Convrgnt Value Engineering LLC v Kennedys Dubai LLP

For Unfair Contracts Act 1977 section 27(1), a choice of English law does not prevent disapplication where, absent that choice, Rome I would select foreign law. A branch under Article 19(2) must be an extension of a distinct parent body; an entity’s own office cannot be its branch. The Retainer was not a branch operation, but its substantive connections made Dubai manifestly closer under Article 4(3), so UCTA did not apply.

Alternatively, the £3 million cap would have failed the reasonableness test. Broad wording covered failure-of-consideration and unjust-enrichment claims. The statement about the terms was not actionable and was not relied upon.

The claimant, a Dubai construction company, retained the defendant law firm in connection with a claim in the Dubai Courts. The Retainer was governed by English law and contained a £3 million liability cap in the defendant’s standard terms.

The court determined four preliminary issues: whether section 27 of UCTA disapplied the statutory controls; whether the cap was reasonable if UCTA applied; whether the cap covered claims for failure of consideration or restitution; and whether statements about the standard terms created actionable misrepresentation or estoppel. The judgment was a first-instance determination of those issues.

The court determined all four preliminary issues in favour of the defendant, subject to its alternative conclusion on reasonableness.

1. Choice of law. Article 19(2) of the Rome I Regulation requires a branch or establishment to be an extension of a distinct parent body. The defendant’s Dubai office was not a branch of the defendant itself. Authorities including Ets A de Bloos SPRL v Société en Commandite par Actions Bouyer (Case 14/76) and CNP spółka z ograniczoną odpowiedzialnością v Gefion Insurance A/S (Case 913/19) supported that approach.
2. The Article 4(3) exception nevertheless applied. Its threshold is high and requires a comparison of all outwardly ascertainable circumstances at the time of contracting. The substance, subject matter, place and performance of the Retainer were overwhelmingly connected with Dubai. Those connections clearly and decisively outweighed the English links. Accordingly, absent the parties’ choice, Dubai law would have governed, triggering section 27(1) of the Unfair Contracts Act 1977.
3. Reasonableness. This was an alternative determination because UCTA did not apply. The burden under section 11(5) would have been on the defendant. The expected loss materially exceeded the cap, the defendant had substantial insurance and parent-company support, and no rational explanation for the cap’s level was given. The cap would therefore have been unreasonable.
4. Scope and representation. Applying the ordinary contractual construction principles in Arnold v Britton [2015] AC 1619, the broad wording of the cap included liability arising otherwise than in contract, tort or statute and included non-performance. It therefore covered failure-of-consideration and unjust-enrichment claims. The statement that disagreement was unlikely did not represent that the terms need not be read. The terms invited inspection, and CVE’s failure to read them was independent of the statement. There was consequently no actionable misrepresentation or estoppel.