'Rome Revisited' - Further Thoughts on Choice of Law

F R Lurssen Werft GmbH & Co KG v. Warren E Halle [2010] EWCA Civ 587

The English Courts have recently considered the question of the applicable law and jurisdiction under a contract where no express choice of law and jurisdiction is stated. Of particular interest is the Court's analysis of the role of the Rome Convention in assessing the law by which a contract will be governed and the conclusion reached both at first instance and subsequently by the Court of Appeal that the provisions of related contracts may be taken into consideration when considering whether the parties have impliedly made a choice of law.

Facts

The Claimant was a German shipbuilding company and the Defendant was an American citizen. The parties entered into two separate Vessel Construction Contracts ("The VCC's") for the construction of motor yachts, both containing clauses providing that the governing law would be English law and that any disputes would be resolved under the rules of the London Maritime Arbitrators Association ("LMAA"). Around three years after execution of the VCC's, the parties entered into a Commission Agreement, which provided that if either of the vessels were purchased by a client introduced by the Claimant then the Claimant would be entitled to a commission of 5% of the sale price. Unlike the VCC's, the Commission Agreement was silent as to the applicable law and jurisdiction.

One of the yachts was sold to a buyer introduced by the Claimant and the parties entered into an agreement to terminate the VCC in respect of that vessel without any further liability on either party. The termination agreement was also stated to be subject to English law. The Defendants failed to pay the 5% commission that the Claimants claimed was due and commenced proceedings. The case came before the Commercial Court following an application by the Defendants challenging the jurisdiction of the English Court to hear the dispute. There were three main issues for consideration:

Whether the Commission Agreement was governed by English law; Whether there was a serious issue to be tried; and Whether England was the forum conveniens The Court had little difficulty in deciding that there was a serious issue to be tried and that England was clearly the most convenient jurisdiction for the determination of the dispute. More interesting was the Court's consideration of the governing law.

1. The Governing Law

   In considering whether English law governs the Commission Agreement, the...