Chapter 14: Jurisdiction & Conflict of Laws Flashcards
1
Q
1 Introduction to jurisdiction and conflict of laws
A
1.1 International aspects of a dispute
When a dispute has an international dimension – so in some way it touches on a country other
than England or Wales – there are three things to consider.
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Q
1
A
Do the courts of England & Wales have jurisdiction to determine a claim?
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Q
2
A
Which countries laws will apply to determine the dispute?
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Q
3
A
Will it be necessary to enforce a judgement abroad and how will this be done?
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Q
1.2 Law and jurisdiction contrasted
A
The first question is concerned with whether the English / Welsh courts will decide a dispute – or is it a dispute that should not be resolved in some other court / tribunal. The second question is concerned with which laws the English and Welsh courts will apply to decide the dispute, assuming they do have jurisdiction.
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Q
1.2 Law and jurisdiction contrasted
A
Don’t confuse these two questions! In most cases you come across, the courts of England and Wales are applying English / Welsh law. But it may not be so. Eg for reasons you will go on to explore, an English Court might conclude that it has jurisdiction to hear a dispute, but that French
law applies. The court will then determine the claim, but using French law. It will probably need
expert evidence in relation to the French law
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Q
1.2 Law and jurisdiction contrasted
A
Note that the CPR will always apply to disputes before the Courts of England and Wales, whether the applicable law is English law, French law or any other law. So a line has to be drawn between English procedural law like the CPR which always applies, and the English substantive law, which could be displaced in an international dispute with the law of another country
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Q
1.3 Why does it matter?
A
It is also important to know which court(s) have jurisdiction because:
(a) If you commence proceedings in a court which does not have jurisdiction, the court might refuse to decide the dispute, and this can lead to time and money being wasted; and
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Q
1.3 Why does it matter?
A
(b) It is possible that more than one court has jurisdiction to determine a dispute. You might then be able to choose whichever is preferable
It is important to understand which country’s law applies – without knowing which law applies, you cannot carry out a useful case analysis.
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Q
2 Jurisdiction: the Hague Convention
A
In this section, we are concerned with the question of whether the courts of England and Wales have jurisdiction to determine a claim. Where proceedings are commenced on or after 1 January 2021, this question must be answered by reference to the Hague Convention on Choice of Court Agreements, if it applies, and otherwise by applying common law rules. This section addresses
specifically the provisions of the Hague Convention
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Q
2 Jurisdiction: the Hague Convention
A
As a general rule, the Courts of England and Wales will determine disputes over matters occurring
in England and Wales – not over matters that take place outside England and Wales or that concern nationals of other countries. If a dispute takes place outside England and Wales or involves a national from a different country, you need to consider whether there are additional criteria that must be satisfied to establish that the courts of England and Wales have jurisdiction.
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Q
2 Jurisdiction: the Hague Convention
A
The Hague Convention on Choice of Court Agreements (‘Hague Convention’) aims to provide
certainty in this area for commercial parties that wish to choose a particular country’s courts to
determine their disputes regardless of where the dispute takes place or where the parties are based. So it allows the parties to control which court will hear a dispute
13
Q
Choice of court agreements
A
Note that the Hague Convention only applies to choice of court agreements concluded on or after 1 October 2015. Such a choice will be made in an agreement between the parties, for example in a contract between the parties. The parties to such an agreement may be based in any jurisdiction (ie they do not need to be based in a Contracting State of the Hague Convention in order to enter
into such a choice of court agreement).
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Q
2.1 Hague Convention Approach
A
These are the key considerations you should address to ascertain whether the parties have effectively given jurisdiction to the courts of England and Wales, and the consequences of this.
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Q
2.1.1 Civil and commercial matters
A
Firstly, the Hague Convention only applies to civil and commercial matters: this covers a wide range of matters, meaning most of the common types of contracts between commercial entities will be included. Public law and criminal disputes are not covered (Article 1(1)).
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Q
2.1.2 Exclusions
A
Secondly, certain types of disputes are excluded from the Hague Convention. This includes disputes with consumers and employment matters. There are other exclusions and in practice you should check the Hague Convention (Article 2).
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Q
2.1.3 Jurisdiction to a contracting state?
A
Thirdly, the Hague Convention only applies where the parties have chosen a Contracting State as
the court that will have jurisdiction (Article 3(a)). The Contracting States at the time of writing are the UK, all EU members states, Mexico, Singapore and Montenegro. So if there is a clause in a contract stating that the Courts of France (an EU member state) have jurisdiction, then that falls within the Convention. If the clause indicates that the courts of a particular state in the USA have
jurisdiction, then the Hague Convention will not apply in that situation. That does not necessarily
mean that the clause will not be effective, it means that you will need to find the answer as to whether it is effective elsewhere (such as by applying the common law rules)
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Q
2.1.4 Exclusive jurisdiction
A
Fourthly, the Hague Convention only applies to clauses which give exclusive jurisdiction to a particular country – ie that country and no other has jurisdiction (Article (1) and Article 3(a) and (b)).
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Q
Example: Exclusive jurisdiction (i)
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“The Courts of England and Wales will have exclusive jurisdiction to determine any dispute arising out of this contract” – the Hague Convention applies to this.
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Q
Example: Exclusive jurisdiction (ii)
A
”The Courts of England and Wales will have jurisdiction to determine any dispute arising out of this contract” – the Hague Convention states that this will be assumed to mean exclusive
jurisdiction, and the Hague Convention applies to this.
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Q
Example: Exclusive jurisdiction (iii)
A
”The Courts of England and Wales will have non-exclusive jurisdiction to determine any dispute arising out of this contract” – this clause aims to give the Courts of England and Wales
jurisdiction on top of any other country which would have jurisdiction under any other relevant rules. The Hague Convention will not apply to this.
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Q
2.1.5 Concluded / evidenced in writing
A
The Hague Convention only applies if the jurisdiction agreement is in writing, or evidenced / documented in writing (Article 3(c)).
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Q
2.1.6 Asymmetric agreements
A
An ‘asymmetric’ agreement is one that provides that one party can commence proceedings only in a specific named country, but the other party can commence proceedings in that country or any other which would have jurisdiction under any other relevant rules. So the same rights are not given to each party, hence the ‘asymmetry’. Due to the way the Hague Convention is worded, it is unclear whether such a clause would fall within the Hague Convention or not.
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Q
2.2 Outcome of Hague Convention applying
A
Where you have a clause which does fall within the provisions of the Hague Convention, there are two main consequences in terms of jurisdiction:
(a) The court indicated as having jurisdiction will have jurisdiction, and cannot decline it on the
basis that the dispute should be decided in another country (Article 5(1) and (2));
(b) Any other court must refuse to hear the proceedings (Article 6 – there are limited exceptions).
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2.3 Summary
* The Hague Convention aims to provide certainty in this area for commercial parties that wish to choose a particular country’s courts to determine their disputes.
* The Hague Convention applies if:
- The matter is a civil or commercial matter
- It is not a type of dispute excluded from the Hague Convention
- A clause in the contract grants jurisdiction to a Contracting State (which includes the UK)…
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2.3 Summary
- …and exclusively that state
- The agreement is in writing / evidenced in writing.
* If this applies, the chosen court cannot decline jurisdiction on the basis that the dispute should be decided in another country, and any other court must refuse to hear the proceedings.
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3 Jurisdiction: the common law
In this section, we are concerned with the question of whether the courts of England and Wales have jurisdiction to determine a claim. Where proceedings are commenced on or after 1 January 2021, this question must be answered by reference to the Hague Convention on Choice of Court Agreements, if it applies, and otherwise by applying common law rules. This section addresses
specifically the common law rules.
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When it comes to establishing the jurisdiction of the courts of England and Wales, the question of
jurisdiction is linked to service of proceedings. Broadly, the court will have jurisdiction under the
common law if:
(a) it is possible to serve the proceedings on the defendant in the jurisdiction (in England and
Wales) – the defendant is ‘present’ in the jurisdiction; or
(b) the court gives permission to serve the proceedings on the defendant outside of the
jurisdiction; or
(c) the Courts of England and Wales are given jurisdiction by a clause in a contract.
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3.1 Serving the proceedings on the defendant in the jurisdiction
A defendant will (in principle) be subject to the jurisdiction of the courts of England and Wales if
proceedings are served on the defendant whilst that defendant is within the jurisdiction. This is true even if the defendant is a foreign defendant (in the sense that it is based in another jurisdiction), or if the subject matter of the proceedings is based in / took place in another
jurisdiction.
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3.1 Serving the proceedings on the defendant in the jurisdiction
For example, proceedings can be served by a variety of methods, including personal service (CPR
6.5) – actually leaving the proceedings with an individual defendant. Proceedings can be personally served on an individual defendant in England and Wales even if they live in another jurisdiction and are only very briefly in England and Wales.
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3.1 Serving the proceedings on the defendant in the jurisdiction
Similarly, a company not incorporated in England and Wales can be served at any place of
business of the company within England and Wales (CPR 6.9(2)).
In a similar vein, if a defendant appoints a solicitor in England and Wales to accept service on its
behalf, and the proceedings can then be served on that solicitor within the jurisdiction.
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Example: Serving the proceedings on the defendant in the jurisdiction
A paper supplier in England entered into a contract with a printing company incorporated in Delaware USA. Pursuant to that contract, the printing company ordered 100,000 units of high quality paper at a cost of $35,000. It was agreed that the paper would be delivered to the printing company’s storage facility in Newark, Delaware. Although the printing company has a branch office in London, England, the contract was negotiated by and completed via the printing company’s office in the USA. The supplier duly delivered the paper. In breach of the contract, the
printing company has failed to pay the purchase price for the paper.
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Example: Serving the proceedings on the defendant in the jurisdiction
Would the courts of England and Wales have jurisdiction to hear a claim by the paper supplier in
relation to the printing company’s failure to pay? The paper supplier can serve proceedings on the printers at its branch in England. The very fact
that the paper supplier serves proceedings on this branch within the jurisdiction is sufficient to
(prima facie) give the courts of England and Wales jurisdiction to hear the dispute.
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3.2 Permission to serve the proceedings on the defendant outside of the jurisdiction
If a party cannot (or for some reason does not want to) serve proceedings within the jurisdiction, it can apply to serve the proceedings on the defendant outside of the jurisdiction. If the court grants permission for this and the proceedings are duly served outside of the jurisdiction, then this gives the courts of England and Wales (in principle) the jurisdiction to determine the claim.
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In order to obtain permission, three matters must be established (CPR 6.37):
(a) The claimant needs to establish one of the grounds in 6B PD 3.1;
(b) The claim must have reasonable prospects of success;
(c) England and Wales must be the ‘proper place’ in which to bring the claim. If these three matters are established, then the court may grant permission for service outside of
the jurisdiction.
Let us look at each in turn.
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3.2.1 Permission – grounds in 6B PD 3.1
There are many grounds on which an application for permission to serve outside of the jurisdiction can be based (6B PD 3.1). Amongst the most important are:
A claim is made for a remedy against a person domiciled within the jurisdiction (1).
A claim is made in respect of a contract where the contract (6) –
(a) was made within the jurisdiction;
(c) is governed by English law; or
(d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract.
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3.2.1 Permission – grounds in 6B PD 3.1
A claim is made in respect of a breach of contract committed within the jurisdiction (7). A claim is made in tort where (9)
(a) damage was sustained, or will be sustained, within the jurisdiction; or
(b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction. These grounds are sometimes referred to as ‘jurisdictional gateways’.
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3.2.2 Permission – reasonable prospect of success
The second matter that must be established is a reasonable prospect of success. This is a relatively low threshold and has been equated to the prospect of success needed to resist an application for summary judgment: De Molestina v Ponton [2002] 1 Lloyd’s Rep 271.
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3.2.3 Permission – England and Wales is the ‘proper place’
The third matter that must be established is that England or Wales is the proper place in which to bring the claim – sometimes referred to as the forum conveniens (convenient / appropriate forum). England or Wales can be the proper place to bring the claim if it is the natural place to bring the proceedings, perhaps because the witnesses are based there, English law applies and/or the
defendant is normally resident in England / Wales.
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3.2.3 Permission – England and Wales is the ‘proper place’
If England or Wales is not the natural place, but rather another jurisdiction is the natural place, the Courts of England and Wales can still be the proper place in which to bring the claim if justice nonetheless requires that the claim be tried in England – perhaps because there is a risk of
improper government interference in a different jurisdiction, or some other reason why the trial will not be fair.
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3.3 Jurisdiction clauses
Finally, the claimant can serve the claim form on a defendant outside the jurisdiction without the court’s permission where a contract contains a term to the effect that the courts of England and/or Wales shall have jurisdiction to determine that claim (CPR 6.33(2B)).
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3.3 Jurisdiction clauses
This provides protection in the same area as the Hague Convention (addressed in a different section). However, the Hague Convention only applies to exclusive choice of court agreements concluded on or after 1 October 2015. If the agreement was concluded before this date or does
not give jurisdiction to the courts of England and Wales exclusively, then the Hague Convention does not apply, and this rule provides an alternative route to establishing jurisdiction (CPR 6.33(2B)).
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3.3 Jurisdiction clauses
There does not appear to be any way to serve proceedings on the man in the jurisdiction. Accordingly, it will be necessary to apply for permission to serve proceedings on the man out of
the jurisdiction. As this is a tort claim (negligence), a ‘gateway’ (6B PD 3.1) can be shown on the basis that the
damage was sustained within the jurisdiction and resulted from an act committed within the jurisdiction. The claim appears to have a reasonable prospect of success (you would need to consider the detail) and England appears to be the proper place given where the accident happened, where the losses have been suffered and English law is likely to apply. So the court
may well grant permission.
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3.4 Summary
* Under the common law, the Courts of England and Wales will have jurisdiction if
- it is possible to serve the proceedings on the defendant in the jurisdiction;
- the court gives permission to serve the proceedings on the defendant outside of the jurisdiction; or
- the Courts of England and Wales are given jurisdiction by a clause in a contract.
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3.4 Summary
* In order to obtain permission (the second of the three options above), three matters must be established:
- the claimant needs to establish one of the grounds / ‘jurisdictional gateways’ (6B PD 3.1);
- the claim must have a reasonable prospect of success;
- England and Wales must be the ‘proper place’ in which to bring the claim.
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4 Serving a claim form outside the jurisdiction
Sometimes in order for the court to have jurisdiction it is necessary to apply for permission to serve proceedings out of the jurisdiction.
Whether or not such an application is necessary, whenever proceedings are served on a defendant outside of the jurisdiction, thought needs to be given to how this can be done. Can the proceedings just be posted to (eg) France? There are a number of different possibilities to consider
which will be examined in this section.
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4.1 Validity of process
Where a claim form has validly been issued, the period for service is six months where the claim form is to be served outside the jurisdiction (CPR 7.5(2)). This gives the claimant a longer period than when a claim form is to be served within the jurisdiction, where it is normally valid for only four months (CPR 7.5(1)).
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4.2 Service out
4.2.1 Permission
By way of a brief reminder, it is not necessary to seek the court’s permission to serve proceedings
out of the jurisdiction if the Courts of England and Wales have jurisdiction because:
(a) the Hague Convention on Choice of Court Agreements gives the court jurisdiction; or
(b) a contract contains a term to the effect that the Courts of England and/or Wales shall have
jurisdiction to determine the claim
(CPR 6.33(2B)). Permission of the court will be required to effect service in other circumstances.
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4.2.2 Procedure
If a claimant is seeking to serve an English claim form abroad without permission, it must file Form
N510 when it issues and files its claim form. This essentially confirms to the court the basis upon which it has jurisdiction over a foreign-domiciled defendant in circumstances where the court’s permission has not been sought to serve the claim form abroad. (CPR 6.34) If seeking to serve an English claim form abroad with permission, the claimant will have to make an application to court, asking the court to allow it to serve the claim form on the defendant. This will be an interim application made pursuant to the usual rules (CPR 23) using the usual application notice in Form N244.
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4.2.3 Methods
Whether or not permission is needed, there are a number of possible methods of service for service outside the UK. (CPR 6.40) Nothing in the rules (or in any court order) shall authorise or require any person to do anything in the destination country which is against the law of that country.
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The methods of service to choose from when serving outside the UK include:
* Service in accordance with an agreed regulation, convention or treaty. Any regulation, convention or treaty in relation to service referred to in this section will only apply to whichever countries have contracted into it, along with the UK.
* Service through the government of the destination country (if that government is willing to do this).
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The methods of service to choose from when serving outside the UK include:
* Service by any method permitted by the law of the destination country. In practice, it is often preferred to take local advice in the destination country and engage a local agent to effect service by a method which is permitted there.
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4.2.4 Response times
Extended periods for filing an acknowledgment of service/defence apply when the claim form/
particulars of claim have been served out of the jurisdiction. The amount of ‘extra time’ allowed will vary, depending on which country is involved.
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4.4 Summary
* When serving out of the jurisdiction you need to consider i) whether permission from the court to do so is needed and ii) which methods of service are possible.
* Permission will not be needed to serve where jurisdiction is established under the Hague
Convention on Choice of Court Agreements pursuant to a contractual term.
* Permission will be needed to serve out in most other circumstances.
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4.4 Summary
* Service outside of the UK can be effected using any method permitted by the law of the destination country or through an applicable regulation, convention or treaty, or through the
government of the country concerned.
* The validity of the claim form and response times for the defendant are extended where service is to be effected out of the jurisdiction.
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5 Difficulties with service
Sometimes, it is not possible to serve effectively through any of the usual methods, whether within or outside of the jurisdiction. The rules therefore allow for an application to the court for an order to deal with this type of situation where this is justified. This will also be considered in this section.
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5 Difficulties with service
In appropriate / exceptional circumstances, the only way to serve effectively, or achieve the certainty required might be to make an application to the court for one of the following orders:
(a) An order for alternative service (CPR 6.15); or
(b) An order dispensing with service (CPR 6.16).
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5.1 Alternative service
The court may permit service by an alternative method if there is good reason to do so, ie where
the other available methods of service would be ineffective or impossible. An application must be made to court setting out why service in accordance with the methods
listed in the CPR are not possible or why attempts to serve in accordance with these methods have been unsuccessful. The application should state the alternative method proposed.
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Example: Alternative service
Alternative service methods include (i) serving on solicitors acting for a party where the solicitor has not been authorised to accept service; and (ii) placing an advert in a newspaper notifying the defendant that proceedings have been commenced against it.
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Example: Alternative service
The court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.
Alternative service cannot be used retrospectively and it cannot be used to remedy irregular service.
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5.2 Dispensing with service
The court may dispense with service of a document. This discretion is usually only exercised where the other side is already aware of the document.
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Example: Dispensing with service
If the claimant wished to make an amendment to its particulars of claim and the defendant agreed to that amendment being made, the claimant would need to make an application to court to amend the document. If the court agreed to the amendment being made, it might dispense with service, ie order that the claimant does not have to serve the document on the defendant, because the defendant is aware
of the amendment. It is very rare for the court to dispense with service of a claim form where the other party is not aware of the proceedings.
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5.3 Summary
* The court may be prepared to make an order allowing alternative service where it is impossible to serve effectively (either within or out of the jurisdiction) through the usual methods.
* The court may dispense with service where it is clear the other side is already aware of the documents.
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6 Disputing or submitting to the court’s jurisdiction
6.1 Disputing the court’s jurisdiction
A party on receipt of court proceedings may wish to challenge the English / Welsh court’s jurisdiction to hear a dispute – either by arguing that the court does not have jurisdiction at all, or that the court should decline to exercise its jurisdiction. This might happen for a variety of reasons, for example:
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6.1 Disputing the court’s jurisdiction
(a) The claimant alleges that the court has jurisdiction pursuant to a convention such as the Hague Convention on Choice of Court Agreements but the defendant disputes this.
(b) The claimant has obtained permission to serve proceedings out of the jurisdiction, but the defendant considers that none of the gateways for obtaining such permission (6B PD 3.1) are satisfied and/or the courts of England and Wales are not the proper place for the claim to be
heard.
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6.1 Disputing the court’s jurisdiction
(c) The proceedings have been served effectively on the defendant within the jurisdiction, but there is another more appropriate forum.
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6.1.1 Disputing the court’s jurisdiction - substance of the objection
The substance of the defendant’s objection depends on the grounds that the claimant is relying on to establish jurisdiction. For example, the defendant may challenge the allegation that the claim falls within the Hague Convention or the way that the Hague Convention has been interpreted. It could challenge that
the common law rules apply, or that a gateway (6B PD 3.1) is established.
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6.1.1 Disputing the court’s jurisdiction - substance of the objection
It could argue that England and Wales is not the proper place for the claim to be heard. The fact that the court has determined that England and Wales is the proper place for the claim to be heard when granting permission does not prevent the defendant from, upon receipt of
proceedings, seeking to argue that England and Wales is not the proper place for the claim to be heard.
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6.1.2 Disputing the court’s jurisdiction - procedure
The procedure for disputing the court’s jurisdiction involves the following key points:
(a) The defendant must first file an acknowledgement of service (CPR 11(2)) – there is a box on the acknowledgement of service to indicate that the defendant intends to contest jurisdiction.
(b) The defendant must then apply within 14 days after filing the acknowledgement of service, disputing the court’s jurisdiction. That application must be supported by evidence.
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6.2 Submitting to the court’s jurisdiction
Submitting to the court’s jurisdiction can be considered the opposite of disputing it. If a party submits to the jurisdiction of the Courts of England and Wales, then they cannot later dispute that jurisdiction, so effectively the court’s jurisdiction is established.
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6.2 Submitting to the court’s jurisdiction
To avoid submitting to the court’s jurisdiction, a defendant served with proceedings must not take
any steps to engage with the proceedings beyond filing an acknowledgement of service and then applying to court to challenge its jurisdiction, as set out earlier in this section. The party must not,
for example, file a defence
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6.2 Submitting to the court’s jurisdiction
Of course, it may be that a party is content for proceedings to continue before the Courts of England and Wales, in which case it will be content to submit to the proceedings, and in that way, the court’s jurisdiction is established.
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6.3 Summary
* A party can argue that the court does not have jurisdiction at all, or that the court should decline to exercise its jurisdiction.
* To argue this, the party will need to attack the basis on which the claimant asserts that the court does have jurisdiction and/or argue that the Courts of England and Wales are not the proper forum for the claim.
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6.3 Summary
* Procedurally, a party wishing to do this should file an acknowledgement of service indicating an intention to dispute jurisdiction, and then make the necessary application to court within 14 days after filing that acknowledgement.
* Submitting to the court’s jurisdiction is the opposite of disputing it. If a party submits to the court’s jurisdiction, it cannot later argue that the court does not have jurisdiction.
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6.3 Summary
* To avoid submitting to the court’s jurisdiction, a defendant served with proceedings must not take any steps to engage with the proceedings beyond filing an acknowledgement of service and then applying to court to challenge its jurisdiction, as set out earlier in this section. The party must not, for example, file a defence.
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7 Conflict of laws: contract
In this section, we are concerned with the question of which country’s laws will apply to determine a contractual dispute specifically. There is a different and equivalent section which is concerned with tortious disputes.
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7.1 Relevant legislation
Prior to Brexit, the majority of contractual disputes were governed by Regulation 593/2008 which
is referred to as the Rome I Regulation (‘Rome I’). At the end of the post-Brexit transition period on
31 December 2020 Rome I was adopted into English law, with minor amendments, by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 and the Jurisdiction, Judgments and Applicable Law (Amendment) (EU Exit) Regulations 2020.
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7.1 Relevant legislation
Accordingly, the relevant law is, broadly, the Rome I Regulation. In this section we use the term
‘Rome I’ to refer to the regulation as amended and retained in the law of England and Wales, and article references are references to this amended Rome I.
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7.1 Relevant legislation
Note that:
(a) There are some areas of law which are excluded from Rome I (Article 1);
(b) Rome I does not apply to contracts entered into before 17 December 2009;
(c) There are special provisions in Rome I for contracts of carriage, consumer contracts, employment contracts and insurance contracts.
These exclusions and special provisions are not addressed in this section.
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7.2 The parties’ choice
Firstly, the parties are free to choose which country’s law will apply (Article 3). In the vast majority of cases this will be done expressly in the contract which is at stake in the dispute. This is known as a ‘choice of law’ clause. The choice can also be ‘demonstrated by… the circumstances of the case’, and the choice can be made at any time – for example, after the dispute has arisen.
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7.3 Types of contract (Articles 4(1)(a)-(h))
In the absence of choice, you must consider Articles 4(1)(a) to (h) which set out various types of
contract and the laws that will apply. The most important are the following:
Sale of goods-Seller’s habitual residence*
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Provisions of services
Service provider’s habitual residence*
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Contract relating to land
Where the land is situated
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Distribution contract
Distributor’s habitual residence*
A company’s habitual residence is where its ‘central administration’ is. For a natural person acting in the course of business, it is where that person’s principal place of business is.
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7.4 Characteristic performance (Article 4(2)
What if there is no choice, and the contract does not fall into the categories in articles 4(1)(a) to
(h) (and remember we only set out four of those in the ‘types of contract’ table)? In that case, the applicable law is the law of the country where the party required to effect characteristic performance of the contract has its habitual residence.
Which party is giving the performance which gives the contract its character? In a contract where one party is paying the other party for something, it is generally the party doing the ‘something’ which is giving the contract its character, not the party making the payment.
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7.5 Manifestly more closely connected (Article 4(3)
If the applicable law has been determined under Article 4(1) or 4(2), the court will apply a different
country’s law if the contract is manifestly more closely connected with that other country. It is to
be expected that this provision will not be used lightly as otherwise it could introduce great uncertainty into the operation of Rome I.
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7.5 Manifestly more closely connected (Article 4(3)
On these facts, there is no express or implied choice of law under Article 3.
This is a contract for the provision of services under Article 4(1)(b). The applicable law is that of the service provider’s habitual residence. Vision is the service provider, it is habitually resident in England, so English law appears to apply to this contract.
However, the court might apply Spanish law pursuant to Article 4(3); the contract is arguably “manifestly” more closely connected with Spain rather than England: note the Spanish bank account, services directed to Spain and Spanish freelancers governed by Spanish law.
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7.6 Summary
* Rome I applies to contracts entered into on or after 17 December 2009.
* There are special provisions in Rome I for contracts of carriage, consumer contracts, employment contracts and insurance contracts – not covered in this section.
* Parties are free to choose which country’s laws apply to their dispute.
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7.6 Summary
In the absence of choice, there are specific provisions in Article 4 which stipulate which country’s laws apply to various types of contract, including:
- Sale of goods – law of country where seller habitually resides
- Provision of services – law of country where service provider habitually resides
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7.6 Summary
If the contract is not one of the types of contract listed in Article 4, the applicable law is that of the country where the “characteristic performer” (usually the party getting paid) has its
habitual residence.
* Conclusions reached via these routes (not by the ‘choice’ provisions) can be displaced if the contract is ‘manifestly more closely connected’ with another country.
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8 Conflict of laws: tort
In this section, we are concerned with the question of which country’s laws will apply to determine a tortious dispute specifically. There is a different and equivalent section which is concerned with contractual disputes.
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8.1 Relevant legislation
Prior to Brexit, the majority of tortious disputes were governed by Regulation 864/2007 which is referred to as the Rome II Regulation (‘Rome II’). At the end of the post-Brexit transition period on 31 December 2020 Rome II was adopted into English law, with minor amendments, by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019 and the Jurisdiction, Judgments and Applicable Law (Amendment) (EU Exit) Regulations 2020.
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8.1 Relevant legislation
Accordingly, the relevant law is, broadly, the Rome II Regulation. In this section we use the term
‘Rome II’ to refer to the regulation as amended and retained in the law of England and Wales, and article references are references to this amended Rome II.
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Note that:
(a) There are some areas of law which are excluded from Rome II (Article 1);
(b) Rome II only applies to events giving rise to damage which occurred on or after 10 January 2009;
(c) There are special provisions in Rome II for product liability, unfair competition, environmental damage, infringement of intellectual property and industrial action. These exclusions and special provisions are not addressed in this section
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8.2 The parties’ choice
Firstly, the parties are free to choose which country’s law will apply (Article 14). If the agreement is entered into after the event giving rise to the tortious damage, then this choice
will be effective. If the agreement is entered into before the event giving rise to the tortious damage, then this
choice will only be effective if both parties are pursuing a commercial activity and freely negotiated the choice of law. The choice can be express, for example, in a contractual term between the parties, or choice can be ‘demonstrated by… the circumstances of the case’.
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8.3 Parties resident in the same country
A company’s habitual residence is where its ‘central administration’ is. For a natural person acting in the course of business, it is where that person’s principal place of business is. So in the absence of choice, if the claimant and defendant both reside in the same country, then that country’s laws will apply – even if the damage happened in a different country (Article 4(2))
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8.4 General rule – law of the country where the damage occurs
Where there is no valid choice and the claimant and the defendant do not reside in the same country, the applicable law is that of the country in which the damage occurs – not where the event giving rise to damage occurs, nor where indirect consequences might occur (Article 4(1)). In cases of personal injury or damage to property, the country in which the damage occurs is very
likely to be the country where the injury was sustained or where the property was damaged.
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8.5 Manifestly more closely connected (Article 4(3)
Even if the applicable law has been determined under Article 4(1) or 4(2), the court will apply a different country’s law if the tort is manifestly more closely connected with that other country. It is to be expected that this provision will not be used lightly as otherwise it could introduce great uncertainty into the operation of Rome II.
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On these facts, there is no choice of law.
The claimant resides in England and Wales. The defendant resides in France. They do not habitually reside in the same country. …and so the law of the country in which the damage occurs applies. The Netherlands was the place where the damage occurred (ie the goods defrosted and became unusable) even though
the event giving rise to the damage occurred in Belgium (turning off the refrigeration units) and most of the indirect consequences of the tort are arguably going to be suffered in England (eg failure to get paid by Dutch supermarket) – Dutch law applies.
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On these facts, there is no choice of law
The tort is not manifestly more closely connected with another country – there are relevant
considerations pointing towards French, English or Dutch law, so the initial conclusion that Dutch
law applies is not displaced.
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8.6 Summary
* Rome II applies to events giving rise to damage which occur on or after 10 January 2009.
* There are special provisions in Rome II for product liability, unfair competition, environmental
damage, infringement of intellectual property and industrial action – not covered in this section.
* After the tortious event, parties are free to choose which country’s laws apply to their dispute
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8.6 Summary
* Before the tortious event, parties are free to choose which country’s laws apply to their dispute only if both pursuing a commercial activity and the choice is freely negotiated.
* In the absence of choice, if both parties habitually reside in the same country, that country’s laws apply.
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8.6 Summary
* Otherwise, the law of the country in which damage occurs applies.
* Conclusions reached via these routes (not by the ‘choice’ provisions) can be displaced if the tort is ‘manifestly more closely connected’ with another country.
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9 Jurisdiction and conflict of laws within the UK
In this chapter, you have already considered the topics of conflict of laws and jurisdiction when there is an ‘international’ dimension to a dispute. However, as you have may have noticed, we referred to the domestic jurisdiction as that of England and Wales. Scotland and Northern Ireland
are different jurisdictions.
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9 Jurisdiction and conflict of laws within the UK
This means that issues of choice of law and of jurisdiction can arise
within the UK, for example when there is a question as to whether English or Scottish courts have
jurisdiction, or whether English/Welsh or Scottish law applies. That is the focus of this section.
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9.1 Conflict of laws
The situation in relation to conflict of laws is relatively simple. If an English / Welsh court is faced with the question of whether Scottish law or Northern Irish law might apply, it will determine that question in just the same way as if it was deciding whether French law applies. Please refer to the sections relating to conflict of laws in contractual and tortious disputes.
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9.2 Jurisdiction
The situation in relation to jurisdiction is more complicated. When this topic was introduced in an
earlier section, we explained that where proceedings are commenced on or after 1 January 2021, the question of whether the courts of England and Wales have jurisdiction must be answered by reference to the Hague Convention on Choice of Court Agreements, if it applies, and otherwise by applying common law rules. However, when the defendant is based in the UK in Scotland or
Northern Ireland, the question of whether the courts of England and Wales have jurisdiction is governed primarily by the Civil Jurisdiction and Judgments Act 1982 (the ‘Act’) (s.16 and schedule 4 of the Act).
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9.2 Jurisdiction
The most important provisions of that Act are summarised in the following pages. Section numbers
are references to sections of the Act unless otherwise stated. The Act contains detail beyond that included in these pages which could be relevant on the facts of a particular case, including special rules for consumer contracts and employment contracts which are beyond the scope of this section.
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9.2.1 Exclusive jurisdiction, jurisdiction agreements and submission
Exclusive jurisdiction
In relation to some particular types of dispute, the Act provides that one part of the UK, and only
that part, can have jurisdiction (schedule 4, rule 11). Perhaps the most important example is that in proceedings which are concerned with real property or tenancies in real property, the part of the UK in which the property is situated will have exclusive jurisdiction (there are slightly different rules for tenancies of 6 months or less for temporary private use).
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Jurisdiction agreements
Where the parties agree that a particular part of the UK will have jurisdiction, then that part will have jurisdiction (schedule 4, rule 12).
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Submission
If a party submits to the jurisdiction of a court in the UK, for example by filing a defence rather than contesting jurisdiction, then that court will have jurisdiction (schedule 4, rule 13) – although this cannot override the exclusive jurisdiction rules above.
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9.2.2 Basic rule - sue where defendant is domiciled
If none of the above apply, then the starting point is that a person domiciled in a part of the UK
should be sued in the courts of that part (schedule 4, rule 2).
Broadly speaking, a person is domiciled in a part of the UK if they are resident there and the
nature and circumstances of their residence indicate they have a substantial connection with that
part (s.41).
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9.2.2 Basic rule - sue where defendant is domiciled
A company is domiciled where its ‘seat’ is, and a company will generally have its seat where it has its registered office, or if it has none, where it was incorporated (s.42 and s.42A). The next page sets out certain circumstances in which a defendant can be sued in parts of the UK
in which they are not domiciled. However, note that even where that is an option, the claimant does not have to take it: the claimant can choose to sue the defendant where the defendant is domiciled under this rule.
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9.2.3 Additional jurisdiction
A person can be sued in parts of the UK in which they are not domiciled in the following circumstances (schedule 4, rules 3 and 5):
* in matters relating to a contract, in the courts for the place of performance of the obligation in
question;
* in matters relating to tort, in the courts for the place where the harmful event occurred or may
occur;
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9.2.3 Additional jurisdiction
* as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;
* where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together;
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9.2.3 Additional jurisdiction
on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending.
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Example: Jurisdiction within the UK
A claimant domiciled in England wishes to bring a breach of contract claim against a defendant supplier of computer hardware based in Scotland. The contract provides for the goods to be delivered in London (England) and contains a clause giving exclusive jurisdiction to the courts of
Scotland. Which court(s) has jurisdiction?
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Example: Jurisdiction within the UK
This not a dispute where the exclusive jurisdiction rules apply.
The parties have agreed that the courts of Scotland will have exclusive jurisdiction, and therefore the defendant must be sued in Scotland.
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Example: Jurisdiction within the UK
If, to vary the scenario, the contract had not contained the exclusive jurisdiction clause, the basic
rule would be that the defendant should be sued where it is domiciled, therefore in Scotland. However, the claimant could choose in the alternative to commence proceedings where the contract was to be performed, which was England (the place of delivery). So the claimant would have a choice as to whether to commence proceedings in Scotland or England.
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9.3 Summary
* Questions of jurisdiction and conflict of laws can arise as between parts of the UK – so between England/Wales, Scotland and Northern Ireland.
* The question of which country’s laws apply is decided just the same way as for any other
jurisdiction (explained in other sections).
* In relation to jurisdiction:
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9.3 Summary
- Generally, disputes about land must be heard in the part of the UK where the land is.
- If the parties have agreed which part of the UK has jurisdiction, that agreement will be upheld.
- If a party submits to the jurisdiction of a particular part of the UK, it will have jurisdiction.
- If none of the above apply, very generally a defendant must be sued in either a) the part of the UK where they are domiciled, or b) the part of the UK where the goods were to be
delivered / services provided / harmful tortious event occurred.
