Choil Trading SA v Addax Energy SA

Under Article 17 of the Lugano Convention, the claimant must show clearly and precisely that the parties reached consensus on English jurisdiction. The claimant must establish a good arguable case, generally by showing a much better argument than the defendant. Jurisdiction clauses in separate contracts are construed in the context of the transaction as a whole, but they do not ordinarily govern disputes arising under a distinct joint venture agreement where the disputes and contractual rights are of a different character. An English jurisdiction clause will not be implied merely because the parties commonly use English law and jurisdiction in international trade. The court must determine whether the agreement, read against its relevant background, would reasonably be understood to contain that term.

Addax Energy SA applied for a declaration that the Commercial Court lacked jurisdiction over claims brought by Choil Trading SA. The claims arose from an alleged oral joint venture concerning physical oil sales and derivative trading. Choil relied on Article 17 of the Lugano Convention, asserting that the parties had expressly or impliedly agreed to English jurisdiction. It alternatively relied on jurisdiction clauses in two related physical sale contracts. The central issues were whether those clauses extended to claims under the joint venture agreement and whether an English jurisdiction clause had been agreed or could be implied.

1. Addax was entitled to a declaration that the court had no jurisdiction over any claim in Choil’s un-amended particulars of claim.

2. For each claim under Article 17 of the Lugano Convention, Choil bore the burden of demonstrating clearly and precisely a consensus that the English courts should have jurisdiction. Consensus was an autonomous concept. Choil had to establish a good arguable case, ordinarily by showing that its argument was much better than Addax’s.

3. The jurisdiction clauses in the two physical sale contracts had to be construed against the background of the related joint venture and sale contracts. However, the joint venture agreement and the sale contracts were legally distinct. Claims for profit sharing, lost profits and speculative derivatives arose under the joint venture agreement and concerned disputes of a different character from disputes under the sale contracts. There was no basis for presuming that the parties intended the sale-contract clauses to govern disputes under an unprovided-for joint venture agreement.

4. The same conclusion applied to the lost-profit and speculative-derivative claims. Even if the profit-sharing claims had fallen within the sale-contract clauses, the other claims were not sufficiently connected with those contracts.

5. The evidence did not establish an express English jurisdiction clause. The contemporaneous record of the meeting contained no such term, and Choil did not have the better argument on the conflicting evidence. Nor could such a term be implied. Applying the approach in Attorney General of Belize v Belize Telecom, the question was whether the agreement, read as a whole against the relevant background, would reasonably be understood to contain the term. The different nature of the disputes and the parties’ common base in Geneva made that implication unjustified.

6. It was unnecessary to decide whether the formal requirements of Article 17(1)(a), (b) or (c) had been satisfied.