Accentuate Ltd v Asigra Inc (A Company Incorporated In Canada)

Mandatory EU rights under the Commercial Agents (Council Directive) Regulations 1993 may prevail over a foreign governing-law clause and an arbitration clause requiring arbitration abroad. Where the Regulations arguably apply, an arbitration agreement is “null and void” or “inoperative” under section 9(4) of the Arbitration Act 1996 so far as it requires arbitration of questions concerning those mandatory rights. A foreign tribunal’s decision on its own jurisdiction is not conclusive in England. The English court must determine whether the arbitration agreement binds the claim and whether a foreign award can be recognised. A claim for compensation under Regulation 17 may therefore satisfy the gateways for service out of the jurisdiction.

Accentuate Ltd appealed against a District Judge’s order setting aside permission to serve Asigra Inc out of the jurisdiction and staying the proceedings under section 9 of the Arbitration Act 1996. The parties’ Master Reseller Agreement selected Ontario law and Toronto arbitration. Accentuate claimed compensation under Regulation 17 of the Commercial Agents (Council Directive) Regulations 1993. A Canadian arbitral tribunal had held that the Regulations did not apply and that Ontario law governed.

The appeal concerned whether Accentuate had a good arguable case that it was a commercial agent, whether the Canadian award bound the English court, whether the arbitration clause could defeat mandatory EU rights, and whether the original application suffered from inadequate disclosure.

1. The appeal was allowed. The order staying the proceedings was set aside, the stay was lifted, and permission to serve out of the jurisdiction remained in force. Directions were to be given for the proceedings to continue.
2. The Distributor had a real prospect of establishing that it was a commercial agent under Regulation 2(1). The first limb concerns a self-employed intermediary with continuing authority to negotiate the sale or purchase of goods on behalf of the principal. The court adopted the broad meaning of negotiation discussed in Fryer v Ian Firth Hardware Ltd and Parks v Esso Petroleum Co Ltd. The contractual arrangement plausibly involved finding end users who would enter software licence agreements directly with the Licensor. The supply of hardware was ancillary but potentially critical because the Regulations concern goods.
3. Following Ingmar GB Ltd v Eaton Leonard Technologies Ltd, mandatory EU rights could not be defeated by a foreign governing-law clause. The same principle applied to an arbitration clause selecting a foreign place and law. If the Regulations applied, the arbitration agreement was “null and void” and “inoperative” under section 9(4) of the Arbitration Act 1996 insofar as it required arbitration of questions concerning mandatory Regulation 17 rights.
4. The arbitral tribunal could rule on its own jurisdiction, but could not be the final adjudicator of that jurisdiction. The English court therefore had to decide whether the arbitration agreement applied to the compensation claim and whether the award could be recognised. The tribunal’s decision was not conclusive.
5. Accentuate consequently had a good arguable case under CPR 6.20(5)(c) and CPR 6.20(6). If compensation was payable, it was payable in England, so the breach occurred there. The Ontario law and arbitration provisions did not defeat those gateways.
6. The disclosure challenge failed. Although disclosure could have been fuller, the District Judge had enough information to identify a real issue and there was no material injustice. On an appeal by way of review, no error justified setting aside the permission to serve.

• High Court (Queen’s Bench Division): Accentuate’s appeal from the District Judge’s decision was allowed. The stay was lifted and permission to serve out remained in force.
• District Registry: The District Judge set aside permission to serve out, declared that the court had no jurisdiction, and granted a stay under section 9 of the Arbitration Act 1996.