24th Mar 2006
The court was required to determine as a preliminary issue the applicable law of a contract between the claimant (M) and the defendants (D), which M claimed it had entered as a result of D's misrepresentations. D were members of the Amec group of companies, and the first defendant was a Norwegian joint venture company occupying and operating a quarry in Norway. M was an English company contracted to carry out specialised processing of rock at the quarry for D. When relations broke down M issued proceedings. Under Norwegian law the proceedings would be statute-barred, and accordingly M argued that the proper law of contract between it and D was English and not Norwegian. M submitted that in the absence of an inferred choice Art.4(2) should be applied so as to presume that the applicable law was English in accordance with M's place of business, and that D could not discharge the burden of proof to rebut the presumption so as to show a closer connection with Norway than with England. D argued that the alleged representations were made in Norway, they related to work to be done in Norway under a contract governed by Norwegian law and the loss occurred in Norway; therefore, Norwegian law applied and there was no reason for it to be disapplied.
(1) M was the characteristic performer of the contract since it was for the performance of work by M that payment was due. M had, at the time of the conclusion of the contract, its central administration in England. By the simple application of the first sentence of the Rome Convention Art.4(2) the presumption was that the contract was most closely connected with England. The contract was entered into in the course of M's trade or business, and its principal place of business was in England. Unless the second sentence of Art.4(2), or Art.4(5), displaced such a finding, the proper law was that of England. The issue was whether the relevant connecting factor between M and the applicable national law was its principal place of business or a place of business other than the principal place of business. (2) The terms of the contract meant that the performance of it was to be effected in Norway. M had employees on site there but, whilst they were there, they were subject to Norwegian health and safety law and expressly subject to administration of the contract by the quarry manager, who was an employee of the first defendant. Aside from its staff and machinery that it had transported from England to Norway, M had no physical presence at the site. It did not have a separate office premises or any area to call its own. M's presence at the quarry was temporary and entirely the result of and solely concerned with the contract in question rather than being coincidental. Save for the agreement with D, M would not have been conducting any business in Norway. There was no place of business other than the principal place of business. That being so, the second sentence of Art.4(2) did not amend the presumption under the first sentence that the contract was most closely connected with England. (3) This was a case where the presumption that arose under Art.4(2) should be disregarded in accordance with the second limb of Art.4(5). The circumstances as a whole revealed points that could be made both for and against the application of the presumption in Art.4(2). Article 4(5) did not mean that all of the circumstances had to point to the contract being more closely connected with another country. The court was entitled to look at all of the circumstances and determine from those with which country the contract was more closely connected. Further, the contract provided for the performance of the work in Norway, and such performance could not have taken place without the assistance of and facilities provided by D. The performance of the contract by both sides was in one place, namely Norway. The problems arising from the purported performance of the contract arose in Norway. M was subject to Norwegian rules and regulations whilst it was in that country and M had to conform with the local regime; those, however, were ancillary circumstances. By itself, the subjection of M to Norwegian local controls for health and safety, planning, employment, tax or registration would not have caused the court to disregard the presumption. However, in a situation where the entire performance of the contract was in one place, the court was entitled to treat those circumstances as confirmation of a more close connection with Norway than with England. D had discharged the burden upon them to show that the presumption should be disregarded. The court took into account and gave great weight to the fact that the place of performance was different from the performer's place of business. The centre of gravity of the dispute was Norway, Definitely Maybe (Touring) Ltd v Marek Lieberberg Konzertagentur GmbH (2001) 1 WLR 1745 applied.
Judgment for defendants.
The appropriate forum for the trial of a dispute between the parties was Norway where a presumption under the Rome Convention Art.4(2) that a construction contract between the parties was most closely connected with England was displaced under Art.4(5).