Cube Lighting And Industrial Design Ltd v Afcon Electra Romania SA

Under Article 23 of the Council Regulation (EC) No 44/2001, a party invoking an exclusive jurisdiction agreement must establish a good arguable case that consensus on the clause was clearly and precisely demonstrated. The writing requirements help establish that consensus and cannot be separated from it. Draft contracts which were never concluded do not evidence a free-standing jurisdiction agreement merely because they contain jurisdiction clauses. An alleged oral agreement must also satisfy the applicable writing requirements. The English court therefore lacks jurisdiction where the evidence shows continuing negotiations, no concluded agreement, no writing from the party to be bound, and no written confirmation capable of engaging the limited good-faith exception.

Cube, an English company, claimed payment from Afcon, a Romanian company, for lighting goods and related work supplied for a shopping mall in Bucharest. Cube initially relied on Article 5 of the Council Regulation (EC) No 44/2001, but later relied on Article 23 and alleged that the parties had agreed that the English courts would have jurisdiction.

The claim was issued in the Chancery Division. Afcon applied under CPR Part 11 for a declaration that the English courts had no jurisdiction. The court considered whether the draft contracts were concluded, whether they evidenced a free-standing oral jurisdiction agreement, and whether Article 23’s formal requirements were satisfied.

1. Application allowed. The court declared that the courts of England and Wales had no jurisdiction to try the claim commenced by the Claim Form issued on 14 February 2011.
2. The applicable test was whether Cube had a good arguable case that Article 23 applied. This required more than a serious issue to be tried, but less than proof on the balance of probabilities. Cube had to show a much better argument than Afcon, on the available material, that the requirements of Article 23 were met.
3. Article 23 required clear and precise demonstration of consensus on the jurisdiction clause. The formal requirements were a means of guaranteeing that consensus and could not be detached from it. The strict approach in Estasis Salotti di Colzani Aimo e Gianmario Colzani v RUWA Polstereimaschinen GmbH [1976] ECR 1831 remained applicable.
4. The evidence did not establish that Contracts A, B and C had been concluded. Negotiations continued after the April and June meetings, the commercial terms changed, and the parties proceeded by later purchase orders. The jurisdiction clauses were therefore terms in proposed contracts, not evidence of a separate agreement governing subsequent contracts.
5. Even if an oral jurisdiction agreement had been alleged with sufficient precision, Afcon had not signed the draft contracts and there was no writing emanating from Afcon containing or evidencing its consent. The exception recognised in F Berghoefer GmbH & Co KG v ASA SA [1985] ECR 2699 could not assist Cube because no written confirmation from Cube had been transmitted to Afcon so as to invite an objection.
6. Cube had therefore failed both on consensus and on the Article 23 formalities. The court did not determine the substantive contractual disputes.

First-instance jurisdiction decision. The judgment states that Afcon’s application under CPR Part 11 was initially listed before Kitchin J on 1 April 2011 and was then determined by the Deputy High Court Judge.