3. The required international element was considered in the context of the proceedings and the Regulation’s jurisdictional scheme. It was not necessary for the contract or clause expressly to refer to international disputes. Article 2(1) itself establishes the general rule for persons domiciled in a Member State, while the exceptions concern circumstances in which a person may be sued elsewhere. The present Part 20 proceedings plainly had an international dimension.
4. The court rejected the submission that the clause had to be assessed at the date of contracting. Sanicentral GmbH v Collin [1979] ECR 3423 supported treating the commencement of proceedings as the relevant time. The court also rejected an artificially strict construction based on Estasis Salotti di Colzani e Gianmarco Colzani v RUWA Polstereimaschinen GmbH [1976] ECR 1831. That decision concerned strict compliance with art 17’s formal requirements, not an inquiry into the parties’ unexpressed intentions.
5. Although the concept in art 23 was autonomous, the law governing the contract was a proper starting point for construction. Under Italian law, selection of a court as having competenza also selected it as having giurisdizione. The English translation of the clause likewise indicated exclusive jurisdiction at Forli. Logic, commercial common sense and the clause’s wording therefore supported its application to all disputes, including those with an international dimension.
6. Alternatively, CPR Part 20.9 could not be used to prevent continuation of the Part 20 claim while the main action remained live, because that would impair the effectiveness of the Regulation under Kongress Agentur Hagen GmbH v Zeehaghe BV [1990] ECR I-1845. But the main action had ended following the consent judgment and payment. Article 6(2) therefore no longer supplied jurisdiction for the separate Part 20 claim.