Novus Aviation Ltd v Onur Air Tasimacilik AS

This is an appeal, with the permission of this court, from a judgment of May 19, 2008, in which Aikens J refused to set aside an order made by Tomlinson J, without notice, giving permission to serve proceedings out of the jurisdiction in Turkey.

Novus Aviation Ltd (“Novus”), the claimant, is a Bahamian company. Novus is a part of the Novus Aviation group which carries on business dealing with and trading in commercial aircraft. It has offices in Switzerland and the Lebanon. Its two principal operating companies are Novus Aviation Services SA, a Swiss company, and Novus Aviation SAL (Offshore), a Lebanese company. The group does some business through the United Kingdom, although that is not significant in this case.

The defendant, Onur Air Tasimacilik AS (“Onur”), is a Turkish company. Its head office and principal place of business are in Istanbul. It has carried on business as an airline since 1992 and is the largest private airline in Turkey. It currently flies to 14 airports in Turkey, and to over 65 airports across countries in the Middle East, Africa and Europe. It has flights to England, but has no office here.

Neither Novus nor Onur has a place of business in England, and none of the facts and matters that give rise to the present dispute took place in England.

In or about May 1999, Novus entered into discussions with Onur with a view to Novus securing business for Onur from an airline known to Novus as having a need for additional passenger capacity, but the identity of which would be disclosed by Novus to Onur only on the making of an agreement between them.

Novus and Onur entered into an agreement (“the July 1999 Agreement”) which is recorded in a fax dated July 21, 1999 from Onur in Istanbul addressed to Novus in Geneva. The fax referred to discussions and correspondence regarding “wet-leasing” of aircraft by Onur to a client of Novus, whose identity was yet to be disclosed to Onur.

A “wet-leasing” arrangement is an arrangement whereby an aircraft is both provided and operated by an aircraft operator, such as Onur, on what is referred to as an “ACMI” (Aircraft, Crew, Maintenance, Insurance) basis. The aircraft, crew, maintenance and insurance are all provided as part of the package, but the “wet-lessee” is required to provide all other services and, in particular, the fuel for the aircraft.

In the July 1999 Agreement it was agreed as follows: in consideration of Onur agreeing to “non-circumvention” and other terms, Novus would agree to disclose the name of the client; Onur would not enter into direct relations with the client, and not circumvent Novus on the proposed transaction for 12 months; if Onur and the proposed client entered into the transaction, Onur would appoint Novus as its exclusive agent for three years from the date of the letter, and pay a commission of at least 5% of the contract value. The fax provided by paragraph 5 as follows: “This letter shall be governed by and construed with English law.”

The client airline was Saudi Arabian Airlines (“Saudia”). As the flag-carrying airline of Saudi Arabia, Saudia plays a major role in the provision of transport for Muslim pilgrims visiting Mecca and Medina during the Hajj. Because some 2 million pilgrims visit Mecca in this period Saudia has a shortfall of aircraft. This period is in Onur’s low season, and its surplus aircraft (and crew) are available for leasing.

Thereafter, Onur entered into various wet-lease agreements with Saudia and paid commission to Novus pursuant to the July 1999 Agreement.

On March 28, 2002, Novus and Onur agreed that the commission would be reduced to a figure of not less than 4%, and that the appointment of Novus would be extended for a further term of 3 years “upon same terms and conditions herein mentioned”. The amendment to the commission arrangement and the extension were recorded on an endorsement to the original fax signed on March 28, 2002 on behalf of Onur and on behalf of Novus. The extended agreement’s term, therefore, would continue until March 28, 2005.

The parties met on September 11 and 12, 2003. This meeting was held at Le Mirador Hotel, Mont-Pelerin, Switzerland. It was attended by Mr Bagana, the Chairman and Chief Executive of Onur, Mr Kuzbari and Mr Khouja of Novus, and Mr Ralph Severin of Air Trails GmbH. The meeting is evidenced by minutes prepared by Novus and signed by the participants.

The minutes state that the purpose of the meeting was to review and evaluate the latest developments since the last meeting and to set up a plan/strategy for the future Hajj movements business. The meeting discussed the relative merits of the A300-600 and B747 aircraft, and the level of Novus’ commission.

The minutes end by stating that “in view of all above, the following resolutions were adopted unanimously”, including (as No 4):

The minutes were signed by all of the participants, although there is some dispute (not material on this appeal) as to when the minutes were signed by Mr Bagana. He accepts that he signed them, although he says that he signed them without reading them through carefully and doing so in a great hurry. He said he trusted what had been prepared by Novus as being accurate and he did not pay much attention to what he was signing.

Novus’ claim is that at the meeting it was agreed by Novus and Onur that the July 1999 Agreement should be extended to apply to all wet-leasing agreements and for a further term of 8 years, and that that was agreed or evidenced by Resolution No 4 in the minutes.

Novus says that it was agreed in November 2006 that the commission was increased from 4% to 5.5% to enable commission of 1.5% to be paid by Onur via Novus to two former executives of Saudia.

By letter dated March 10, 2007, Onur wrote to Novus to say that it “...has started to negotiate and sign wet-leasing contracts with the Saudi Arabian Airlines directly and for this reason we would like to point out that our existing contract by this new arrangements [e]ffective by 04 Feb 2007 has terminated”.

Novus has not accepted the alleged repudiation, and claims damages for Onur’s continuing failure to pay the commissions due under the July 1999 Agreement as extended, in particular the sums due in relation to the arrangements made in 2006 between Onur and Saudia for the 2007 pilgrimages.

Novus applied for, and obtained, permission to serve the proceedings on Onur in Turkey under CPR 6.20(5)(c) on the ground that “the contract is expressly stated as being both governed by and construed in accordance with English law.”

The essence of the dispute is this. Novus says that at the 2003 meeting the parties agreed to extend the July 1999 Agreement to apply to all wet-leasing agreements and for a further eight years, to September 11, 2011; that the agreement to extend was agreed in and/or evidenced by the minutes, and in particular by Resolution No 4; that the parties plainly intended the July 1999 Agreement as extended to continue to be governed by and construed in accordance with English law; and that the remuneration rate would continue to be not less than 4%.

Consequently, the particulars of claim allege that Onur has refused or failed to pay sums due in respect of aircraft wet-leasing transactions with Saudia in respect of all invoices submitted from January 10, 2007 onwards. Novus claims its remuneration at a commission basis of 4% on a total contract value of the wet-leases of about US$51 million. The commission claimed is some US$2 million as at the date of the particulars of claim. There is an additional small claim in respect of another outstanding invoice.

Onur’s case will be that no extension was agreed and consequently the July 1999 Agreement terminated in 2005 in accordance with the terms of the 2002 extension. Its evidence is that what was discussed at the meeting was a new and distinct proposal that Saudia would lease planes from Onur for the whole of the year, rather than for the period around the Hajj; Novus said that Saudia would be prepared to enter into a eight-year contract on ACMI terms in relation to Airbus A300 planes, and also another contract in relation to Boeing 747 planes for several years. Onur says that because some of these planes would need to be secured by Onur from other airlines, it would make a significant alteration to the existing relationship between Onur and Saudia.

Mr Bagana says that he was sceptical because contracts were usually not concluded for more than 2 years in the industry. He was therefore not surprised when Novus did not revert to him with any further information about such a relationship with Saudia. He says that “this was a business suggestion which went nowhere”, because Novus failed to carry out its promise to obtain lengthy contracts with Saudia. Consequently, Onur’s case will be that because the proposed new contractual relationship between Saudia and Onur did not come into existence, there was never any further agreement between Onur and Novus, whether for eight years or any period; and therefore Novus has no rights at all and Onur has no obligations in respect of it.

He also says that within Onur it was Mr Pekpak, Vice-President of the Commercial Department, who signed commercial agreements with third parties, and Mr Bagana did not get involved with the detail of Onur’s commercial relations with companies such as Novus; and that Mr Pekpak did not know of the 2003 minutes until 2007.

In considering whether Novus had a good arguable case on the merits (which is not in issue on this appeal) the judge referred to the fact that there was some support for the proposition that Onur was acting as if there was a contract which existed after the meeting of 2003 and well after the period when the first extension would have expired on March 28, 2005: in particular the letter of March 10, 2007 from Onur to Mr Khouja of Novus referred to above; and an email dated February 23, 2006 from Mr Khouja to Mr Bagana, after the three year period ending on March 28, 2005, which says:

The judge considered three questions (applying Sawyer v Atari Interactive Inc. [2005] EWHC 2351 (Ch), [2006] ILPr 8). The first was whether the claimant had a cause of action against the defendant which had a reasonable prospect of success. The second was whether the claimant had a good arguable case that the claim fell within one of the heads of CPR, Rule 6.20. The third question was whether the claimant had established that England was the appropriate forum.

The judge decided that there was a good arguable case that there was a contract, running for eight years from September 12, 2003, of an agency type governed by English law. Resolution No 4 talked in terms of the two parties maintaining the same terms and conditions of co-operation as the existing ones. That phraseology made no sense unless it referred back to what had already been agreed. The only things that had been agreed were those that had been recorded in the fax of July 21, 1999, as subsequently varied by the endorsements. The minutes referred to existing terms and conditions, and to all aircraft leased by Onur to Saudia for the coming eight year term. That suggested that it was intended that the arrangement would apply to everything, and not just any particular new arrangements for additional aircraft relating to carriage of pilgrims. On the wording of the document Novus had very much the better of the argument, and the other communications between the parties in 2006 and 2007 suggested an existing agreement and one which existed after March 2005. Accordingly there was a good arguable case in favour of an extended contract as from September 12, 2003 and that such a contract was governed, by implication, by English law.

There is no appeal on the first two questions decided by the judge.

On the question of appropriate forum the judge directed himself as follows. First, it is for the claimant in the present type of case to demonstrate that England is the forum which is identified as being the forum in which the case can be suitably tried in the interests of all the parties and for the ends of justice: Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460.

Second, it is necessary to identify what the issues between the parties would be at trial, and (without undermining the fact that it is for the claimant to show that England is the more appropriate forum for the trial of the action) it is for the defendant to identify issues which are relevant and to state, as clearly as possible, how they arise or may arise in the proceedings: Limit (No. 3) v. PDV Insurance Co [2005] EWCA Civ 383, [2005] Lloyd's Rep IR 552.

Third, where the head of jurisdiction relied upon is that the contract is governed by English law, the burden on a claimant to demonstrate that England is the appropriate forum is a heavy one. It was necessary to be wary of placing too much emphasis on the importance of English law and of the English language as a means of saying that the English courts are the appropriate forum. But where the decision depends upon the construction of the document or documents in one language and the rival courts are, on the one hand, courts whose native language is that of the document and on the other hand, courts whose native language is not that of the document, it is in the interests of the parties and the ends of justice that the true meaning should be ascertained and be decided by the courts whose native language is that of the document: The Magnum [1989] 1 Lloyd’s Rep 47, 51, per Parker LJ.

The judge identified the following issues: first, the construction of paragraph four (in particular) of the resolutions; second, whether or not the minutes accurately reflected or evidenced what was agreed between the parties at that meeting; whether the parties’ subsequent conduct, in the period 2003 to March/April 2007, gave rise to an estoppel; and whether Mr Bagana had authority to enter into the alleged 2003 agreement.

The judge concluded as follows: the relevant document was in English. It would have to be construed in accordance with English law and it would have to be understood as an English language document. It was plain and obvious that the English courts were in a better position to construe that document than the Turkish courts.

If there was to be a challenge to the accuracy of the agreement, the court would have to consider evidence from two sets of people who did not have English as their first language. But the negotiations took place in English, and the court’s job would be to construe objectively what was said in English in order to arrive at a conclusion as to what was agreed, if it was indeed different from that recorded in the minutes. An English court would be in a better position to do this than a Turkish court would. The officers of Novus speak French as their first language. But they would be likely to give their evidence in English. It would be easier for the English court to deal with the evidence. If they had to give their evidence in Turkish, then the Turkish court would be trying to interpret what their evidence was, translated into Turkish, in relation to related negotiations which were conducted in English.

Onur’s officers could not give evidence in the English court in English because they would not be happy that they would be sufficiently fluent to be able to express themselves properly. Their evidence would be given in Turkish through an interpreter. But they could be cross-examined on what it was they said in English. It was clear that the English court was in a better position to evaluate that evidence than would be the Turkish court.

The fact that there would be direct cross-examination by lawyers in English proceedings was not a relevant factor.

An estoppel argument based on subsequent conduct was a neutral factor or a small factor in favour of the English court being the appropriate court, because estoppel was “quintessentially an Anglo-Saxon legal concept with which an English court may be better able to deal.”

If the matter were to go to the Turkish court, then issues of construction and any issues of English law which arose on certainty of contracting, certainty of terms, and intention to enter into legal relations, would all have to be dealt with through English law experts. That was a cumbersome process which would be entirely avoided if the matter were to be dealt with by the English court.

If issues of actual authority arise, they would be likely to be governed (under English conflicts rules, at least) by Turkish law. However, again under English conflict rules, issues of ostensible or usual authority would be governed by the putative proper law of the contract, which would be, in this case, English law. In that regard, the English court would be in a better position to deal with the English law issues than a Turkish court.

The judge also bore in mind that there was no connection with England, in terms of the facts, in relation to this dispute. Onur had connections with Turkey, which was its place of business and where its witnesses were based. But the question of where its business was based did not bear at all on the issues which arose. The fact that its witnesses were based in Turkey was not a weighty matter. Evidence could be taken by video link and there was no need for witnesses to come to England at all.

The judge concluded that this was a finely balanced case, but that Novus had discharged its burden.

Onur’s case in essence is that the judge failed to consider whether England was the natural forum. In fact Turkey is the natural forum. Onur is resident in Turkey. Correspondence originated in Turkey. Some of the meetings took place there. Invoices were received in Turkey. Payments were made through a Turkish bank account; and the aircraft leased by Onur to Saudia flew from Turkey.

The only dispute between the parties is whether the parties agreed at the meeting in September 2003 to extend the term of the July 1999 Agreement.

The July 1999 Agreement was made by exchange of faxes between Onur's offices in Turkey and Novus’ offices in Switzerland. All the meetings between the parties took place, variously, in Switzerland, Turkey (Onur’s offices), or in Saudi Arabia. The meeting at which the disputed extension was allegedly agreed took place at a hotel in Switzerland. Novus rendered its invoices to Onur in Turkey, for payment to its bank account in Switzerland. The underlying aircraft leasing contracts were concerned with the leasing of aircraft by Onur to Saudia, for use in the Hajj.

The evidence showed that not a single meeting, payment, e-mail, fax, telephone call, or any other relevant event or communication, took place in - or even passed through - the jurisdiction of the English court, or otherwise had any connection with England.

As is not uncommon in international commerce, the July 1999 Agreement contained an English law clause – but not an English choice of forum. As is also not uncommon in that context, the parties communicated in English because neither was able to understand the other’s native language (respectively Turkish on the one hand, and French or Arabic on the other).

Apart from that, the dispute has no connection whatsoever with England. Neither Onur nor Novus has offices in England.

The essential nature of the judge’s error was that he treated the perceived procedural convenience of dealing with the dispute between the parties in English, before a court familiar with English law, as being an overriding consideration as to whether the English court was an “appropriate” court to hear the matter. The judge failed to apply the correct test, namely whether Novus had discharged the (heavy) burden of demonstrating that England was “the natural forum” for the dispute, which is to say the forum with which the dispute had the most real and substantial connection.

The judge effectively substituted, in the place of the test for the appropriate forum, a test as to whether England might be a convenient forum - specifically, a procedurally convenient forum - contrary to the principles set out in (amongst other cases) Spiliada Maritime Corp. v Cansulex Ltd [1987] AC 460. The judge overlooked the requirement in Spiliada (at 478) that England should be the forum with which the action had the most real and substantial connection. He failed properly to consider or take into account “what was really the overriding fact, namely that substantially the dispute had no connection with England at all”: Macsteel Commercial Holdings (Pty) Ltd v Thermasteel V (Canada) Inc [1996] CLC 1403, 1408 (CA).

The judge erred in his analysis of the likely issues between the parties, particularly in that he appeared to consider that the relatively straightforward question of whether the parties had agreed to an extension of the Agency Agreement or not (and related but typical arguments of modest scope about authority and the parties’ subsequent conduct), was likely to raise complex questions of construction and/or other issues under English law.

The judge effectively equated the parties’ choice of English law with a choice of English forum, which is an error of principle: Macsteel Commercial Holdings (Pty) Ltd v Thermasteel V (Canada) Inc [1996] CLC 1403 (CA); Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch), [2006] ILPr 8).

Where the sole jurisdictional ground relied on by the claimant is CPR 6.20(5)(c), i.e. that the claim is made in respect of a contract governed by English law, particular caution is required, and the burden on the claimant of showing good reasons justifying service out of the jurisdiction is a “particularly heavy one”: The Elli 2 [1985] 1 Lloyd’s Rep 107 at 113; Spiliada Maritime Corp. v Cansulex Ltd [1987] AC 460, 480. Special regard must be had to the fact that jurisdiction founded on this basis is exorbitant: Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, at 65-66.

The dispute was a simple one. Any issue of construction (if there were any) concerned merely the evidential interpretation of one sentence in the minutes of a meeting. There is no important issue of English law which the court trying the action would have to resolve.

Any court considering the matter would need mainly to look at the (one sentence) paragraph in the minutes which is said to contain or evidence this alleged agreement; listen to the witnesses’ evidence; and decide whether they had or had not made the alleged agreement. This does not require any great excursion into English legal principles or theory, any elaborate consideration of technical English language, or any other exercise peculiarly suited to the English court’s procedure or skills. It was the type of straightforward issue which any court anywhere in the world is perfectly capable of addressing without any great difficulty.

As to the putative issues of construction, the relevant part of the minutes is one sentence covering three lines; and the meeting took place over a period of two days, now more than 5 years ago. Any court seeking to resolve the question of whether the parties made the alleged agreement would not embark on some elaborate attempt to construe the one sentence which is said to evidence it, still less to try to construe particular words which the witnesses may or may not have used orally – even if, as is most improbable, any witness could credibly claim to be able to remember any of the precise English words which they used during the meeting. Any court trying this issue will hear the witnesses, look at the minutes, and consider whether, taking the written and oral evidence together, it is satisfied that the parties reached the relevant agreement. It will not embark on some elaborate attempt to construe the precise words used by the parties, and it is artificial to suppose that issues of construction would constitute any significant part of the exercise.

Even if the parties might be asked in cross-examination about what they said in English at the September 2003 meeting, the judge overlooked the fact that it was unlikely to be a useful exercise given that the meeting took place more than 5 years ago, lasted two days, was not conducted in the parties’ respective native languages, and it was therefore most improbable that anybody would be able reliably to give any evidence of the precise English words which they used.

The judge erred in attaching any significance, as a factor militating in favour of the English court, to the possibility that Novus might seek to argue some form of unspecified estoppel. The alleged estoppel issue was inchoate and vague: the nature of this alleged estoppel was not explained or even mentioned in Novus’ pleadings, evidence, or skeleton argument; it was first vaguely suggested as a possibility in the course of oral submissions, without much explanation. Even if the alleged estoppel had been properly identified, while the judge may be right in thinking that estoppel per se is a “quintessentially an Anglo-Saxon concept”, it does not follow that a civil court - such as the Turkish court - would be unfamiliar with equivalent concepts or somehow have any difficulty comprehending an argument based on what are (essentially) principles of acquiescence or waiver (which are, albeit under different labels, commonplace concepts in all developed legal systems).

Contrary to the judge’s assessment, the fourth issue (agency) was at most neutral. Whilst it is correct that ostensible authority is (under English conflict of laws principles) a matter for the putative proper law of contract (and therefore in this case before an English court would be English law), Mr Bagana’s actual authority to act on behalf of the Turkish corporation he represents is almost certainly a matter of Turkish law, arising as it does from his position as an officer of the Turkish company, which the Turkish court would be better suited to determine.

The judge misunderstood the significance of the complete lack of any factual connection between the dispute and the English forum, and the significance of Onur’s residence. He did not address the question of how England could be the natural forum for this dispute in circumstances where it had no factual connection with the dispute at all, let alone the most real and substantial connection.

The judge disregarded the significance of Onur’s residence on the ground that the question of where its business was based did not bear on the issues which arose. But the places where the parties respectively reside or carry on business, are connecting factors indicating what is the natural forum i.e. the forum with which the dispute has the most real and substantial connection: Spiliada, at 478; Macsteel, at 1406-7.

The effect of the judge’s incorrect analysis of the nature of the likely issues between the parties was to lead him into error, as it caused him to consider that putative English law issues of construction, estoppel, and ostensible authority were of far greater significance than was in fact the case. Viewed realistically, however, the simple point is that this is a straightforward dispute about whether or not an agreement was made at a meeting, which does not raise any peculiar or difficult issues of English or any other system of law, and in the determination of which the English court has no particular advantage over any other court.

The only issue on this appeal is whether the judge correctly exercised his discretion to authorise service out of the jurisdiction under what was then CPR 6.20(5)(c), which authorised service out of the jurisdiction where a claim was made in respect of a contract where the contract was “governed by English law”. This provision had its origin in RSC Ord 11, r 1(1)(e)(iii), introduced in 1920, which provided that service outside the jurisdiction could be authorised where a claim was brought to enforce, etc a contract which was “by its terms or by implication to be governed by English law.” Prior to the introduction of the CPR that head of jurisdiction had became, with minor changes, RSC Ord 11, r 1(1)(d)(iii).

Since October 2008 the provisions for service outside the jurisdiction have been relegated to a Part 6 Practice Direction, and what was CPR 6.20(5)(c) is now 6BPD para 3.1(6)(c).

By CPR 6.21(2A) (now CPR 6.37(3)) the court could not give permission unless satisfied that “England and Wales is the proper place in which to bring the claim.”

This is an appeal from the exercise of a discretion and the familiar principles apply. The appellant must show that the judge misdirected himself in principle or took into account matters which he should not have done, or failed to take account of matters which he should have done, or that he is plainly wrong.

It seems to me that Onur takes only two points which could possibly reach this standard. The first is that the judge failed to take account of a claimant’s duty under the Spiliada test to establish that England was the natural forum and that the action had a real and substantial connection with England.

The second is that the judge effectively equated the choice of English law and/or the use of the English language with a choice of an English forum.

As to the first point, it is fanciful to suggest that this judge overlooked the Spiliada principles. It was not necessary for him to spell them out. He referred several times to the need to establish the appropriate forum, and said that the task of the court was to identify the forum in which the case could suitably be tried in the interests of all the parties and for the ends of justice. This was a direct reference to a passage in Spiliada (at 476) in substantially identical terms. It is true that the judge did not expressly echo Lord Goff of Chieveley’s approval, a little later (at 477-478), of Lord Keith of Kinkel’s formulation in The Abidin Daver [1984] AC 398, 415, of the “natural forum” as being “that with which the action had the most real and substantial connection.” But I have not been able to identify any error of principle in the judge’s approach. It is plain from Lord Goff’s speech that whether the emphasis is on the appropriate forum or the natural forum, or the forum in which the case may be suitably tried in the interests of the parties and for the ends of justice, or with which the action has its most real and substantial connection, precisely the same matters are to be taken into account. The factors include availability of witnesses, the governing law, the residence or place of business of the parties, and the ground of jurisdiction relied upon: [1987] AC at 478, 482. Nor does it matter if the question is formulated in terms of whether it is the action, or the dispute, which has a real and substantial connection with the relevant forum. The essence of Lord Goff’s speech in the context of service out of the jurisdiction is that the claimant has the burden of persuading the court that England is clearly the appropriate forum for the trial of the action: at 481.

In such a familiar area the ex tempore judgment of an experienced commercial judge should not be expected to echo every nuance of Lord Goff’s speech, nor should Lord Goff’s speech be treated as a peremptory statute. This is one of those cases where it can be assumed with some confidence that the judge was fully aware of the principles in Spiliada. The application of those principles is part of the regular diet of the judges in the Commercial Court. As Lord Hoffmann said in Piglowska v Piglowski [1999] 1 WLR 1360, at 1372 (in the context of the discretion under section 25(2) of the Matrimonial Causes Act 1973), where a judge gives an unreserved judgment, the judge’s reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. That was particularly true when the matters in question were well known, and an appellate court should resist the temptation to subvert the principle that it should not substitute its own discretion for that of the judge by a narrow textual analysis which enables it to claim that he misdirected himself. That is precisely what Mr Howe QC seeks to do in this appeal when he claims that the judge ignored crucial parts of Lord Goff’s speech in Spiliada.

That leads to the next point. Has the judge treated the choice of English law and the use of the English language as tantamount to a choice of English forum? In my judgment he has not.

The use of the governing law of a contract as a basis of jurisdiction is limited to England and the Commonwealth. It plays no role in the United States, and it is not, of course, a ground of jurisdiction under the Brussels Regulation scheme (or its predecessors the Brussels and Lugano Conventions). Special transitional provision was made in Article 35 of the 1978 Accession Convention to enable the English and Irish courts to exercise jurisdiction on this basis over Convention defendants under contracts concluded before the Accession Convention came into force.

In Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, at 68, Lord Diplock said that the exorbitance of the jurisdiction sought to be invoked where reliance was based exclusively on the then RSC Ord 11, r 1(1)(f)(iii) (contract by its terms or by implication governed by English law) was an important factor to be placed in the balance against granting leave. He went on to say that that factor could be outweighed if the would-be plaintiff could satisfy the court that justice could not be obtained by him in the alternative forum, or could only be obtained at excessive cost, delay or inconvenience. Lord Wilberforce took a somewhat broader view of the factors to be taken into account, namely the nature of the dispute, the legal and practical issues involved, local knowledge, availability of witnesses and their evidence and expense: [1984] AC at 72. Although Lord Diplock’s speech had the approval of all the other members of the House, it is now clear that Lord Wilberforce’s formulation has come to be accepted: see Spiliada, at 480, approving The Elli 2 [1985] 1 Lloyd’s Rep 107.

In Spiliada Lord Goff said (at 481) that the fact that English law was the proper law of the contract might be of very great importance, or it may be of little importance in the context of the whole case; and that (at 486) it was a relevant factor that the litigation was being fought under a contract governed by English law, and that was by no means an insignificant factor, since there was not only a dispute as to the effect of the bill of lading contract but also as to the nature of the obligations under the contract.

In Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch), [2006] ILPr 8 I reviewed the authorities on the relevance of a choice of English law in the exercise of the discretion, and I mention some of them here.

It is contrary to principle to suggest that by agreeing to English law the parties must be regarded as contracting to have chosen English jurisdiction. In Macsteel Commercial Holdings (Pty) Ltd v Thermasteel V (Canada) Inc [1996] CLC 1403 Sir Thomas Bingham MR said (at 1407) that the distinction between the choice of English law and a contractual choice of an English forum was a distinction of very major importance, and Millett LJ said (at 1408) that the judge had made a fundamental error in equating choice of law with choice of forum.

In BP Exploration Co (Libya) v Hunt [1976] 3 All ER 879, 893 (in a passage which is not in the report at [1976] 1 WLR 788) Kerr J said that the fact that the contract was governed by English law was the predominating factor to be borne in mind. Unless there were other considerations of overwhelming weight which militated against the English courts, the appropriate forum for deciding the rights of the parties under English law were the courts of England. In Texas it would be necessary to adduce expert evidence on English law. But in The Elli 2 [1985] 1 Lloyd's Rep 107, at 118, May LJ said that he would not go so far as Kerr J in saying that the fact that the contract was governed by English law was a predominating factor. That factor would have a different weight in different circumstances. I agree.

Factors which may weigh in favour of the English forum would include the fact that issues of English public policy may be involved (as in EI du Pont de Nemours v Agnew [1987] 2 Lloyd’s Rep 585; Mitsubishi Corp v Alafouzos [1988] 1 Lloyd’s Rep 191) or the fact that the foreign forum, notwithstanding the express choice of English law, may not apply English law, and may instead apply its own law: Coast Lines Ltd v Hudig and Veder Chartering NV [1971] 2 Lloyd’s Rep 390, affd [1972] 2 QB 34.

In Sawyer v Atari Interactive Inc, at [54], I suggested that assessing the significance of a choice of English law is not an exercise in the counting of contacts, but of identifying, so far as is possible in the absence of a formal defence, the issues, and then considering the appropriateness of the competing fora.

As I have said, the judge placed reliance on what Parker LJ said in The Magnum [1989] 1 Lloyd’s Rep 47, 51, about the desirability of the English court deciding on the construction of a document in the English language. But it is not likely that any issue of construction of the kind Parker LJ had in mind will arise in this case. So also it would not normally be right to treat the use of the English language in negotiations as a matter of great weight. In international business the use of the English (or, in reality, the American) language has become ubiquitous.

The judge accepted that the present case was a finely balanced one. He took into account that some issues might have to be determined by English law; that there might be questions as to what was said (in English) at meetings, particularly the September 2003 meeting; that Onur was resident in Turkey and its witnesses were based there; and that there was no factual connection of the dispute with England. Although Onur and its principal witnesses are in Turkey, the dispute has no factual connection with Turkey. I accept that at this stage it is by no means clear that any substantial issues of English law will arise at trial, and that the use of English in the negotiations is only one of the factors to be taken into account in determining the most appropriate forum. But the judge did not treat the governing law of the putative contract or the use of English in the documents and in the negotiations as in any sense conclusive. In my judgment he was entitled to come to the conclusion that Novus had shown clearly that England was the appropriate forum, and I am entirely unable to detect any error of principle or other ground for interfering with the judge’s exercise of discretion. I would therefore dismiss the appeal.

I agree.

I also agree.