Summary
The claimant, Canyon, was a Scottish company. The defendant, GDF, was a Dutch company.
The sum of money was due under a contract concluded between Canyon and another Dutch company, Cecon. Cecon had sub-contracted to Canyon some of the work which it had to carry out for GDF. The project agreement between Cecon and GDF contained a Dutch jurisdiction clause. The sub-contract contained an arbitration clause. Cecon fell behind with the payment to Canyon which was due under the sub-contract. GDF wrote to Cecon offering to pay Canyon directly.
Based on this commitment, Canyon’s claim against GDF was for £3.4 million.
The proceedings were started in England. The defendant challenged the jurisdiction of the English court.
The defendant’s challenge to jurisdiction was dismissed by the English High Court. HHJ Mackie QC held:
“30 The alleged contract requires GDF to pay Cecon’s debts to Canyon in return for Canyon completing the Trenching Contract. The characteristic obligation of the alleged contract seems to me to be the assumption by GDF of the obligation to pay what Canyon is owed under its contract with Cecon (a contract to which, it is common ground, GDF is not a party) in return for Canyon continuing to perform it. No one is providing what would naturally be described as goods or services. The cited cases concern conventional commercial arrangements such as distribution agreements and matters such as how to classify an agreement involving both goods and services. The vocabulary of and assumptions behind these cases are far removed from the sort of obligations arising under the alleged contract. The assumption of the obligation to pay is not what one would usually describe as a contract for goods or services and I do not consider it to be so here. I therefore conclude that art.5(1)(b) does not apply. That then leads to the question—what is the place of performance “of the obligation in question” under art.5(1)(a) ?
[…]
53 [...] I conclude that a normally well informed defendant would be reasonably able to foresee that, apart from at his domicile, he might be sued in either of the places where payment was required to be made under the alleged contract. At the time of assuming the payment obligation, the essence of what he was required to do under the alleged contract, he could readily have discovered that payment was due in Scotland or England. If GDF can be taken to have given thought to the matter when entering into the alleged contract it could reasonably have foreseen that if it failed to pay it might be sued in the Netherlands where it is domiciled or in Scotland or in England. There is force in Mr Fealy’s submission that the art.5(1)(b) cases dealing with goods and services necessarily involve a degree of proximity that is likely to be greater than in other cases and should be viewed accordingly. On balance, however, I conclude that art.5 gave Canyon a choice between Scotland and England.” [53]
Regarding the CJEU’s preliminary reference request, the judge had this to state:
“54 I do not pretend that the issues raised by this aspect of the application are straightforward or based on principles that have been established beyond doubt. Mr Russell suggested that the Court might consider a reference to the European Court under CPR68. I do not consider that it would be appropriate for me to take that step. The Court of Appeal can of course take that step if it thinks it necessary. I will however give permission to appeal, at least on the European law aspects of this application.” [30, 53 and 54]
On 7th January 2016, the Court of Appeal dismissed the appeal. The judgment is yet to be reported.