Halpern & Ors v Halpern & Anor

Under the Rome Convention, the law chosen to govern a contract must be the law of a country. A non-national system of religious law cannot itself be the applicable law. Its rules may nevertheless form part of the contractual framework or assist interpretation where the parties’ agreement identifies their relevance with sufficient certainty.

Questions affecting the contract as a whole, including duress, mistake and frustration, remain governed by the applicable national law. Rescission for duress is subject in principle to the same practical-justice approach to counter-restitution as other vitiating factors. Its availability and form depend on the facts; exact restoration is not invariably required.

The claimants sought to enforce a compromise of an inheritance dispute which had been referred to a Beth Din applying Jewish law. The executor defendants resisted enforcement on grounds including duress, mistake, frustration, uncertainty and non-performance of a condition requiring documents to be returned or destroyed.

Christopher Clarke J rejected several defences summarily but left duress and compliance with the condition for trial. A separate preliminary issue was then determined by Nigel Teare QC, sitting as a deputy High Court judge, whose decision was reported at [2006] 3 WLR 946. He held that a contract procured by duress could not be avoided where substantial restitution was impossible.

The Court of Appeal considered the governing law of the compromise, the permissible role of Jewish law, the remaining contractual defences and whether the preliminary ruling on rescission should stand before the relevant facts were found.

1. The appeals were allowed to a limited extent. The preliminary determination concerning rescission for duress was set aside. On the main appeal, the rulings concerning clause 4 and the first alleged mistake were qualified so that those matters could be considered after the facts and any issue of illegality had been determined.

2. The Contracts (Applicable Law) Act 1990 gave effect to the Rome Convention. The Convention contemplated a choice between the laws of countries. It did not permit Jewish law, or another non-national system, to be selected as the contract’s governing law. The compromise contained no express choice of national law and no implied choice demonstrated with reasonable certainty. Under article 4, English law was the applicable law.

3. Jewish law could nevertheless be relevant to the contractual framework and interpretation. A foreign or non-national body of rules may be incorporated where the material rules are identified with sufficient certainty. The context of a compromise between Orthodox Jews, resolving an arbitration conducted under Jewish law, could also assist interpretation. English law continued to govern matters affecting the contract as a whole, including duress, mistake, frustration and their consequences.

4. Section 46 of the Arbitration Act 1996 separately permits arbitrators to decide disputes according to non-national considerations agreed by the parties. An English court may stay proceedings in favour of such an arbitration and enforce the resulting award.

5. The alleged mistake about the rabbi’s power to require an oath could not yet be excluded as a possible basis for relief under another legal characterisation because its resolution depended on facts also relevant to duress. The alleged common mistake about the estate’s existence or value was untenable. The executors knew of the sister’s claim and purported to compromise on her behalf. Her later award could not frustrate an agreement which should already have been performed and which purported to bind her.

6. The compromise was not void for uncertainty. Its machinery identified how assets were to be selected and valued. The defined contracting party’s obligations were personal and, if breached, joint and several.

7. Rescission for duress should in principle follow the practical-justice approach applicable to other vitiating factors. Exact restoration is unnecessary where the court can make appropriate allowances or monetary counter-restitution. Whether practical justice required counter-restitution, and what remedy was appropriate, depended on findings concerning the alleged pressure and the identity and significance of any destroyed documents. The abstract preliminary question therefore could not usefully receive a definitive answer.

1. Court of Appeal (Civil Division): By [2007] EWCA Civ 291, allowed the appeals to a limited extent, qualified two rulings made on the summary judgment application and set aside the answer to the separate preliminary issue.
2. High Court, Queen’s Bench Division, Commercial Court: Nigel Teare QC, sitting as a deputy High Court judge, determined that a party could not avoid a contract procured by duress where substantial restitution could not be offered. The decision was reported at [2006] 3 WLR 946.
3. High Court, Queen’s Bench Division, Commercial Court: Christopher Clarke J disposed summarily of several defences but directed the issues of duress and compliance with the document condition to trial.