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1. The Defendant has brought a motion seeking to have service of the Plaintiff’s plenary summons set aside on the ground that this Court does not have jurisdiction to hear and determine the claim.

2. The Plaintiff is an Irish company registered here and the Defendant an English company registered there. On the 22nd January, 1997 the Plaintiff took delivery of a consignment of frozen bean sprouts from the Defendant’s store in Buckinghamshire for use in its food processing business in Co. Monaghan. The goods were allegedly defective and the Plaintiff’s claim sounds in contract and tort.

3. The Defendant submits that Article 2 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial matters, which provides that persons domiciled in a contracting state shall be sued in the Courts of that state, governs this case.

4. The Plaintiff relies on the exceptions to this general rule set out in Article 5(1) and (3) which specify that such a person may be sued in contract cases in the place of performance of the obligation in question and in tort cases in the place where the harmful event occurred - both of which, says the Plaintiff, were at Carrickmacross, Co. Monaghan.

5. The Defendant began supplying frozen fruit and vegetables to the Plaintiff in early 1996. The Plaintiff usually ordered the goods by telephone which were then sent by the Defendant to the Plaintiff’s premises in Carrickmacross, the price including cost of transport. On occasion, however, when the Plaintiff ran short of a particular line of vegetables, it would place a supplemental order on an “ex store” basis, the place of delivery being the Defendant’s own premises: in these cases the Plaintiff itself arranged the transportation of the goods. At one stage such “ex store” purchases amounted to between 5% and 10% of the overall but have become less frequent as the Plaintiff’s business increased.

6. The delivery of bean sprouts in the present case was one of the increasingly infrequent “ex store” deliveries. The Plaintiff made an urgent request for this consignment on or about the 22nd January, 1997 and the Defendant arranged for delivery to the Plaintiff at its store and Kings Lynn, the Plaintiff arranging at its own cost for the transportation of the bean sprouts to Co. Monaghan. The consignment was collected by the Plaintiff from the Defendant’s store on the 22nd January 1997 - that is the same day on which the order was placed.

7. In an Affidavit filed on behalf of the Plaintiff in this motion, Eddie Fitzgerald, agrees with the foregoing broad picture but stresses that the Defendant company was fully aware of the business requirements of the Plaintiff which were to use the Defendant’s frozen foodstuffs for the purpose of the Plaintiff’s food processing business and therefore were aware of the need for products that were merchantable and fit for that purpose. The Defendant was obliged to supply bean sprouts which the Plaintiff could use in this way in Ireland and they failed, he says, in this obligation.

8. Mr. McCann, B.L., submits for the Defendant that Article 5 of the Convention is of no avail to the Plaintiff in the present case.

9. Where relevant, Article 5 provides:-

10. Dealing first with the case sounding in contract, Mr. McCann submits that the place of performance of the obligation in question was England. He says two questions arise in this context, namely, what is the relevant obligation and where is it to be performed?

11. The relevant obligation he submits is to deliver goods of merchantable quality fit for the intended purpose. The Defendant contracted to deliver these goods at its premises in Kings Lynn in England. Mr. McCann relies on Handbridge Limited -v- British Aerospace Communications Limited , (1993:3:IR:342) where the then Chief Justice, Finlay CJ (page 358), having already noted that the principle laid down in the Convention is that jurisdiction is vested in the Courts of the state of the defendant’s domicile, said:-

12. Further he relies on the judgment of the European Court of Justice in De Bloos -v- Bouyer , (1976:ECR:1497, at p. 1508) where it was held:-

13. Furthermore, he relies on the decision of Court of Appeal in Viskase Limited -v- Paul Kiefel GmBH , (1999:3:AER:362). In that case there was a series of deliveries of German machines to an English company for use in its factory in England. One of the machines was delivered in England, the remaining seven being delivered in Germany. The plaintiff claimed that the machines were defective and commenced proceedings for breach of contract against the defendant in England. The defendant applied for a stay on the basis that the allegedly breached obligation was to deliver the machinery and the place of delivery was Germany and accordingly the English Courts had no jurisdiction in regard to the seven machines delivered in Germany.

14. Mr. McCann refers in particular to the following passage from the judgment of Chadwick LJ at page 376:-

15. Accordingly, Mr. McCann submits that whilst the alleged evidence of breach became apparent in Carrickmacross, the breach itself occurred, if it did occur, in England.

16. With regard to the claim sounding tort, Mr. McCann submits that the alleged breach does not amount to a “tort” for the purposes of the Convention. If it did he accepts that “the harmful event” occurred in Carrickmacross and this Court would have jurisdiction to deal with that part of the Plaintiff’s claim (but not the claim sounding in contract).

17. His point is, however, that whilst the harmful event may amount to a tort in Irish law, it is not a “ tort, delict or quasi-delict” for the purposes of Article 5(3) of the Convention which does not cover harmful events which are “ related to a ‘contract’ within the meaning of Article 5(1)” .

18. Mr. McCann submits that this principle has been established by the Court of Justice in Kalfelis -v- Bankhaus Schröder , (1988:ECR:5565). In that case the Court of Justice decided that the concept of “ matters relating to tort, delict or quasi-delict” should not be interpreted simply as referring to the national law of one or other of the states concerned. This would give rise to a possible divergence of definitions as between Contracting States with a resulting conflicting jurisprudence in relation to jurisdiction. The Court therefore held:-

19. The concept of tort, delict and quasi-delict, therefore, is not necessarily identical with the concept of tort or its equivalent in any Member State but rather is autonomous and independent of all. Furthermore, and in this respect it is unlike the position in this country, it is a concept covering all actions seeking to establish the liability of a defendant which are not related to a ‘contract’ within the meaning of Article 5(1).

20. It is submitted that in the present case the alleged tort is clearly related to a contract within the meaning of Article 5(1) and indeed the particulars of alleged breach of the duty of care are identical with those of the alleged breach of contract.

21. Mr. O’Callaghan, B.L., for the Plaintiff submitted that the ongoing contractual relationship between the parties constituted an umbrella agreement over and above the specific agreement requiring delivery of this particular consignment in Kings Lynn, which umbrella agreement imposed an obligation upon the Defendant to ensure that the goods were suitable for processing by the Plaintiff in their premises at Carrickmacross, Co. Monaghan. If they were not so suitable then there was a breach of that obligation and the place where that breach occurred was the place where the obligation applied, namely, in Co. Monaghan. Accordingly, insofar as the Plaintiff’s claim sounds in contract, it is entitled to bring that claim in the Courts for the place of performance of the obligation in question, namely, in this country.

22. Mr. O’Callaghan accepted that if there had been merely a once off contractual agreement for the frozen bean sprouts in this case then the obligation would have been one which was to be performed in England. The Defendant, however, was fully aware that the bean sprouts were to be fit for the Plaintiff’s purpose for use in its food processing plant in Co. Monaghan and accordingly was under an obligation to ensure that the goods were fit for such use in that place. He relied on the judgment of McCracken J in Bio Medical Research Limited -v- Delatex SA , (unreported:6th May, 1999), where it was held that the overall relationship between the parties was governed by an unwritten umbrella agreement dealing with the distribution of the plaintiff’s slimming products in France, albeit that there were individual sales agreements every time an order was given.

23. Mr. O’Callaghan submits that this shows that the Court on an application such as this will consider the commercial reality of the transactions between the parties.

24. In that case, I observe, the real issue between the parties was whether the French defendant was the sole agent for the Irish company’s goods in France. The learned Judge noted that whilst the plaintiff’s claim was not directly a claim for breach of contract “ it is a claim primarily for declarations in relation to a contract”. But the contract in respect of which the plaintiff sought declarations was the verbal umbrella contract relating to the character of the agency of the defendant in France, not the individual sales agreement which applied every time an order was given.

25. Mr. O’Callaghan was not able to put the matter further than to say that the Defendant was aware of the purposes to which the Plaintiff intended to put its product from its early dealings with the Plaintiff. He was not in a position to assert specific contractual obligations undertaken by the Defendant by reason of this ongoing contractual relationship which were over and above the contractual obligations arising from the specific order in the instant case in respect of which delivery was required to be made in England.

26. With regard to the Plaintiff’s claim sounding in tort, Mr. O’Callaghan submitted that the breach of the alleged duty of care was a separate and independent cause of action and was not related to the contract and in particular was not related to the overall contractual relationship which was, in truth, the expression of the full commercial reality of the transactions between the parties. The Defendant’s duty of care arose from its knowledge of the Plaintiff’s requirements over the years which was independent of its knowledge of those requirements arising out of the instant transaction or under the related contractual obligations.

27. In my opinion, the alleged manifestation of defects in the goods supplied by the Defendant which became apparent in the Plaintiff’s premises in Co. Monaghan does not constitute in and of itself a breach of contract on the part of the Defendant occurring in Co. Monaghan but does constitute potential evidence of such a breach occurring in England. In my view the obligation of the Defendant was to deliver goods of merchantable quality and fit for the agreed purpose to the Plaintiff. That obligation was to deliver goods in England. If subsequently it transpires that the goods are not fit then this is evidence that the Defendants were in breach of their contractual obligation in failing to deliver goods to the appropriate standard. Clearly in the present case because the delivery was to occur in England therefore the breach, if such it transpires to be, occurred in that country.

28. I do not think that there was any contractual term or obligation operating between the parties other than those arising out of the Plaintiff’s order for this consignment and the Defendant’s agreement to deliver goods to that order at its premises at Kings Lynn, England.

29. With regard to the Plaintiff’s claim sounding in tort, in my opinion it is clearly related to the contract. One of the purposes of the Convention was to avoid or reduce situations where legal proceedings arising out of the same transaction might be instituted in different Member States. That is why, in my view, the Court of Justice in Kalfelis decided not only that the concept of “tort, delict or quasi-delict” was to be independent of similar concepts in individual Member States, but also that it covered all actions seeking to establish liability of a defendant and which are not related to a ‘contract’ within the meaning of Article 5(1). In this context I think it worth referring to the following paragraph from the opinion of the Advocate General in Kalfelis although it does not, in terms, form part of the judgment of the Court.

30. In the result, I accede to the application of the Defendant. I will discuss with Counsel which of the several reliefs claimed on the Notice of Motion is most appropriate.