GDE LLC & Anor v Anglia Autoflow Ltd

Under the Rome Convention, an implied choice of law requires a genuine positive choice demonstrated with reasonable certainty. An English jurisdiction clause may support such an inference, but it does not necessarily establish a choice of English law. In the absence of choice, the court must identify the country with which the contract is most closely connected. The Article 4(2) presumption should not be strained to apply where the characteristic performer did not exist when the contract was made. The court should instead apply Article 4(1), assessing objectively the centre of gravity of the contractual relationship and giving appropriate, but reduced, weight to unforeseen subsequent events.

The claimants sought unpaid commission and damages under a commercial agency agreement covering North America. The parties disputed whether the agreement was governed by English, Ontario or Georgia law. The issue was tried as a preliminary question because the claimants accepted that their substantive claim would be time-barred under Ontario law.

The agreement contained a clause submitting serious disputes to the English courts, but no express choice-of-law clause. The intended agent, GDE, had not been incorporated when the agreement was concluded. The court therefore considered whether there was an implied choice under Article 3 of the Rome Convention and, failing that, how Articles 4(1), 4(2) and 4(5) applied.

1. No implied choice of English law. Article 3(1) required the claimants to establish an objective, mutual choice demonstrated with reasonable certainty. The jurisdiction clause imposed a mandatory obligation to litigate serious, unresolved disputes in England, but it created at most an assumption that English law might apply. It did not demonstrate a positive choice of English law. The surrounding circumstances did not cure that deficiency.
2. Article 4(2) was incapable of sensible application. The characteristic performance was that of the agent, GDE, but GDE did not exist when the agreement was concluded and therefore had no principal place of business or central administration at that date. The court should not strain the Article 4(2) presumption in those circumstances. Article 4(1) supplied the appropriate route.
3. Closest connection. Article 4(1) required an objective assessment of all factors characterising the contractual relationship to identify its centre of gravity. The dominant considerations were the agreement’s primary focus on Canada, especially eastern Canada, and the agent’s Ontario base from which he worked when not travelling. The English jurisdiction clause was ancillary and was outweighed by those factors. The agreement was most closely connected with Ontario.
4. Alternative Article 4 analysis. If Article 4(2) applied, the agreement was commercial and the relevant connecting factor would be the agent’s principal place of business at the date of the contract. That place was also Ontario. If a presumption in favour of Georgia arose, Article 4(5) would displace it in favour of Ontario, but not England.
5. The preliminary issues were answered by holding that the Agency Agreement was governed by Ontario law. The second issue did not arise.