Commercial Marine Piling Ltd v Pierse Contracting Ltd

Under article 5(1)(a) of Council Regulation 44/2001, a defendant domiciled in one Member State may be sued in another where that is the place of performance of the obligation in question. That place is determined under the law governing the obligation. For a guarantee, the characteristic performance is ordinarily that of the guarantor, but the article 4(2) presumption may be displaced where the circumstances as a whole show a closer connection with another country. Where a guarantee contains no provision identifying the place of payment, the general rule is that the debtor must seek the creditor. The commercial and geographical centre of gravity of the guarantee, including the place where the guaranteed payment and related obligations were to be performed, justified English jurisdiction.

Commercial Marine & Piling Limited claimed sums under a parent company guarantee given by Pierse Contracting Limited, an Irish company, in respect of obligations owed by its English subsidiary, Pierse Contracting Limited (UK). The underlying English proceedings against the subsidiary resulted in judgment after its defence was struck out.

The Irish guarantor applied for a declaration that the English courts lacked jurisdiction. The central issues were the applicable law of the guarantee, whether the article 4(2) presumption under the Rome Convention was displaced by article 4(5), and the place of performance of the payment obligation for the purposes of article 5(1)(a) of Council Regulation 44/2001.

1. Application dismissed. The guarantor could be sued in England under article 5(1)(a) of Council Regulation 44/2001 because the place of performance of the relevant obligation was England.
2. The place of performance had to be determined under the law governing the obligation, applying Industrie Tessili Italiana v Dunlop AG (Case 12/76) [1976] ECR 1473. The 1990 Act gave effect to the Rome Convention. Article 4(2) created a presumption in favour of the country of the guarantor’s central administration because the characteristic performance of a guarantee was the guarantor’s payment obligation.
3. The presumption was displaced under article 4(5). The relevant factors included the place where payment under the guarantee was to be made and the place of performance of the beneficiary’s obligation. Consistently with Samcrete Egypt Engineers and Contractors SAE v Land Rover Exports Ltd [2001] EWCA Civ 2019, the guarantee had a geographical centre of gravity in England. The guarantor’s Irish incorporation was the only material Irish connection.
4. There was no express term identifying the place of payment. The general English rule stated in The Eider (1893) P 119 was that the debtor must seek the creditor. The court followed the reasoning in Bank of Scotland v Seitz [1990] SLT 584, distinguishing the different demand-based circumstances considered in Britten Norman Ltd v State Ownership Fund of Romania (6 July 2000).
5. The guarantee required payment upon default by the English subsidiary and did not require a demand. Payment was therefore to be made to CMP in England. The same conclusion would have followed under the Irish authority of Unidare plc and Unidare Cables Ltd v James Scott [1991] IR 88.