Canyon Offshore Ltd v GDF Suez E&P Nederland BV

This application to contest jurisdiction is mainly about Article 5(1) ofCouncil Regulation (EC) 44/2001(“the Judgments Regulation”) and the place of performance of obligations.

The Court has four bundles of documents including two helpful witness statements from Mr Ashley and Ms Woodward Quail of the parties’ solicitors which set out the facts. None of the facts are in dispute except what happened at a meeting on 17 January 2014 and some points of timing, issues which I cannot resolve on this application.

The Claimant (“Canyon”) is a Scottish company with its registered office in Aberdeen. The Defendant applicant (“GDF”), a Dutch company, is a large owner and operator of oil and gas fields. In particular, GDF operates wells in the Dutch sector of the Orca, Sierra and Amstel fields in the North Sea.

GDF wished to develop further those fields by the erection of additional platforms, which in turn required the installation of subsea pipelines. On 4 September 2012 GDF entered into three contracts in materially the same form, with Cecon NL BV (“Cecon”), another Dutch company, for the transportation and installation of these pipelines (“the Project Agreements”). Each Agreement is expressly subject to Dutch law and jurisdiction. The Project Agreements permitted Cecon to sub-contract its work and provided for the costs of sub-contractors, “…to be reimbursed to [Cecon] by [GDF] on a cost plus basis, i.e. cost plus ten (10) per cent….”

Cecon sub-contracted part of the work to Canyon under an agreement dated 1 July 2013 (“The Trenching Contract”). Article 39 of the Trenching Contract provides that it is governed by English law and subject to arbitration in Rotterdam. The only other provisions relevant to this application are Clause 3 of section 1 that Cecon “shall pay to [Canyon] the Price” and Article 15 of section 2 which deals with time of payment.

In about November 2013, Cecon fell behind in its payment obligations to its sub-contractors, including Canyon. Canyon had done work and issued invoices. Each invoice stipulated that payment was to be made by wire transfer to Canyon’s Bank of America account in London or by mail payment to Canyon’s address in Aberdeen. GDF was concerned that these payment difficulties would have an impact on the project if sub-contractors were to cease work due to non-payment. So GDF made the proposal set out in a letter addressed to Cecon of 16 January 2014 (“the Letter”) the relevant parts of which read as follows. The Letter must of course be read as a whole and in context.

“Further to our meeting of today we herewith inform you as follows.

We understand that certain sub-contractors contracted by Cecon NL B.V. ("Cecon") and engaged in the execution of the work for the transport and installation of the pipelines ("projects") as referred to above have been left unpaid for a substantial period of time. This has resulted in a large backlog of outstanding invoices. We also understand that Cecon is not in the position to fulfil its payment obligations under the respective sub-contracts.

The above situation is causing a threat to the projects considering that these sub-contractors may suspend their services any time now they have not been paid by Cecon. If these sub-contractors would stop their activities this could lead to a delay and an increase of costs. Although GDF SUEZ E&P Nederland B.V. ("GDF SUEZ") is not obliged in any way or form to take over this payment obligation, in order to mitigate cost and potential damages GDF SUEZ sees no other option than to, on behalf of Cecon, pay the relevant sub-contractors directly. GDF SUEZ is only prepared to pay the relevant sub-contractors based on the following conditions:

The amount of the invoices is undisputed and approved for payment by Cecon;

The invoices are not related to the operation of the Pipelay Vessel 'Lewek Centurion' except for the works done by sub-contractor CRC-EVANS Ltd;

The invoices are not subject to any variation order, already in process by GDF SUEZ;

The invoices are not subject to any future variation order;

The relevant invoice is not disputed by GDF SUEZ.

Please note that payments made by GDF Suez to the relevant sub-contractors shall discharge GDF SUEZ from any payment obligation towards Cecon (in Dutch; "bevrijdende betaling") under the agreements referred to above for that same amount. GDF SUEZ shall not take over the contractual position of Cecon under the relevant sub-contract and this letter should therefore not be interpreted in such way that this could be assumed. Cecon shall ensure and document that any and all payments done by GDF SUEZ shall discharge Cecon from its payment obligation towards the relevant sub-contractor.

This arrangement shall apply to invoices from sub-contractors that have been left unpaid until the date of this letter, provided that the conditions reflected above are being met.

Upon receipt of this letter counter signed by Cecon, the agreement set out in this letter will come into force….”

There was a meeting between Canyon and Cecon on 17 January 2014. The evidence about the meeting from Ms Woodward Quail, on instructions, is that Cecon, mainly through Mr Stinenbosch told Canyon that Cecon had met GDF on 15 January 2014 (that is consistent with the terms of the Letter). Cecon told Canyon that GDF “had given a commitment” that GDF would pay the sub-contractors’ invoices to ensure that the sub-contractors did not suspend performance. As a result Mr McIntosh of Canyon, “was in no doubt that the agreement was that GDF would pay Canyon directly, if Canyon kept on working.” The evidence (see paragraph 32(3)) suggests that Canyon understood, although it is unclear whether that was from what it was told or simply from inference, that future as well as past invoices would be covered.Further, it is said that Mr McIntosh understood that GDF had authorised Cecon to pass on a contractual offer to Canyon. GDF responds in general terms stating that it did not agree that Cecon could act as GDF’s agent or hold out Cecon to Canyon as GDF’s agent. There is a dispute between the parties as to whether Cecon accepted the offer before GDF told Cecon that it had withdrawn it. The Court cannot resolve these factual issues on this application.

Canyon says that it relied on the Letter and what was said at the 17 January 2014 meeting and decided to carry on working until the job was completed at the end of January.

At paragraph 7 of the Particulars of Claim, Canyon alleges that Canyon and GDF made a contract and that, “GDF agreed that it would pay directly to Canyon any sums invoiced by Canyon to Cecon under the Trenching Contract.” Canyon relies upon the Letter as an offer by GDF to Canyon to pay sums due to Canyon under the Trenching Contract, “if Canyon agreed to continue to perform its obligations under the Trenching Contract and/or continued to perform such obligations” (paragraph 8(4)). Canyon claims some £2.1m in respect of work done before 16 January 2014 (paragraph 15(2)).

Canyon also claims that at a meeting on 17 January 2014 between representatives of Cecon and Canyon, GDF, acting through the agency of Cecon, “offered, once such invoices were approved by Cecon, to pay to Canyon sums invoiced by Canyon to Cecon, in respect of invoices to be rendered in relation to the continuation of the work then being performed by Canyon’s vessel, the “GRAND CANYON”” (paragraph 8(5)). Canyon says that it accepted these offers (paragraph 8(8)).

Canyon claims, based on the commitment given at the meeting, some £3.4m from GDF for work carried out after 16 January 2014.

In the alternative, Canyon alleges that the Letter gave rise to a contract between GDF and Cecon for the benefit of Cecon’s sub-contractors and that as a member of that class, Canyon can enforce it against GDF under the Contracts (Rights of Third Parties) Act 1999.

GDF accepts, for the purpose of this application, that any alleged contract between the parties and the question whether it was made is governed by English law. At first GDF had argued that this was a Dutch law issue and expert evidence was exchanged.

It is common ground, from the otherwise now irrelevant expert evidence, that under Dutch law, which governs the Project Agreements, an employer, such as GDF, may make a direct payment to a sub-contractor, such as Canyon, to discharge the main contractor’s debt to the sub-contractor. In the absence of agreement by the main contractor, such a direct payment does not discharge the employer’s payment obligation to the main contractor.

It is also common ground first that GDF is domiciled in the Netherlands so that the Judgment Regulation applies and secondly that the English court does not have jurisdiction over GDF under Article 2 given its Dutch domicile. For Canyon it is Article 5(1) or nothing.

The Article provides:

“Article 5.

A person domiciled in a Member State may, in another Member State, be sued:

1.(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b)

for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

- in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

- in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

(c)

if subparagraph (b) does not apply then subparagraph (a) applies”.

In order to maintain jurisdiction under article 5(1), Canyon must show that it has a good arguable case (that is, a better or much better argument than GDF) that factors exist which allow the Court to conclude that it has jurisdiction. Mr Fealy QC for GDF refers to this in terms of the “jurisdictional facts” identified by Lord Collins in AK Investment CJSC v. Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at paragraph 71.

Mr Fealy submits that his client’s alleged payment obligation under English law is the relevant jurisdictional fact that Canyon must establish in the present application, to the standard of a good arguable case. He says that the proper construction of the Letter shows that GDF did not owe the alleged payment obligation or confer a right on Canyon enforceable under the 1999 Act. That is a matter that the Court can and should decide on this application and it is not directly concerned with good arguable case. He relies on what Lord Collins says at paragraph 81 of AK“A question of law can arise on an application in connection with service out of the jurisdiction, and, if the question of law goes to the existence of jurisdiction, the court will normally decide it, rather than treating it as a question of whether there is a good arguable case”.

Mr Fealy says that the relevant contractual and legal matrix is that GDF employed Cecon as contractor under the Project Agreements, and Cecon sub-contracted part of that work to Canyon. Under the Trenching Contract, governed by English law, Canyon agreed, “to look only to [Cecon] for the performance of the obligation assumed herein by [Cecon]…” (clause 5). The Project Agreements are governed by Dutch law. Under Dutch law, an employer, such as GDF, may make a direct payment to a sub-contractor, such as Canyon, to discharge the main contractor’s debt to the sub-contractor. As I have already mentioned, in the absence of agreement by the main contractor, such a direct payment does not discharge the employer’s payment obligation to the main contractor. The Letter is addressed by GDF to Cecon not the sub-contractors, and provides for Cecon’s acceptance (not that of the sub-contractors) by counter-signature and return to GDF. It expresses GDF’s willingness to pay certain of Cecon’s sub-contractors provided that certain conditions are met and Cecon agrees that, “payment by [GDF] to the relevant sub-contractors shall discharge [GDF] from any payment obligations towards Cecon…under [the Project Agreements] for the same amount.” Under Dutch law Cecon’s agreement was necessary to such a pro tanto discharge of GDF’s payment obligation under the Project Agreements.

The Letter permits (but does not oblige) GDF to pay Cecon’s sub-contractors in return for the pro-tanto discharge of its payment obligations to Cecon. It expressly disclaims any assumption by GDF of the obligations of Cecon under its sub-contracts. Furthermore, the Letter does not give Canyon any rights under the 1999 Act. It did not confer any right upon Cecon, let alone its sub contractors, to call upon GDF to pay its sub-contractors. Further on a proper construction of the Letter , it was not intended to be enforceable by Cecon’s sub-contractors. The alleged oral agreement by GDF fails for the same reasons. The evidence given in support of the oral agreement does not suggest that any promise made by Mr Stinenbosch, purportedly on GDF’s behalf, went beyond the terms of the Letter.

Mr Russell QC says that the context was thatGDF wanted to ensure that Canyon and the other sub-contractors would carry on working. To achieve this, GDF needed to assure the sub-contractors that they would be paid. Mr Fealy had argued that properly construed the only effect of the Letter is to confer a benefit on GDF. If the only purpose of the Letter had been to provide that if GDF paid sub-contractors directly that would discharge GDF’s obligation to pay Cecon, it would have provided no assurance to Canyon or the other sub-contractors. Further “GDF sees no other option than to, on behalf of Cecon, pay the relevant sub-contractors directly,” is not language conferring a benefit on GDF. The Letter did not simply give GDF an option to pay invoices. The penultimate sentence is mandatory. If the conditions in the Letter were met, GDF was obliged to pay the outstanding invoices. Canyon says that even if the Letter stood alone it should be construed as a contractual offer which was accepted by Canyon.

Mr Russell thus submits that Canyon has a good arguable case that there was either a payment contract between GDF and Canyon, pursuant to which GDF was liable to pay Canyon; or one between GDF and Cecon, pursuant to which GDF was liable to pay Canyon, and which Canyon is entitled to enforce pursuant to the Contract (Rights of Third Parties) Act 1999 (“the 1999 Act”).

Decision. The claimant has to establish that he has a good arguable case on the merits. “Good arguable case” reflects in that context that one side has a much better argument on the material available. The court must, before allowing the court to take jurisdiction, be as satisfied as it can be having regard to the limitations which an interlocutory process imposes that the relevant factors exist. Both sides cite the leading authorities. Mr Russell cites in addition the judgment of Teare J in Antonio Gramsci v Recoletos [2012] 2 Lloyd’s Rep 365.The concept does not seem to me to present difficulties of application in this case.

Mr Fealy’s construction is tenable taken in isolation but Mr Russell’s approach is equally valid and becomes a convincing one when set against the facts. Some facts are in dispute but the alleged contract did not come into existence until the Letter was proffered at the meeting on 17^th January and that is the context in which the text must be seen. The claim also relies on an alleged oral contract at the meeting. There is therefore no basis for deciding the issue of construction at this point or on the narrow basis suggested by Mr Fealy. The question of good arguable case involves some consideration of the facts. It is not denied that there was a meeting as alleged or that the Letter was produced at it. The arguments of Mr Russell surround this question. If the Letter was intended by GDF simply as a clarification to Cecon, why was it produced at a meeting with Canyon? There would be no point in doing this except to reassure Canyon. On the evidence currently available the facts favour Canyon not GDF. It may turn out that the facts are different but at present there is a good arguable case that the position is as claimed by Canyon.

At the hearing and mainly in reply Mr Fealy relied on CPR6.33 which permits service abroad only where each claim in the Claim Form is one which the Court has power to determine under the Judgments Regulation. He contended that since Canyon’s case as advanced in submissions would require amendment of the Particulars of Claim that case cannot meet the requirements of CPR 6.33. Mr Russell accepts that there will be need to amend the Particulars of Claim but not the Claim Form which, alone, is the subject of CPR6.33. Mr Fealy’s technical point seems to me to be met by the equally technical response from Mr Russell. If sound the point would have led to fresh litigation and put the Claimant and probably both parties to some unnecessary waste of time and resources.

GDF characterises the alleged contract as one for the provision of services under Article 5(1) (b), in which case the place of performance of the obligation is the place in a Member State, “where, under the contract, the services were provided or should have been provided….”

Mr Fealy says (and it is not disputed) that the concept of the provision of services for these purposes is an autonomous principle of European law. The relevant jurisprudence is summarised by the European Court of Justice in Krejci Lager v Olbrich [2014] I.L.Pr. 8. At paragraph 26, the Court records that, “according to the Court’s case law, the concept of service…implies, at least, that the party who provides the service carries out a particular activity in return for remuneration.” In that case, the court concluded that a contract for the storage of goods was a contract for the provision of services.

He argues that under the alleged contract, GDF agreed to make payments to Canyon provided that it continued to perform its obligations under the Trenching Contract or agreed to do so (see paragraphs 8(4) and 8(5) of the Particulars of Claim). Under the alleged contract with GDF, Canyon was to perform its obligations under the Trenching Contract. Under that contract, Canyon’s work was defined by reference to the work to be carried out under the Project Agreements. In each case, that work was to be carried out on the Dutch continental shelf. None of the services to be performed by Canyon were to be performed in England and Wales.

Mr Russell submits that in determining whether a contract is a contract for the provision of services, it is necessary to identify the characteristic obligation or obligations of the contract in issue and cites two ECJ decisions, Car Trim v Keysafety Systems[2010] 2 All ER (Comm) and Corman-Collins SA v La Maison du Whisky SA[2014] QB 431. The characteristic obligation of the alleged contract was GDF’s obligation to pay Canyon, not the provision of trenching services by Canyon. The first substantive paragraph of the Letter identifies the key features which give rise to the payment contract. There was a large backlog of outstanding invoices and Ceconwas, “not in a position to fulfil its payment obligations under the respective sub-contracts.” The “payment obligation” is expressly identified in the second substantive paragraph. The effect of payment by GDF to Canyon is that GDF is discharged from its payment obligations to Cecon. GDF was not stepping into Cecon’s shoes in relation the Trenching Contract generally, only in relation to the obligation to pay. On invoices already outstanding at 16 January 2014, Canyon’s services had already been performed. For the same reasons, if the alleged contract was only between GDF and Cecon, the characteristic obligation was GDF’s obligation to make payment to the sub-contractors, including Canyon.

Decision. The alleged contract requires GDF to pay Cecon’s debts to Canyon in return for Canyon completing the Trenching Contract. The characteristic obligation of the alleged contract seems to me to be the assumption by GDF of the obligation to pay what Canyon is owed under its contract with Cecon ( a contract to which, it is common ground, GDF is not a party) in return for Canyon continuing to perform it. No one is providing what would naturally be described as goods or services. The cited cases concern conventional commercial arrangements such as distribution agreements and matters such as how to classify an agreement involving both goods and services. The vocabulary of and assumptions behind these cases are far removed from the sort of obligations arising under the alleged contract. The assumption of the obligation to pay is not what one would usually describe as a contract for goods or services and I do not consider it to be so here. I therefore conclude that 5(1) (b) does not apply. That then leads to the question- what is the place of performance “of the obligation in question” under Article 5(1) (a).

It is common ground that if Article 5(1)(b) does not apply the “obligation in question” is the obligation which is the basis of the claim- see The Conflict of Laws (15^th edition) Dicey, Morris & Collins11-274. The “place of performance of the obligation in question” under Article 5(1) (a) does not have an autonomous meaning but is to be determined in accordance with the law governing that obligation according to the conflict rules of the court before which the proceedings have been brought, in this case, English law.

GDF contends that the place for the performance of the obligation in question under Article 5(1)(a) is not England and Wales.The obligation in question is GDF’s alleged obligation to make payment to Canyon. Mr Fealy argues that in the absence of express stipulation to the contrary, the place of performance under the alleged contract of that obligation is Scotland, where Canyon has its registered office and place of business. (He cites Custom Made Commercial Ltd v Stawa Metalbau GmbH [1994] ECR I-2913 at paragraph 26- a citation that supports only the proposition that the place of performance is to be decided by the conflicts of laws rules of the court deciding jurisdiction.)What then is the place of performance under those conflicts of laws rules which, it is common ground, are those of English law? Where no place of payment is expressly or impliedly specified by the contract, the general rule under English law is that it is the debtor’s duty to seek out the creditor to pay at his place of business or residence. Paragraph 21-055 of Chitty on Contracts, (31^st edition) provides that :

“Place of payment. Where the place of payment is specified by the contract, the debtor must tender payment at that place in order to discharge his obligations. Where no place of payment is expressly or impliedly specified by the contract, the general rule is that it is the debtor’s duty to seek the creditor in order to pay the creditor at the creditor’s place of business or residence, if it is in England, but the rule is not applicable to large employers of labour who maintain a regular pay-day and pay office. Unless there is evidence of a contrary intention, the place for payment of a debt is the business place or residence of the creditor at the date when the debt was contracted. If the contract specifies alternative places for payment, it is the duty of the party entitled to select the place to notify the other party; if it is for the creditor to select, there is no default in payment until the creditor notifies the debtor which place of payment the creditor selects.”

GDF says that that place is Scotland where Canyon is based and has its registered office.

Mr Fealy says that if GDF is wrong about that and the invoices are relevant, these give the option of payment in England or Scotland. They do not stipulate for a single place of performance. European law says that Article 5(1)(a) does not apply because where there is no single place of performance ( see Besix v Wasserreinigungsbau Alfred Kretzschmar [2003] 1 WLR 1113, at paragraphs 28 and 29). I consider Besix later in this judgment. Thus Article 5 cannot apply.

Mr Russell submits that as a matter of English law the place of performance of the payment obligation in respect of Canyon’s invoices under the Trenching Contract was England or Scotland. The general rule that the debtor must seek out the creditor may be easily displaced by contractual terms. The Trenching Contract did not in termsspecify a place (or bank account) for payment. However, clause 15.3 provided that Cecon was obliged to pay Canyon within 30 days from receipt of a correctly prepared invoice. It is very common for an invoice to indicate the method by which payment is to be made. Ms Woodward Quail’s evidence is that in modern business it will be “highly unusual” for payment to be made by cheque. Payment by electronic bank transfer is much more common and “standard”. It would be unusual to find a commercial contract which did not provide for payment into a bank account, but required payment to be made at the creditor’s place of business.

Mr Russell says that the Trenching Contract should be construed as entitling Canyon to stipulate the place of payment in its invoices. At the very least, the Trenching Contract should be construed as entitling Canyon to stipulate as a place for payment its account with a major bank in a major financial centre. Alternatively, a term to that effect should be implied. Canyon says that it is plain that Cecon’s understanding was that Canyon was entitled to stipulate in its invoices that payment should be made to, inter alia, Canyon’s London bank account. All payments were in fact made by electronic transfer to the London bank account without any query by Cecon as to whether such payment would be sufficient to discharge its obligation (on GDF’s case) to pay at Canyon’s address in Aberdeen.

Mr Fealy responds that the terms of Canyon’s invoices and Cecon’s conduct are irrelevant to the proper construction of the alleged agreement. In the case of the Trenching Agreement, it is post-contractual conduct and as such is inadmissible on issues of construction. In so far as Canyon suggests that the position is different under the alleged contract, Cecon’s choice to pay by transfer to the London bank account is irrelevant. He also says that there is no evidence that GDF was aware of Cecon’s practice at the time the alleged contract is said to have been made.

Decision. The presumption that the debtor must seek out the creditor at his place of business and pay him there is of long standing but it is readily displaced implicitly and not just expressly -see Chitty at Paragraph 21-055. The Court can take account of modern ways of making commercial payment based on its daily experience and without having to rely upon evidence from the parties’ solicitors. As I see it the terms of the alleged contract are essentially the same as those provisions of the Trenching Contract which give rise to the liability to pay and to payment itself. These provided that Cecon was obliged to pay Canyon within 30 days from receipt of a correctly prepared invoice. It was not, as it were, required to travel to Aberdeen with a wad of cash. Mr Fealy is right to submit that the terms of the invoices as later issued under that contract and what happened in practice with payments are inadmissible to construction of the Trenching Contract. The position is less clear with the alleged contract as the factual matrix is a little different to that of the Trenching Contract and includes a later period of time. It seems to me however to be implicit in the obligation on Cecon to pay a correctly prepared invoice that Canyon was to provide payment details and arrangements in that invoice (or in some other way) which were reasonably consistent with conventional commercial practice for making payments. Canyon had done that with past invoices and required payment by bank transfer in London or by other means to Aberdeen. As GDF was undertaking to perform Cecon’s payment obligation it follows that, one way or another, the place of performance of the obligation was prescribed by the invoices and was equally England or Scotland.

GDF submits that as the terms of the invoice do not stipulate for a single place of performance Article 5(1) (a) does not apply. This is because the Article does not apply where there is no single place of performance as the European Court of Justice held in Besix at paragraphs 28 and 29, a case under the Brussels Convention. At 29 and 32 the ECJ stated “a single place of performance for the obligation in question must be identified.” Mr Fealy says that Canyon’s attempt to diminish the importance of this statement should be rejected. The European Court of Justice when it is performing this role is not deciding cases. It is giving interpretative rulings on questions of law. It would be a narrow approach to take to say that Paragraphs 28 and 29 can be regarded as a throwaway comment.

Canyon responds that Besix was a very different case from this one. There was an exclusivity clause whereby the parties agreed that they would act exclusively with each other and not commit themselves to other partners. The referring court stated that the parties’ clear intention was to have the exclusivity obligation honoured throughout the world. Therefore, any member state would have been a place of performance. If Article 5(1) had applied it would have offended the underlying principle that a normally well-informed defendant should be able reasonably to foresee before which courts he may be sued. The statement in Paragraph 29 was not necessary for the purposes of the decision, the ratio of which was that where the relevant obligation was not to do something, so that performance was worldwide, Article 5(1) did not apply. It is inconsistent with later cases.

Mr Russell also seeks to distinguish Besix on the ground that this was a Brussels Convention case where there was no equivalent of Article 5(1) (b). He accepts that in Falco Privatstuftung v Weller-Lindhorst [2010] Bus LR 210the ECJ held that Article 5(1)(a) of the Judgments Regulation should be construed in the same way that Article 5(1) of the Brussels Convention had been construed. He says however, that was principally in the context of the meaning of “the obligation in question” and whether or not the place of performance was to have an autonomous meaning or was to be a matter of the law governing the obligation as determined by the conflicts laws of the lex fori. I do not accept that Falco was seeking to limit the scope of the need for consistency. The reasons for doing this appear to apply to all aspects of Article 5 of the Convention.

Mr Russell says that more recent cases under Article 5(1) (b) of the Judgments Regulation have made it clear that the fact that there is more than one place of performance is not a bar to the applicability of the provision. He cites Color Drack v Lexx International[2010] 1 WLR 1909, Rehder v Air Baltic Corpn[2010] Bus LR 549 and Wood Floor Solutions v Silva Trade[2010]1 WLR 1900. He says that the ECJ has held in this context that the court must look at where the main performance is to take place, pursuant to the provisions of the contract, or in the absence of such provisions, the actual performance of the contract or where it cannot be established on that basis, the place where the agent is domiciled. Further, if it is not possible to determine the principal place of performance, each of the places of performance has a sufficiently close link to the material elements of the dispute and, accordingly, a significant link as regards jurisdiction. In such circumstances the claimant may sue the defendant in the place of performance of its choice.

Mr Russell says that when it comes to the question whether the existence of more than one place of performance should oust the application of Article 5(1) there is no reason in principle to draw a distinction between 5(1)(a) and 5(1)(b). The reasoning in the cases cited above is just as applicable to 5(1) (a) as to 5(1) (b). Both refer to “the place of performance” in the singular. Yet, as the Article 5(1) (b) authorities make clear, the existence of more than one place of performance is not a bar to the Article’s applicability.

Mr Fealy responds that the Article 5(1)(b) cases do not assist Canyon. With a contract for the sale of goods or the provision of services the place of delivery or provision will have a proximity to the contract, because they are the place in which the characteristic obligation of the contract has been performed. None of the later cases seek to say that the same approach could be taken to a payment obligation. A contract may provide a place of payment, with little proximity as a connecting factor with the actual contract and its performance, as this case illustrates.

The later cases. Mr Russell cites three ECJ cases. In Color Drack invocation of the special jurisdiction under Article 5(1)(b) was justified by the existence of a particularly close linking factor between the contract and the court. A place of delivery was a sufficiently close link of proximity even where there were multiple places of delivery within the same member state. Besix was not referred to.

Color Drack was referred to in Rehder where the ECJ held that on the proper interpretation of Article 5(1) (b) a passenger could sue an airline either in the courts of the place where the aircraft took off or where it landed, even where these were in different member states. While the defendant’s registered office did not provide the necessary link the other factors did. There was the close connection required for the special jurisdiction. The requirements of proximity and predictability were met where the choice was between only two possible “fora”. When discussing general considerations the ECJ is clearly looking at Article 5(1) conferring special jurisdiction as a whole, not just at (b).

In Wood Floor Solutions the ECJ applied Color Drack and cited Rehder in concluding that jurisdiction under Article 5(1) (b) belonged to the place where the main provision of services took place. The Court focussed on the objectives of proximity and predictability which it saw as having been identified in these two cases.

In the decision of the Court of Appeal in Mora Shipping v Axa Corporate Solutions[2005] EWCA Civ 1069; [2005] 2 Lloyd’s Rep 769 the Claimant conceded that it had to establish that payment was to be made in one jurisdiction and the relevant point was not argued or discussed. That case does not assist resolution of this one. I agree with Mr Fealy that, when examined the discussion in Briggs & Rees Civil Jurisdiction and Judgments, 5^th edition at 2.160 does not assist either.

Decision. In Besix the court identifies the objective of legal certainty and the need for a normally well informed defendant reasonably to be able to foresee in which courts other than his domicile he may be sued. The court seeks to avoid a situation where a number of courts have jurisdiction, for the reasons which it gives, and before reaching the words GDF relies on, concludes that if the obligation is be performed in a number of places jurisdiction cannot be conferred on all of them. A single place of performance has to be identified, that with the closest connection between the dispute and the court. The explicit language in Paragraphs 29 and 32 has to be seen in the context of the facts of that case where the relevant obligation was “characterised by a multiplicity of places of performance”. If the language of Paragraphs 29 and 32 had given rise to a clear rule it is surprising that the ECJ proceeded as it did in the later cases (and it is surprising that Besix was not cited in any of them but that may be because Article 5 (1)(b) did not exist under the Convention).

It is clear from Falco that Regulation cases are generally, and not just to the limited extent submitted by Mr Russell, to be interpreted in accordance with guidance given by earlier Convention cases.

While Besix is far removed from the facts of this case, the considerations which it sets out seem to me to apply to a degree even where the choice is between only two states for jurisdiction under Article 5. The later decisions address this point. Although Besix is not referred to in the later decisions, its reasoning seems to be carried through into them albeit in different words.

The reasoning in the later cases on Article 5(1) (b) is implicitly, and sometimes, explicitly based on considerations relevant to Article 5 as a whole so that in my view it applies equally to cases under Article 5(1) (a). The later cases suggest an evolution towards permitting claimants to have a choice, within Article 5, of where to sue provided that there is sufficient proximity and predictability. I conclude that Canyon had that choice provided that it met the other requirements.

The scope of the words proximity and predictability in this context has not as yet been much worked out. Applying, as best as I can, those concepts to the facts of this case I conclude that a normally well informed defendant would be reasonably able to foresee that, apart from at his domicile, he might be sued in either of the places where payment was required to be made under the alleged contract. At the time of assuming the payment obligation, the essence of what he was required to do under the alleged contract, he could readily have discovered that payment was due in Scotland or England. If GDF can be taken to have given thought to the matter when entering into the alleged contract it could reasonably have foreseen that if it failed to pay it might be sued in the Netherlands where it is domiciled or in Scotland or in England. There is force in Mr Fealy’s submission that the Article 5(1)(b) cases dealing with goods and services necessarily involve a degree of proximity that is likely to be greater than in other cases and should be viewed accordingly. On balance, however, I conclude that Article 5 gave Canyon a choice between Scotland and England.

I do not pretend that the issues raised by this aspect of the application are straightforwardor based on principles that have been established beyond doubt. Mr Russell suggested that the Court might consider a reference to the European Court under CPR68. I do not consider that it would be appropriate for me to take that step. The Court of Appeal can of course take that step if it thinks it necessary. I will however give permission to appeal, at least on the European law aspects of this application.

The application fails. I shall be grateful if Counsel will let me have corrections of the usual kind and a draft order, both preferably agreed, not less than 72 hours before hand down of this judgment together with a note of any matters which they wish to raise at the hearing.

Mr Russell kindly sent me a transcript of the hearing after I had written this judgment but before I had sent it out. I have been grateful for the opportunity to check some points in my notes.