Chester Hall Precision Engineering Ltd v Service Centres Aero France

For an exclusive jurisdiction clause under Article 23, the court must be satisfied both that the parties really consented to the chosen jurisdiction and that the Regulation’s formal requirements are met. Consent may arise through oral agreement or conduct, including acceptance of contractual terms incorporated by reference. A party relying on the clause must establish an applicable agreement and have the better of the argument on the evidence available at the jurisdiction challenge. Where the evidence does not establish that the contractual terms containing the clause applied to the relevant transactions, the clause is not shown to be incorporated and the jurisdiction challenge fails.

The claimant, a United Kingdom company, sought recovery of alleged overpayments made to the defendant, a French company, for semi-finished metal products supplied between 2007 and 2009. The defendant applied to set aside the claim and declare that the English court lacked jurisdiction, relying on an exclusive jurisdiction clause in its general conditions of sale selecting the Commercial Court of Nantes.

The issue was whether the clause had been incorporated into the parties’ agreements and whether Article 23 of Council Regulation EC No. 44/2001 was engaged. The claimant abandoned an earlier argument based on a separate alleged contract and relied on the absence of proof that the relevant conditions had been incorporated.

1. Application dismissed. The defendant failed to establish that the Commercial Court of Nantes had exclusive jurisdiction.
2. Article 23 required proof of both genuine consent to the jurisdiction clause and compliance with its formal requirements. An exclusive jurisdiction clause need not appear in a written agreement between the parties. Agreement by conduct may satisfy the consent requirement, provided the agreement is evidenced in writing and the parties’ choice of Member State jurisdiction is certain.
3. The court applied the principle illustrated by 7E Communications Limited v Vertex Antennentechnick GmBh [2007] 1 WLR 2174 and Credit Suisse Financial Products v Societe Generale D'Enterprises [1997] CLC 168: express incorporation by reference can establish agreement to written terms containing a jurisdiction clause. It is immaterial that the party did not possess or read the incorporated terms.
4. The defendant nevertheless had to prove that the terms relied on were the terms incorporated into the relevant 2008 and 2009 transactions. The purchase orders and confirmations referred to the defendant’s general conditions, but the reverse sides were not produced. There was no evidence identifying the exhibited conditions as those applicable at the material time. The evidence therefore did not establish incorporation of the Nantes clause.
5. The result was the same whether the evidential test required a good arguable case, as discussed in Fosby v Ranovito [2010] Lloyd's Law Reports, Volume 1, page 384, or proof on the balance of probabilities. The defendant failed on either approach.
6. The formal requirements concerning consent to a derogation from ordinary jurisdiction are to be construed strictly, reflecting the importance of establishing agreement to the chosen jurisdiction, as observed in Poskey at paragraph 39. The application was dismissed.