Kaefer Aislamientos SA De CV v AMS Drilling Mexico SA de CV

For an undisclosed principal to be bound by a contract, the alleged agent must have acted within the scope of the principal’s actual authority and intended, when contracting, to do so on the principal’s behalf. The contract or surrounding circumstances may exclude the doctrine, but identifying the contractual parties is not, by itself, sufficient.

On an interlocutory jurisdiction challenge, the claimant must establish a good arguable case that an English jurisdiction agreement exists. Ordinarily, the claimant must also have the better of the argument on the available material. Where the evidence makes relative plausibility impossible to determine without a mini-trial, a sufficiently arguable case may suffice. The court’s conclusion is provisional and does not bind the trial court.

The claimant sought payment for works performed on a jack-up rig under a purchase order containing an English exclusive jurisdiction clause. It sued AMS Mexico, AMS, AT1, and Ezion. AT1 and Ezion challenged jurisdiction, arguing that they were not parties to the purchase order.

The claimant alleged that AMS and/or AMS Mexico contracted as agents for AT1 and Ezion, who were therefore undisclosed principals bound by the jurisdiction agreement. The court considered whether there was a good arguable case of actual authority and intention to contract on behalf of the alleged principals, and whether the claimant had the better of the argument.

1. Undisclosed principal. Applying Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, the court held that the alleged agent must have actual authority and must have intended, at the time of contracting, to contract on the principal’s behalf. The contract or surrounding circumstances may show that the agent was the true and only principal.
2. The identification of AMS or AMS Mexico as the contractual party did not, without more, exclude an undisclosed principal. An express prohibition, or a contract concerning the registered title of a named party, might do so. The present contract and circumstances did not demonstrate that the claimant was unwilling to contract with an undisclosed principal.
3. Jurisdictional standard. The claimant bore the burden of establishing the jurisdiction agreement. At this interlocutory stage, the court applied a good arguable case standard rather than the balance of probabilities. The test ordinarily had both an absolute element, requiring a case with substance, and a relative element, requiring the claimant to have the better of the argument.
4. Where the available evidence made it impossible to determine which side had the better argument without conducting a mini-trial, the court could exercise jurisdiction on a sufficiently arguable case alone. That exception did not apply here because the documentary material permitted a relative assessment.
5. There was no good arguable case that AMS Mexico acted for AT1 or Ezion, or that AMS acted for Ezion. There was a good arguable case that AMS acted for AT1, but AT1 had the better of the argument that it was not an undisclosed principal. The evidence showed no direct authority or contemporaneous intention to contract on AT1’s behalf. The benefits of the works, the rig ownership, related agreements, correspondence, settlement discussions and payments did not overcome that conclusion.
6. The applications by AT1 and Ezion were allowed. The court had no jurisdiction to try the claim against them.

First-instance decision. The judgment states that the applications by AT1 and Ezion challenging jurisdiction were allowed.