Construction

To exclude the jurisdiction of the courts of England and Wales, a clause must be clear in its meaning and clear evidence of incorporation is required: Hanwha Q Cells GmbH v Lark Power Generation Limit

The claimant (“Hanwha”) brought a claim against the defendant (“Lark”) for the price of solar panels sold and delivered to Lark.

Lark challenged jurisdiction on the basis that any contract between Hanwha and Lark was governed by Hanwha’s terms and conditions (“the Terms and Conditions”), which contained a clause providing:

“SEVERABILITY CLAUSE, PLACE OF PERFORMANCE, PLACE OF JURISDICTION, WRITTEN FORM

…Bitterfeld-Wolfen shall be the place of performance and jurisdiction for Hanwha Q Cells GmbH. These terms and conditions are governed by German law…”.

Lark argued that the Terms and Conditions were incorporated into the contract of sale and that the jurisdiction of the courts of England and Wales was ousted by an exclusive jurisdiction clause compliant with article 25 of the Recast Brussels Regulation (“Article 25”). The parties agreed that three questions arose.

  1. Were the Terms and Conditions incorporated into the contract of sale?
  2. If so, on a proper construction, does the relevant clause exclude the jurisdiction of the courts of England and Wales?
  3. If so, is the jurisdiction agreement formally valid under Article 25?

It was common ground that a contract was formed upon acceptance by Hanwha of an offer to contract contained in a purchase order (“the Purchase Order”). The Purchase Order contained no reference to the Terms and Conditions. Lark relied on a quotation sent by Hanwha to a company within the Larkfleet group of companies, of which Lark was a member, stating that all deliveries and services would be subject to the Terms and Conditions (“the Quotation”). Although the Purchase Order did not refer expressly to the Quotation, Lark argued that, considering the correspondence as a whole, the parties clearly intended to incorporate the terms of the Quotation, including by reference the Terms and Conditions. Lark pointed to post-contractual invoices as further evidence of the parties’ mutual intention to incorporate the Terms and Conditions.

HHJ Christopher Hancock QC dismissed Lark’s application. Referring to established authority requiring an agreement on jurisdiction to be clearly and precisely demonstrated and requiring Lark to have much the better of the argument, he found that incorporation of the Terms and Conditions could not be implied from the placing of an order on terms which were consistent with the earlier Quotation. The placing of the order did not necessarily involve the incorporation of all terms of the Quotation, particularly where a letter of intent from another of the Larkfleet companies had suggested that the contract would be on the terms of a purchase order. Since the first question was answered in the negative, the application failed.

Albeit obiter and tentatively, HHJ Christopher Hancock QC also answered the second question in the negative. He noted that the relevant clause contained no reference to disputes, to courts or tribunals or to one of the parties and that there was no court in Bitterfeld-Wolfen capable of hearing the claim. The language of the clause reflected article 7 of the Recast Brussels Regulation, which deals with non-exclusive jurisdiction by reference to the place of performance. He concluded that the clause was too ambiguous to require all disputes to be determined in the closest place to Bitterfeld-Wolfen which would be able to hear the claim.

 

John Ditchburn, instructed by Coltman Warner Cranston, represented the claimant.

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