Fr. Lürssen Werft GmbH & Co Kg v Halle

For service out of the jurisdiction, the claimant must show that it has much the better of the argument that the contract is governed by English law. Under Article 3.1 of the Rome Convention, an implied choice is sufficient where a real choice is demonstrated with reasonable certainty from the contract and all the circumstances. The court must not infer a choice merely because English law would be a reasonable choice. Related contracts containing an express English-law clause may provide strong evidence, and subsequent contractual conduct may be considered insofar as it illuminates the parties’ intention at the time of contracting. Where serious issues remain for trial and England is clearly the most convenient forum, jurisdiction may properly be exercised despite the parties’ foreign connections.

The claimant, a German shipbuilder, claimed commission from the defendant, an American resident of Florida, under a short Commission Agreement concerning the sale of two yachts. The agreement contained no governing-law or jurisdiction clause. The parties’ earlier Vessel Construction Contracts and later Termination Agreement were governed by English law.

The claimant had obtained permission to serve the claim form out of the jurisdiction. The defendant applied under CPR Part 11 to set aside that order, arguing that English law had not been chosen, that the claim had no reasonable prospect of success, and that England was not the forum conveniens. The court therefore had to decide those three issues.

1. Application refused. The claimant established a good arguable case, in the sense that it had much the better of the argument, that the Commission Agreement was governed by English law.
2. Article 3.1 of the Rome Convention, given effect by the Contracts (Applicable Law) Act 1990, permits an implied choice of law where a real choice is demonstrated with reasonable certainty from the contract or the surrounding circumstances. The court must not strain to find a choice where the parties had no clear intention to make one.
3. The two earlier Vessel Construction Contracts were closely related to the Commission Agreement and governed the parties’ prior commercial relationship. Their express choice of English law therefore strongly supported an implied choice for the Commission Agreement. The later Termination Agreement reinforced that conclusion.
4. The court further held that subsequent conduct, including the terms of a later contract, could legitimately be considered under Article 3.1 insofar as it shed light on the parties’ intention when the earlier contract was concluded.
5. There were three serious issues to be tried: estoppel or waiver arising from an email; whether the Termination Agreement discharged the commission obligation; and the proper construction of the Commission Agreement. The threshold under CPR 6.37(1)(b) was equivalent to the summary-judgment test under CPR 24.2. Each issue was properly arguable.
6. England was clearly the most suitable forum. The principal issues were likely to be governed by English law, the factual and disclosure issues were limited, the parties communicated in English, and the parties had accepted LMAA arbitration as a dispute-resolution forum. Germany and Florida were not more convenient. The defendant’s conditional offer to submit to German jurisdiction carried little weight.