JK Fabrications Ltd v Fastfix Ltd & Anor [2020] NIQB 63 is a good illustration of how not to draft choice of court (and governing law, in fact) provisions generally, let alone in general terms and conditions – GTCs. Albeit with a shaky obiter suggestion on identifying a court.
Tobsteel GmbH domiciled in Őhringen, Germany seeks to set aside a third party notice served on it on the ground that the Northern Irish courts have no jurisdiction to determine the third party proceedings brought by Fastfix, domiciled in Ireland. Fastfix is the defendant in proceedings brought by JK Fabrications, domiciled in Northern Ireland. In separate proceedings JK Fabrications Limited is sued by SMBJV, an unincorporated joint venture in respect of a major sewerage project in London. Bolts are the common element in dispute in both cases; the bolts supplied by Tobsteel to Fastfix who in turn supplied these bolts to JK Fabrications.
As justifiably held by Larkin J, the choice of court upon which Tobsteel bases its argument, itself was not properly bolted. The clause at issue is included in a “General Terms of Supply and Payment for TOBSTEEL GmbH” document which General Terms of Delivery and Payment document in which clause VIII reads
“VIII. Place of performance, choice of forum, applicable legislation.
1. The place of performance and choice of forum for deliveries and payments (including complaints regarding cheques or bills) and for all disputes arising between us and the purchaser from the purchase contracts concluded between us and him or her shall be Öhringen. However, we shall be entitled to file a complaint against the purchaser at his or her residence or registered business address.
2. The legal relationship between us and our customers or between us and third parties shall be governed exclusively by the legislation of the Federal Republic of Germany”
The judgment shows that Tobsteel itself in fact did not initially see clear as to which GTCs applied. In earlier affidavits, two more, and different, versions of GTCs were said to apply.
The first level of discussion was whether there had at all been consent to the GTCs. The judge held there had not been. At 16:
The instrument on which Tobsteel relies as the vehicle of agreement is a combination of the words “Subject to our general terms of business if requested a print can be provided” and Mr Connolly’s [of Fastifx, GAVC] email containing the words “Alex, this is O.K.”. This combination is too fragile to bear that weight.
This was not so much (at 17) because it could not be established that the clause had actually been consulted by Mr Connolly. Larkin J, in line with the Report Jenard:
While it is often a commercially necessary fiction that a party has ‘agreed’ terms that he may not have seen in advance, far less read, based on his signature indicating his consent to be bound by such terms or some other manifestation of acceptance, …
Rather, it has to be clear which version of what is actually referred to: at 17:
..it is observable that in those cases in which this commercially necessary fiction operates, it will be clear what the applicable terms are.
At 19-20:
If Tobsteel wished, as I find it did, to secure agreement on Clause VIII.1 with Fastfix it needed an adequate mechanism or instrument for obtaining that agreement. In the event, and taking the evidence for Tobsteel at its reasonable height, Tobsteel sought to bind Fastfix in the documents referred to above to Tobsteel’s “general terms of business”. Clause VIII.1 of June 2014 is not contained in a document entitled “general terms of business” but in a document entitled “General Terms of Supply and Payment for TOBSTEEL GmbH”. One might properly say, further, that in 2017 Herr Gebert, insofar as he thought specifically about the matter, meant to refer to the June 2004 text, but whether he meant to or not, he did not refer to it so as to permit the creation of an agreement between Tobsteel and Fastfix that Clause VIII.1 should apply.
In none of the cases on Article 25 or its antecedents is there an example of a term incorporating X by reference being held to incorporate Y by reference and thus satisfy the requirements of [A25].
In conclusion, consent had not been clearly and precisely demonstrated. Again, this is a clear emphasis on the need for proper GTC filekeeping.
At 21 ff the judge obiter but in this case in my view wrongly, holds that even if he had found there to have been consent to the clause, it did not meet with the requirements of A25 BIa. As a reminder, the clause reads
1. The place of performance and choice of forum for deliveries and payments (including complaints regarding cheques or bills) and for all disputes arising between us and the purchaser from the purchase contracts concluded between us and him or her shall be Öhringen. However, we shall be entitled to file a complaint against the purchaser at his or her residence or registered business address.
2. The legal relationship between us and our customers or between us and third parties shall be governed exclusively by the legislation of the Federal Republic of Germany”
The judge argues that the proviso at 1 does not identify a court at all and that the choice of law proviso in 2 cannot come to the rescue (it could conversely, under Rome I) for choice of court and law as recently emphasised in Enka Insaat are to be looked at differently.
I agree 1 is an odd mix of anchoring locus solutionis typically done under A7(1) BIa, with what seems to be a unilateral choice of court pro Tobsteel; and that on that basis it might be vulnerable as choice of court under A25 (but it could be rescued under A7(1). I disagree that the name of a town that has a court (let alone a court; which the judge agrees with) needs to be included for it to be proper choice of court: name any town and local civil procedure rules will tell you the relevant court.
‘(A)n agreement on ‘Derry Recorder’s Court’ would satisfy the requirement of Article 25 that a court be agreed but that an agreement on ‘Derry’ would not.’: I do not think that is correct.
Geert.
EU Private International Law, 3rd ed. Feb 2021, 2.296, 2.315 ff