Pablo Star agreed a deal with Dubai's Emirates Integrated
Telecommunications Company, trading as Du, under which it would
supply photo and video services for a year for at least $30,000 a
month.
The contract worked for the first three months, when work worth
£100,000 was commissioned and paid for. When Du then said that it
would not be commissioning any more work Pablo Star sued.
Both companies claimed that the laws of their countries should
apply to the dispute, and both claimed that agreements and emails
supported their case.
The Court of Appeal has ruled that Du certainly did not
establish in pre-contract negotiations or in the contract itself
that the law governing any dispute should be that of Dubai. It also
found that terms produced in negotiation by Pablo Star identifying
English courts as those with jurisdiction were not necessarily part
of the contract.
Du had said in one of its requests for work to Pablo Star that
"vendors will be expected to contract on du terms and conditions as
supplied in Appendix B". But no Appendix B was attached to the
email.
"On a proper analysis it is almost unarguable that the terms
produced and relied on for the first time in [Du email writer] Mr
Ansari's statement were incorporated into any contract between EITC
and Pablo Star," said Lord Justice Waller in his ruling.
The Court also found that even if there had been an appendix, it
is unclear that the terms and conditions did specify Dubai law as
being that which governed the agreement.
"The terms and conditions produced by Mr Ansari did not contain
such a provision and thus it can be argued as it seems to me fairly
conclusively that they simply cannot be the terms or conditions to
which the note refers," said the ruling. "They appear indeed not to
be standard terms and conditions in the ordinary sense of that
word; they appear to be the terms of an 'Information Technology
Master Agreement'. It cannot be open to a party to a contract to
refer to 'its terms and conditions' and then pull any terms and
conditions out of the drawer which suits its purpose."
Du also relied on statements at the bottom of its emails that
said that "without exception, du does not enter into agreements by
exchange of emails and nothing in this mail shall be construed or
interpreted as binding du or creating any obligation on behalf of
du".
Lord Justice Waller said that this was not grounds on which it
could claim that no contract had been concluded.
"It seems to me that the language used in the e-mails of 26th
and 27th September taken with the production of the Purchase Orders
in the context of those e-mails together with the fact for three
months work was done and paid for, provides a strongly arguable
case that [Du] committed themselves to providing $30,000 worth of
work each month as identified in the e-mail of 26th September. The
commitment was not purely by e-mail and thus the note on the bottom
seems to me not to be applicable," he said.
Having ruled that neither company properly established where
disputes should be settled as part of the contract for work, the
Court applied the normal rules for deciding whose law should govern
a dispute.
"By Article 4(2) of the Rome Convention as enacted into English
law by the Contracts (Applicable Law) Act 1990, there is a
presumption in favour of the law of the place of business of the
person who is to effect characteristic performance of a contract,"
said the ruling.
The Court found that Pablo Star was that party and that "the law
with which any contract that Pablo Star establish has its closest
connection is English ... it follows that Pablo Star can establish
that the [English] court is entitled to take jurisdiction," it
said.
Pablo Star's claim was for £50,000, which is the sum that Du
alone claimed in costs for the lower court hearings on the matter.
Though it was only awarded £10,000, Lord Justice Waller said that
companies must act more sensibly in establishing where conflict
should be resolved.
"It is worrying indeed that a respectable company such as EITC
faced with a claim for under £50,000, which they must appreciate
has some merit even if not certain of success, should spend many
thousands of pounds seeking to argue about where such a dispute
should be resolved," he said.
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