Lawlor v Sandvik Mining & Construction Mobile Crushers and Screens Ltd

Under the Rome Convention, an implied choice of law exists only where the contract’s terms or circumstances objectively demonstrate with reasonable certainty that the parties made a positive choice. The party asserting the choice bears the burden. A conscious subjective decision need not be proved, but the circumstances must support the conclusion that the parties should be taken to have intended that law. It is insufficient that the law would probably have been chosen.

Article 4 supplies the closest-connection rule where Article 3 is not satisfied. The Convention’s test must be applied in light of its international character and the need for uniformity, rather than through the historically blurred common-law approach. A previous contract governed by one law does not, without more, establish an implied choice for a later contract of a different legal nature and made in different circumstances.

The claimant, an Irish citizen, worked principally in Spain as a sales agent for a UK company. The informal agency arrangement began in about 1994 or 1995 and ended in 2009 after the company was acquired by Sandvik. He claimed compensation under the Commercial Agents (Council Directive) Regulations 1993. The value of the claim depended on whether English or Spanish law governed the agency agreement.

On a preliminary issue, HHJ Mackie QC held that Spanish law applied under Article 4 of the Rome Convention and rejected an implied choice of English law under Article 3. The appeal challenged only the Article 3 conclusion. The central issue was whether the circumstances objectively demonstrated with reasonable certainty an implied choice of English law.

The appeal was dismissed unanimously. Lord Toulson delivered the judgment, with Lord Justices Leveson and Lloyd agreeing.

1. Applicable framework. Article 3 of the Rome Convention gives effect to party autonomy where the parties have expressed a choice of law or where their choice is demonstrated with reasonable certainty by the contract’s terms or circumstances. Article 4 applies the closest-connection test where Article 3 is not satisfied.
2. Objective standard. The party asserting an implied choice bears the burden of establishing it. The inquiry is objective. Evidence of either party’s unspoken subjective thoughts is inadmissible. It is unnecessary to prove an actual conscious choice, but the circumstances must make it the only reasonable conclusion that the parties should be taken to have intended the putative law.
3. International interpretation. The distinction between inferred choice under Article 3 and closest connection under Article 4 had become blurred at common law. Article 3 could not be applied through that earlier common-law approach. Article 18 required regard to the Convention’s international character and the desirability of uniform interpretation and application, as recognised in Samcrete Egypt v Land Rover Exports Limited [2001] EWCA Civ 2019 and Iran Continental Shelf Oil Co v IRI International Corp [2002] EWCA Civ 1024.
4. Application. The evidence concerning formation of the agency agreement was vague. The claimant lived and worked mainly in Spain, and the available circumstances did not demonstrate with reasonable certainty that the agreement was intended to be governed by English law. It was insufficient to show merely that English law would probably have been chosen if a choice had been made.
5. Earlier employment contract. The fact that the claimant’s earlier employment contract was probably governed by English law did not establish an implied choice for the later agency agreement. The agency created a different legal relationship in different factual circumstances, and the earlier contract was not found to contain an express English-law term. Spanish law therefore applied under Article 4.

• Court of Appeal (Civil Division) — [2013] EWCA Civ 365: dismissed the appeal.
• Queen’s Bench Division, London Mercantile Court — HHJ Mackie QC determined the preliminary issue and held that Spanish law governed the agency agreement under Article 4 of the Rome Convention.