Advanced Commercial Litigation Notes Legal Practice Course

ADVANCED COMMERCIAL LITIGATION SGS 1: CONFLICT OF LAWS I (CONTRACT) MCQs Article 3(2)- The parties to a contract can (in theory) change the applicable law at any time. See The change will not, however, prejudice the formal validity of the contract and will not adversely affect the rights of third parties. Your client is a company incorporated (and with its head office) in England. It specialises in making ‘made-to-measure’ wedding dresses. It is involved in a dispute with Fabrics Limited, a company incorporated in (and with its central administration in) Hong Kong. The dispute relates to the fitness for purpose of some silk fabric that your client purchased from Fabrics Limited. You look at the contract, which was concluded in early 2019. It is very brief. It does not contain a choice of law clause, but does contain a choice of English jurisdiction clause. Your client tells you that the contract was negotiated and signed in a hurry and the parties did not have time to consider its terms in any detail. Over the last two years, your client has entered into several contracts with Fabrics Limited and all of these contracts contain an English choice of law clause; the parties had a long discussion on this point when they first contracted with each other and they agreed that English law would suit their purposes best. Which ONE of the following is TRUE? a) The English court may find that the parties have made a choice of English law because there has been a previous course of dealing between the parties under contracts containing an express choice of English law clause. b) The English court will infer that a choice of English jurisdiction clause is also an implied choice of English law. c) Because the parties have not chosen the law applicable to the contract, the English court will apply the law of the country with which the contract is most closely connected. d) A combination of the above. Answer: (a) This contract will be governed by the Rome I Regulation. a) This is correct. There has been a previous course of dealing between the parties under contracts containing an express choice of English law clause. From what your client says, it seems that the choice of English law clause has not been omitted from this contract in circumstances which indicate a deliberate change of policy by the parties – it seems that it was omitted because the contract was signed in a rush and the parties did not have time to consider its terms in any detail. Accordingly, the English court MAY find that the parties have made a choice of English law, even though it is not expressly stated in the contract. This is likely to be done if the choice of law clause has been omitted in circumstances which do not indicate a deliberate change of policy by the parties. See Article 3(1) and Recital 12. Example: Article 8 You are a banking lawyer. You work for a South African law firm that specialises in shipping finance. Your firm’s principal office is in Cape Town. You are currently based in the firm’s London office. You are dismissed. You are considering bringing proceedings for unfair dismissal. There is a South African choice of law clause in your contract of employment. The choice of law clause will not deprive you of the protection afforded to you by the provisions which cannot be derogated from by agreement under the law which would apply in the absence of choice. The law which would apply in the absence of choice is English law (the law of the country in which you habitually carry out your work in the performance of your contract). You will therefore have the protection of English rules of law which cannot be derogated from by agreement. Example: Articles 9(1) and (2) Two companies enter into a contract for the manufacture and supply of goods. Both companies are incorporated in Italy. The goods are to be made and delivered in Italy. Payment is to be made and received in Italy, in Euros. The parties expressly choose French law to govern the contract, wishing to avoid the application of an Italian statute. A dispute arises between the parties. One party commences Nirali KotharilOMoAR cPSD| proceedings before the English courts on the basis that (i) it has litigated there before (ii) it perceives that the matter will reach trial sooner in England than in Italy and (iii) the defendant has some property in England which can be enforced against if it refuses to satisfy any judgment. The defendant submits to the jurisdiction of the English court. The following laws might accordingly apply in the case: French law, pursuant to Article 3(1); Provisions of Italian law which cannot be derogated from by agreement, pursuant to Article 3(3); and English overriding mandatory provisions, pursuant to Article 9(2). Exam Question- 16 marks. Students were asked to advise Mandy Kullar in relation to an issue arising out of her recent wedding celebrations. The wedding took place in December 2019 at Mandy’s estate, Dylan Park, which is in Cornwall, England. Mandy wanted to choose and purchase all of the wine for the wedding herself and used a company called Masseria Spartivento (‘MS’). MS’s website stated that it was incorporated in Italy and had only one site, the farm in Tuscany (Italy), which is where its central administration and all other functions of the business took place. The website was in Italian (Mandy understands and can speak Italian), did not have different pages for customers from different countries, and did not offer translations of its pages, and the impression was very much that MS was a small, family business in Tuscany. There was, however, an email contact address which Mandy used to contact MS to enquire about sampling some of its products. MS had no facility to send any of its produce to England and so Mandy sampled its wine and cheese when she was on holiday in Italy during summer 2019 and decided that MS would be the perfect supplier of wine and cheese for her wedding. She placed an order for 1,000 bottles of wine and 70kgs of cheese for 65,000 Euros which Mandy paid to MS from her Italian bank account. Mandy subsequently arranged for a specialist food and beverage courier company based nearby in Cornwall, Celtic Cargo Limited (‘CCL’), to collect the items from MS’s farm (in Tuscany) and bring them to Dylan Park in time to be served at the wedding reception. Unfortunately, in November 2019 when the items were received by Mandy at Dylan Park it was apparent that the quality of the items was unsatisfactory and far inferior to that which Mandy had sampled in Tuscany. A significant amount of the wine was contaminated with a cork taint and was undrinkable. Much of the cheese seemed ‘off’ with excessive mould and an offensive smell. Mandy and the caterers took the view that it was too risky to serve the Items to the wedding guests. Replacements for the items (which were unusable) had to be purchased at the last minute, at a cost of £78,000. Mandy contacted MS who maintained that the items supplied were of the highest quality and that some variation in the products was to be expected when using