Scottish & Newcastle International Limited v Othon Ghalanos Limited

The central issue was whether, for the purposes of article 5(1)(b) of Council Regulation (EC) No 44/2001, the goods sold were or should have been delivered in England. Applying English law (the law agreed by the parties), the House held that delivery occurred on shipment at Liverpool. Key legal foundations were article 5(1)(b) of the Regulation and the Sale of Goods Act 1979, in particular sections 61(1) and 32(1). The contracts were analysed as essentially FOB in character: the buyer nominated carrier and had negotiated freight with the carrier's Cyprus agents; bills of lading were non-negotiable, made out to the buyer and to be forwarded to the buyer immediately after shipment; and the seller had no continuing interest in the goods after shipment. On that basis delivery was treated as occurring in Liverpool and the English courts had jurisdiction; the appeal was dismissed.

This was an appeal from the Court of Appeal concerning jurisdiction under the Brussels regime. The respondents, Scottish & Newcastle International Limited (S&N), a Scottish company, sued the appellants, Othon Ghalanos Limited (Ghalanos), a Cypriot company, for the price of eleven consignments of cider shipped in June–July 2004. The sole basis for proceedings in England was article 5(1)(b) of Council Regulation (EC) No 44/2001: whether the place where, under the contract, the goods were delivered or should have been delivered was in a Member State other than the defendant's domicile.

The factual matrix was that the contract was governed by English law; shipment was from Liverpool (or Felixstowe) by Zim Line vessels to Limassol; invoices and documents had boxes showing "Place of delivery" as Limassol; freight was to be prepaid by S&N at a rate agreed by Ghalanos with Zim Line's Cyprus agents; bills of lading were non-negotiable and made out to Ghalanos as consignee and were to be forwarded to Ghalanos immediately after shipment; payment was due 90 days after the vessel's arrival. At first instance Andrew Smith J and the Court of Appeal held for S&N that delivery was in England; Ghalanos appealed.

Issues framed by the House included (i) whether Limassol, as entered on the invoices, constituted the contractual place of delivery, (ii) whether delivery for the purposes of article 5(1)(b) occurred on shipment at Liverpool under English law, (iii) the application of Sale of Goods Act 1979 s.32(1) and the common law principles about delivery to a carrier and agency or bailment, and (iv) whether the contract should be characterised as CFR/C&F or as essentially FOB and the consequences of any documentary sale arrangements retaining symbolic possession.

The House analysed the contract and documents and concluded that the invoices' "place of delivery" entries referred to the port of discharge in the carriage chain and did not displace ordinary legal analysis under English law. On the facts the carriers were to be regarded as acting for the buyer and the seller had ceased to have any continuing interest in the goods on shipment: bills were non-negotiable and addressed to the buyer and to be forwarded immediately; freight had been negotiated by the buyer; property and risk passed on shipment. Under s.32(1) the seller's delivery to the carrier was prima facie delivery to the buyer in Liverpool, and nothing in the contract displaced that prima facie rule. The House therefore dismissed the appeal, holding that the place of delivery for article 5(1)(b) was Liverpool and that the English courts had jurisdiction.

The Lords also discussed the wider conceptual question whether, in documentary or CIF/CFR contexts, the place of delivery for article 5(1)(b) might in different circumstances be regarded as the place of transfer of documents or another place; some speeches reserved questions not arising for decision on the facts.

This was an appeal: the appeal was dismissed. The House held that, applying English law to the contract, delivery took place on shipment at Liverpool because the seller, when handing the goods to the carrier nominated under the buyer's instructions and with bills of lading made out to the buyer and forwarded to the buyer, had effected a voluntary transfer of possession (within Sale of Goods Act 1979 ss.61 and 32). Consequently the place of delivery for article 5(1)(b) was Liverpool and the English courts had jurisdiction.

High Court (Andrew Smith J) [2006] EWHC 1039 (Comm); Court of Appeal [2006] EWCA Civ 1750; House of Lords [2008] UKHL 11.