Morley v Reiter Engineering GmbH & Co.KG

On an interim jurisdiction application, the party invoking a special jurisdiction under the Judgments Regulation must establish a good arguable case. This requires a much better argument than the opposing party on the material available, rather than proof on the balance of probabilities or a mini-trial. The standard applies to jurisdiction under both Art.5 and Art.23. In determining the place where goods should have been delivered, the court may give substantial weight to contemporary contractual communications, arrangements for collection, actual delivery and the absence of a timely complaint. Where the evidence strongly supports delivery in the defendant’s Member State, the claimant cannot invoke Art.5 merely by relying on an inconsistent witness account.

The defendant, a German company, sold the claimant a race-prepared Lamborghini for use in United Kingdom motor racing. The car was collected from the defendant’s premises in Germany and taken to England. The claimant later brought a contractual claim alleging that the car was unfit for purpose because of oil starvation.

The defendant challenged the jurisdiction of the courts of England and Wales after the claim form was served out of the jurisdiction. The claimant relied on Art.5 of the Judgments Regulation, contending that the car ought to have been delivered in England. The defendant relied primarily on Art.2 and alternatively on an alleged exclusive German jurisdiction clause under Art.23. The issue was whether either party had established the necessary good arguable case at the interim hearing.

1. Application succeeded. The claimant was required to show a good arguable case that the car should have been delivered in England for the purposes of Art.5. That standard requires the party bearing the burden to demonstrate a much better argument on the available material. The court should avoid turning a preliminary jurisdiction issue into a trial, and the ordinary balance-of-probabilities standard was inappropriate.
2. The good arguable case standard applied generally to matters going to jurisdiction, including Art.5, although Art.5 confers non-exclusive jurisdiction. The approach in Canada Trust Co. v Stolzenberg (No.2) and [1998] 1 WLR 547 was of general application, consistently with Bols Distilleries BV v Superior Yacht Services Ltd and [2007] 1 WLR 12.
3. The defendant had the much better argument on the place of delivery. The contemporary correspondence showed that delivery had been fixed for 15 March and that the claimant’s agent would collect the car from the defendant’s works in Germany. The actual collection and delivery in Germany, together with the absence of any complaint for more than three years, strongly supported that conclusion. The inference was consistent with 7 E Communications Ltd v Vertex & Antennentechnik GmbH, [2007] 1 WLR 2175.
4. The claimant’s contrary account was materially inconsistent with the contemporary documents and did not establish a good arguable case under Art.5(1). The defendant was therefore entitled to be sued in Germany under Art.2.
5. The Art.23 issue did not arise. If necessary, the court would have found that the defendant also failed to establish a good arguable case that the draft contract had been brought to the claimant’s attention or that a German jurisdiction clause had been made or evidenced in writing.
6. The claimant was ordered to pay the defendant’s costs of the application on the standard basis.