Oakley v Ultra Vehicle Design Ltd. & Anor

A claim concerning ownership of an asset and a security interest may fall within the jurisdiction conferred by the Judgments Regulation where a necessary co-defendant is domiciled in England and the claims are sufficiently connected to require determination together. The mere presence of insolvency proceedings does not bring an otherwise ordinary proprietary claim within the Insolvency Proceedings Regulation. A jurisdiction agreement must satisfy the formal requirements of Article 23. Those requirements are distinct from the applicable-law rules under the Rome Convention, which permit an express oral choice of law. Where factual evidence on a preliminary issue is not challenged by cross-examination after a proper opportunity to seek it, the court may treat that evidence as unchallenged.

The applicant, the supervisor of a company voluntary arrangement, sought directions concerning ownership of a valuable motor home and the validity of security claimed by Behlke Electronic GmbH under a contract dated 21 March 2003. Ultra Vehicle Design Ltd, the other respondent, was domiciled in the United Kingdom but took no part. Behlke disputed English jurisdiction and contended that the contract was governed by German law.

The court determined two preliminary issues: whether it had jurisdiction under the Insolvency Proceedings Regulation or the Judgments Regulation, and whether English or German law governed the 2003 contract.

1. Insolvency Proceedings Regulation. The company voluntary arrangement had been approved before Regulation 1346/2000/EC came into force and therefore was not main insolvency proceedings within Article 43. The present application was also proceeding outside the compulsory winding-up proceedings because the liquidator was not a party. The Regulation consequently did not confer jurisdiction.
2. In any event, the claim was an assertion of proprietary rights which the company could have made whether or not insolvency proceedings existed. Applying the criterion discussed in Gourdain v Nadler Case 133/78, [1979] ECR 733, it was not a claim deriving directly from, and closely connected with, insolvency proceedings.
3. Judgments Regulation. The oral agreement alleged by Behlke did not satisfy Article 23 of Regulation 44/2001/EC. The parties had not established a relevant practice: there had been only one earlier transaction, involving a different contracting company, and nothing relevant was recorded in writing. The reasoning in The Tilly Russ Case 71/83, [1984] ECR 2417; [1985] QB 931 did not establish that the present requirements were met.
4. Article 6(1) applied. UVDL was domiciled in the United Kingdom and was a necessary, or at least proper, party. The claims concerning ownership, the sale agreement and Behlke’s alleged interest in the vehicle were so closely connected that they should be heard together to avoid inconsistent or irreconcilable decisions. The court therefore had jurisdiction over Behlke.
5. Choice of law. The question whether the contract was governed by English or German law was not necessary to establish jurisdiction under the Judgments Regulation. It was nevertheless necessary to determine the effect of the contract. Under Article 3 of the Rome Convention, incorporated by the Contracts (Applicable Law) Act 1990, an express choice of law may be demonstrated by the circumstances and need not be in writing.
6. The evidence of an express oral agreement that German law would govern was unchallenged. The applicant had not sought an order for cross-examination when the factual dispute was apparent and had declined the later opportunity to cross-examine. The court therefore declared that the 2003 contract was governed by German law and referred the matter to a District Judge for directions and case management.