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
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,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
traditional methods of production. MS also suggested that, for example, the cheese in particular might have been
transported and stored in such a way as to cause it to deteriorate since leaving MS’s farm.
Mandy wished to issue proceedings against MS before the English courts to recover her losses. MS indicated that, should
this happen, it will submit to the jurisdiction of the English court. The contract between Mandy and MS does not contain
a choice of law clause or a choice of jurisdiction clause. Students were asked which country’s laws the English court was
most likely to apply to the dispute.
Good answers included:
1. Rome I Regulation needed to be considered.
2. The material scope and temporal scope were satisfied.
3. There was no express choice of law.
4. It was unlikely that one may be implied by the court.
5. The starting point in these circumstances, therefore, is to apply Article 4.
6. But in this particular case, this was a consumer contract under Article 6.
7. This is because Mandy is a natural person acting outside of any trade/profession contracting with a professional
(Recital 24).
8. Mandy’s habitual residence is England (Article 19).
9. An assessment needed to be made as to whether MS had directed its activities in England.
10. Various application points suggested that MS did not direct its activities as such: the website was merely accessible
in England, it was entirely in Italian, it had a low level domain name, no international facility was available, there was no
online ordering via the website, no delivery to England and payment was in Euros.
11. Article 6(3) says that the default is therefore to go to Article 3 or 4. Here it would be 4.
12. Article 4(1) (a) applies as this is a contract for the sale of goods.
13. Applicable law will be where the seller has its habitual residence and this was Italy.
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,14. The English court would therefore apply Italian law to the dispute.
15. Given that this is the conclusion, students should also have applied Article 9 and 21 as they might operate so that
English overriding mandatory provision and/or public policy provisions displace contradictory Italian provisions.
SGS 2: CONFLICT OF LAWS II (TORT)
MCQs
(Environmental damage)
Industrial Paints Limited (“IPL”) is a company incorporated in England. It is a wholly owned subsidiary of Renaissance
Paints SpA (“Renaissance Paints”), a company incorporated in Italy. IPL has a factory in Dover. In October 2019, a
substantial amount of toxic waste leaked from its Dover plant. Two days later, such waste caused damage to fishing
materials and products owned by Poisson GmbH (“Poisson”), a German incorporated company with a branch on the
French coast, whilst such materials and products were being stored near Calais, France. Poisson commences
proceedings against IPL and Renaissance Paints in England.
Which country’s laws are MOST LIKELY to be applied by the English court? Please
choose the ONE CORRECT answer from the options below:
a) French law;
b) English law;
c) German law; or
d) The claimant has a choice as between some of the above countries’ laws.
The answer is (d). The Rome II Regulation will apply to this tort. This case relates to environmental damage. Article 7
will accordingly apply. See, also, Recital 24. The claimant can therefore elect to apply French law (as the law of the
place where the damage occurred for the purposes of Article 4(1)) or English law (as the law of the country in which
the event giving rise to the damage occurred).
Even if French law is applied to the dispute, the English court can take account of the English rules of safety and
conduct pursuant to Article 17.
(Product liability)
Industrial & Commercial Jigsaws Limited (“ICJL”) is a company incorporated in England. It has its registered office and
central administration in Sheffield. ICJL makes industrial metal-cutting machines. Such machines are marketed and sold
throughout all the countries of the European Union. In September 2019, ICJL supplies one of its machines to a Belgian
company named Gaufres SPRL (“Gaufres”). Gaufres is based in Liege, Belgium. The machine is manufactured in Sheffield
and shipped to one of Gaufres’ factories in Aachen, Germany. It turns out that there is a fault with the ICJL machine. It
accordingly malfunctions and causes personal injury to one of Gaufres’ employees, Isabel van den Bossche, whilst she is
working in the company’s Aachen factory. Ms van den Bossche is a Dutch national, living in Maastricht, The Netherlands.
Gaufres has now gone out of business due to insolvency. Mrs van den Bossche accordingly sues ICJL in England.
Which country’s laws are MOST LIKELY to be applied by the English court?
a) English law;
b) Dutch law;
c) Belgian law; or
d) German law.
The answer is (b). The Rome II Regulation will apply to this tort. This case relates to product liability. Given that the
product (i.e. the metal cutting machine) has been marketed in the country in which Ms van den Bossche habitually
resides (namely The Netherlands), Article 5(1)(a) should apply. It is not clear from the circumstances that the tort is
manifestly closer connected with another country for the purposes of Article 5(2).
Further, the court will consider the relevant rules of safety and conduct in force at the place and time of “the event
giving rise to the liability”; see Article 17 and Recital 34. Therefore, depending upon the court’s analysis of what went
wrong and where, this is likely to include the relevant rules in place in England (where it was manufactured) and/or
Germany (where it was installed and operational).
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, Common Law rules applied in cases of defamation
Rule of double actionability
“Double actionability”- Phillips -v- Eyre: 1) The tort is actionable under the law of the forum- give rise to a tortious action
in English Courts (if this had happened in England where it is being heard)
2) The claimant must show that the tort is NOT justifiable under the law of the place of the tort- Tort does not give rise
to some civil liability under the law of the place where the tort occurred
Flexibility in second limb (Boys v Chaplin) - accident in Malta, British Armed forces- road traffic accident- injuries
Head of terms which were available under English but not under Maltese law
Seen as being unfair to the claimant that certain heads of terms
Court decided second limb could be decided flexibly (could overlook that double actionability was not satisfied under
the second limb)
Flexibility in first limb (Red Sea Insurance)- didn’t apply the first condition
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