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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Caledonia Subsea Ltd v. Micoperi SRL [2002] ScotCS 345 (12 July 2002) URL: http://www.bailii.org/scot/cases/ScotCS/2002/345.html Cite as: [2002] ScotCS 345, 2003 SCLR 20 |
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord President Lord Cameron of Lochbroom Lord Marnoch
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A2804/01 OPINION OF THE LORD PRESIDENT in RECLAIMING MOTION in the cause CALEDONIA SUBSEA LIMITED Pursuers and Respondents; against MICOPERI SRL Defenders and Reclaimers: _______ |
Act: Swanson, Solicitor Advocate; Maclay Murray & Spens (Pursuers and Respondents)
Alt: Howie, Q.C.; Henderson Boyd Jackson (Defenders and Reclaimers)
12 July 2002
[1] In this commercial action the defenders have reclaimed against the interlocutor of the Lord Ordinary dated 23 March 2001 in which he repelled their plea-in-law that they were not subject to the jurisdiction of the Court of Session. It is not in dispute that the success of that plea depended on, inter alia, the proposition that the law applicable to the contract to which this action relates was the law of the Arab Republic of Egypt. The decision of the Lord Ordinary followed upon a preliminary proof before answer on the issue between the parties, which was whether the applicable law was the law of Egypt or, as the pursuers contended, the law of Scotland. [2] At the outset it convenient to set out a summary of what the Lord Ordinary found to be established on the evidence before him, as set out in the Opinion which he delivered on 9 March 2001. Mr Howie, who appeared for the defenders, made it clear from the outset there was no dispute about any of his findings. [3] The pursuers are a company incorporated under the Companies Acts, with their registered office and sole place of business in Aberdeen. They entered into a contract for the provision of diving services in 1999. There is a question as to whether the other contracting party was the defenders, who have a principal place of business in Ravenna, or Micoperi Limited Liability Company, established in Texas, United States of America. However, for present purposes it is sufficient to refer to the other contracting party as the defenders. [4] The diving services were required to assist in regard to the "post-trenching" of a pipeline which had been already laid on the Mediterranean sea bed in connection with the Ha'py Field Development Project. Two pipelines ran from a rig at the Ha'py I gas well, which was some 40 kms north of a headland to the west of Port Said, to a terminal between the headland and Port Said. The operation in which the defenders were engaged included trenching in the vicinity of the pipeline, the object being that it should sink into the trench which would then be back-filled. The trenching was to be done by specialist machinery lowered from a vessel. Diving services were required in order to effect fine adjustments under water to the positioning of that machinery. Divers might also be required for preparatory work to manipulate the smaller diameter pipe which was liable to become detached to some extent from the larger one. The work on which the divers were to be engaged was solely on the deeper stretches of the pipeline, that is from about 80 metres in depth in the vicinity of the rig to about 20 metres in depth closer to the shore. That work was all beyond 6 - 7 kms from the shore. The operations (including diving services) carried out nearer the shore were effected by companies other than the pursuers. The Lord Ordinary states that it may be taken that the operations in the project, including those on which the pursuers were engaged, took place in Egyptian waters and in respect of apparatus forming part of the Egyptian permanent or semi-permanent infrastructure. [5] The services provided by the pursuers were based on daily rates for the members of a team of divers and related personnel. The rates which were ultimately agreed reflected lower rates than those generally obtaining in the North Sea. The team consisted of a superintendent, two supervisors, two life-support supervisors, two life-support technicians and ten divers, four of whom were saturation divers. The pursuers arranged with a Swiss company for the services of personnel to make up the team and any replacements of its members. The qualifications of the potential members of the team were vetted by the pursuers' management in Aberdeen. Although the members of the team were of different nationalities they were all English speakers, this being an important qualification for safety communications and other reasons. The pursuers in Aberdeen also provided through their project management a documentation package on diving rules, regulations and procedures. Some of it was of general application, and some was customised for the particular project. The pursuers' management took the view that the safety standards which should be applied on the contract should be consistent with those applicable in the North Sea. [6] The defenders were engaged as subcontractors under a sub-contract with The Petroleum Projects and Technical Consultation Co. ("Petrojet"), an Egyptian company. Petrojet acted under a main contract in which the employer was Gulf of Suez Petroleum Company ("GUPCO"), another Egyptian company, which acted on behalf of various interests under a concession apparently granted by the Egyptian Government. In the main contract there was an express choice of the law of Egypt as the law governing it. This provision was also incorporated into the sub-contract between the defenders and Petrojet. The Lord Ordinary observes that such a contractual provision was unsurprising in the context of the work to be performed in such a geographical location. It was normal, at least where the engaging party was established in that location. The main contract also contained an arbitration clause for settlement of all disputes under the Rules of the Regional Center for International Commercial Arbitration in Cairo. Both contracts were written in the English language, the generally adopted language in the international oil and gas industry. All communications, written and oral, between the pursuers and the defenders were also in that language. [7] For the purposes of their work the defenders chartered a vessel owned by a Norwegian company and operated by a Norwegian crew, but sailing under a Bahamian flag. The defenders also arranged for the provision on that vessel of saturation diving equipment, including a diving bell, living chamber for the divers in saturation and various control functions. It was arranged between the pursuers and the defenders that a forward party comprising four members of the pursuers' team would join the vessel at Dundee with a view to familiarising themselves with the diving equipment as the vessel sailed to the Mediterranean. It was intended that the remainder of the team would join the vessel at Siracusa in Sicily before it proceeded thence to the Ha'py Field. The vessel was constructed with a "moon pool", through which a diving bell could be lowered into the sea. However, after the vessel arrived at Dundee it became apparent that some physical modifications would be required before the diving equipment could be used safely on that vessel. Moreover, some pipework connections for the diving equipment still required to be made. The defenders arranged for the necessary parts to be delivered to Siracusa for fitting there. In the event there were delays in completing the arrangements to allow operations to commence at the Field. The vessel, having sailed from Dundee early in August 1999, arrived at Siracusa about the middle of that month. It remained in that port until about the end of August, during which time some of the outstanding fitting work was carried out, part of it by members of the pursuers' team who had the appropriate skills, the balance of that team having joined the vessel over the period while it was at Siracusa. The vessel then sailed to Malta to fuel, returned to Siracusa to pick up further equipment and then proceeded to Port Said, from where it ultimately sailed to the Field, arriving there in about the third week of September, when work started. [8] On board the vessel during the diving operations, in addition to the Norwegian crew and the pursuers' team, were one or two representatives of the defenders. During the post-trenching operations a technical crew of Italian personnel was also on board, some of these being employees of the defenders. A representative of GUPCO and/of Petrojet came on board almost daily. The pursuers had no place of business or representative on the Egyptian mainland. The defenders had two representatives, one responsible for logistic supervision and stationed at Port Said, and the other responsible for project management and stationed at Cairo. The defenders also engaged the services of an Egyptian customs and freight forwarding agent of Port Said. Supplies for the vessel while on station at the Field passed through Port Said, where the vessel could seek refuge in the event of bad weather. Emergency diving gas supplies were stored there for part of the period of the work. Arrangements for the transfer between Cairo Airport and the vessel of replacements for members of the pursuers' team were handled through the defenders' representatives or agent. Such changes in personnel typically occurred every 4-6 weeks. The organisation of replacements was carried out by the pursuers' project manager in Aberdeen. This included travel arrangements as far as Cairo Airport. Travel arrangements for the original team members who joined the vessel at Dundee or at Siracusa were also organised in Aberdeen. On one occasion a diver in the pursuers' team received emergency medical treatment in Egypt. In early December the vessel was briefly in dry dock in Israel for immediate repairs. [9] During the subsistence of the contractual operations the superintendent (the senior member of the pursuers' team) reported daily from the vessel to the pursuers' management in Aberdeen, usually by e-mail and sometimes by satellite phone. Such reports included matters relating to safety issues. Although decisions on such matters were generally taken on the spot, on one occasion a safety issue required to be referred for decision to the pursuers' management. This occurred when a "through water" acoustic communication system between the vessel and the diving bell broke down. Other interested parties wanted diving operations to continue (to avoid adverse financial consequences), but the pursuers' management in Aberdeen insisted that these operations be discontinued until that system was functioning again. During the currency of the operations communication between the pursuers and the defenders (other than between personnel on the vessel) was by fax between Aberdeen and Ravenna. [10] The service for which the pursuers were engaged was the provision of a diving team, but in the event certain additional services were also provided. An arrangement was made whereby diving gas supplies (for which the defenders were responsible) were purchased by it from an Aberdeen company through the pursuers. This was essentially an accounting exercise entered into to avoid a commercial problem for the defenders. The pursuers obtained certain other supplies for the defenders in Aberdeen. However, these elements were under separate contractual arrangements from those relating to diving services and were, in any event, of relatively minor importance in relation to the parties' relationship as a whole. [11] The pursuers' team carried out diving operations under the contract from about mid September 1999 until about the end of that year. By the latter time relations between the parties had broken down. Concerns had arisen by November about due payment to the pursuers. A representative of the pursuers visited Egypt in November and again in December of that year, when he met the defenders' project manager and, separately, personnel from GUPCO. The diving operations were ultimately completed by the pursuers early in 2000 under a separate arrangement not involving the defenders. In so far as payments were made to the pursuers under the present contract (as they were on two occasions) these were made to the pursuers' bank account in Aberdeen which was its only bank account. [12] The Contracts (Applicable Law) Act 1990 provides by section 2(1) that certain Conventions, including the Rome Convention, which was signed by the United Kingdom on 7 December 1981, shall, with certain exceptions, have the force of law in the United Kingdom. The English language text of the Convention is set out in Schedule 1 to the Act. Section 3(1) of the 1990 Act states:"Any question as to the meaning or effect of any provision of the Conventions shall, if not referred to the European Court in accordance with the Brussels protocol (which was signed by the United Kingdom on 19 December 1988), be determined in accordance with the principles laid down by, and any relevant decision of, the European Court".
Subsection (2) states:
"Judicial notice shall be taken on any decision of, or expression of opinion by, the European Court on any such question".
However, arrangements for the referring of questions to the European Court have not yet come into force. As a consequence there are as yet no decisions or expressions of opinion by the court.
[13] Subsection (3) of section 3 goes on to state that, without prejudice to any practice of the courts as to the matters which may be considered apart from that subsection, the report on the Rome Convention by Professor Mario Giuliano and Professor Paul Lagarde ("the Report") which is reproduced in the Official Journal of the Communities of 31 October 1980 "may be considered in ascertaining the meaning or effect of any provision of that Convention". [14] Article 1.1 of the Rome Convention provides that its rules "shall apply to contractual obligations in any situation involving a choice between the laws of different countries". Accordingly, although the Convention is an instrument of the European Union, it does not matter whether one of the laws in question is or is not the law of a country which is a member of the Union. [15] Article 3 of the Rome Convention confers on parties freedom of choice as to the law which is to govern their contract. It is not in dispute that no such choice was made in the present case. [16] Article 4 of the Rome Convention provides:"1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception by governed by the law of that other country.
2. Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party's trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.
3. Notwithstanding the provisions of paragraph 2 of this Article, to the extent that the subject matter of the contract is a right in immovable property or a right to use immovable property it shall be presumed that the contract is most closely connected with the country where the immovable property is situated.
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5. Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country".
Paragraph 4 sets out a presumption dealing with a contract for the carriage of goods, the terms of which do not appear to be of any assistance in regard to the present issue.
[17] At this point I would make a number of general observations about the paragraphs I have quoted, against the background of the present case. [18] It is plain that the Convention was intended to bring about a substantial change in the way in which courts in a number of countries arrived at a determination as to the law which governed a contract. In Samcrete Egypt Engineers & Contractors S.A.E. v. Land Rover Exports Limited [2001] EWCA Civ 2109, Potter L.J. at para. 39 pointed out that, under the rules of the law applicable prior to the 1990 Act, the task of the court in deciding the "proper law" of the contract was that of inferring a choice by the parties. He stated:"That task compendiously involved the considerations now required to be looked at separately under Article 3 and 4 of the Convention, the former of which looks to the common (subjective) intention of the parties as to the system of law governing the contract, whereas the latter in the absence of an express or tacit choice of law, looks to localise the contract on the basis of objective considerations connecting the contract to a particular country..."
"the flexibility of the general principle established by paragraph 1 is substantially modified by the presumptions in paragraphs 2, 3 and 4, and by a strictly limited exception in favour of severability at the end of paragraph 1".
"gives specific form and objectivity to the, in itself, too vague concept of 'closest connection'. At the same time it greatly simplifies the problem of determining the law applicable to the contract in default of choice by the parties. The place where the act was done becomes unimportant. There is no longer any need to determine where the contract was concluded, with all the difficulties and the problems of classification that arise in practice. Seeking the place of performance or the different places of performance and classifying them becomes superfluous".
"The submission of the contract, in the absence of a choice by the parties, to the law appropriate to the characteristic performance defines the connecting the factor of the contract from the inside, and not from the outside by elements unrelated to the essence of the obligation such as the nationality of the contracting parties or the place where the contract was concluded. In addition it is possible to relate the concept of characteristic performance to an even more general idea, namely the idea that his performance refers to the function which the legal relationship involved fulfils in the economic and social life of any country. The concept of characteristic performance essentially links the contract to the social and economic environment of which it will form a part".
"The first is to say that the presumption in par. 2, which is expressly made subject to par. 5, is weak and will more readily be displaced when the place of performance differs from the place of business of the performer. The second, adopts a narrower view of the 'exception' to the presumption in par. 5 and gives firm dominance to the presumption".
"The presumption is therefore displaced if the Court concludes that it is not appropriate in the circumstances of any given case. This, formally, makes the presumption very weak but it does not detract from the guidance that par. 2 gives as to what is meant by 'the country with which it is most closely connected' and does not detract from the need to look for a geographical connection. This reading of art. 4 is also supported by the commentators".
"The true reason, it seems, is that the social and economic source from which the performance comes (and to which in ordinary course the economic benefit of payment may be expected to return) is in the country of establishment. If the place of performance had been the dominant factor, it would have been easy so to provide".
He went on to state that he was not able to accept that "when para. 5 is seriously invoked, the presumption in para. 2 only has effect when other factors are evenly balanced". He took the view that the presumption was "of material weight" (para. [27]). Later he referred to "the pre-eminent significance of the place of business of the performer" (para. [31]). In para. [32] he quoted a footnote to an article by Professor Lagarde in vol. 22 of the Virginian Journal of International Law (1981) at page 91 as follows:
"The judge's discretion with respect to disregarding the presumption [in para. 2] is comparable to the judge's power in exceptional cases to sever a part of the contract...[under the second sentence of para. 1]".
"In the present case the application of art. 4(2) would lead to an irregular and subjective position where the governing law of a letter of credit would vary according to whether one was looking at the position of the confirming or the issuing bank. It is of great importance to both beneficiaries and banks concerned in the issue and operation of international letters of credit that there should be clarity and simplicity in such matters. Article 4(5) provides the answer. The Rome Convention was not intended to confuse legal relationships or to disrupt normal expectations in the way which is implicit in Vysya's submissions".
"The Court of Appeal apparently and rightly proceeded from the view that it follows from the wording and the structure of art. 4, as well as from the uniformity in the application of the law which has been intended with the Convention, that this exception to the main rule of section 2 has to be applied restrictively, to the effect that the main rule should be disregarded only if, in the special circumstances of the case, the place of business of the party who is to effect the characteristic performance has no real significance as a connecting factor".
As is pointed out by the writer of the article, the Supreme Court referred to para. 2 as containing "the main rule"; regarded para. 5 as an exception and not merely another expression of para. 1; stated that special circumstances were needed in order to justify its application; stated that the desire to create uniform law required a restrictive application to be given to para. 5 and that the characteristic performance was the predominant connecting factor; and identified a priority of rule, namely that the place of business of the performer under para. 2 prevailed unless it had "no real significance as a connecting factor".
[32] Mrs. Swanson, who appeared as solicitor advocate for the pursuers, expressed a clear reservation about the approach which the Supreme Court had taken in that case. It implied, she said, that it was unnecessary for a court to go beyond the exercise under para. 2. However, the court would always have to go through the comparative exercise which was required by para. 5 where another country was contended for. [33] Mrs. Swanson provided the court with an unofficial translation of the transcript of the judgment delivered by the Supreme Court, along with the opinion delivered by the Advocat General for its assistance. According to that translation, he expressed the view that the exception in para. 5 came into play if the "assumption" in para. 2 did not achieve the intended goal. The purpose of the exception was the better localisation of the contact. "Consequently a factual geographical contract preponderance with a country other than the country where the characteristic performer has its place of domicile or business provides the grounds of applying the exception rule" (para. 18). He went on to state that para. 5 "should only be applied in clear cases of contact preponderance" (para. 19). In para. 20 he said in regard to cases in which it was applied:"What it comes down to is that the characteristic performer's place of business, when seen in the context of all the circumstances, has insufficient 'localising power' and, consequently, cannot confirm the assumption in para. 2. It will happen in particular if the characteristic performer's place of domicile or business is 'accidental' because the characteristic performer was not operating from its place of business when the contract was concluded...or because with long-term contracts the characteristic performer's place of work is outside the country where it is based".
"In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application".
"While a straight reading of the words of Article 4 renders the presumption 'formally very weak' (per Hobhouse L.J. in the Credit Lyonnais case at p. 5), unless Article 4(2) is regarded as a rule of thumb which requires a preponderance of contrary connecting factors to be established before that presumption can be disregarded, the intention of the Convention is likely to be subverted".
Dicey & Morris The Conflict of Laws 13th edition states at para. 32-123:
"It is suggested that it would be inconsistent with the scheme and purpose of Article 4 for the presumptions to have no role except where other factors are evenly balanced, and that for the presumptions to be displaced it must be shown (which probably means clearly) that the contract has a closer connection with some other country".
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord President Lord Cameron of Lochbroom Lord Marnoch
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A2804/01 OPINION OF LORD CAMERON OF LOCHBROOM in RECLAIMING MOTION in the cause CALEDONIA SUBSEA LIMITED Pursuers and Respondents; against MICOPERI SRL Defenders and Reclaimers: _______ |
Act: Swanson, Solicitor Advocate; Maclay Murray & Spens (Pursuers and Respondents)
Alt: Howie, Q.C.; Henderson Boyd Jackson (Defenders and Reclaimers)
12 July 2002
[1] Your Lordship in the chair has set out the fact together with the relevant provisions of the Contracts (Applicable Law) Act 1990 ("the 1990 Act) and those of the Rome Convention. I agree with your Lordship that this reclaiming motion be refused. [2] However out of deference to the submissions made before us in an area of law in which a signal change of approach has been brought about by the provisions of section 2(1) of the 1990 Act, I have endeavoured in what follows to set out the reasons why I consider that the Lord Ordinary did not err in law in his approach to the facts and that his determination was correct both in law and in fact. [3] The defenders and reclaimers do not dispute that the issue is one which falls to be determined within the context of Article 4 of the Rome Convention. That is to say, they do not seek to suggest that the contract is governed by a law chosen by the parties within the context of Article 3, either as a choice which was express or, in particular, one which could be "demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case"(my emphasis). It follows that the circumstances of the present case cannot demonstrate with reasonable certainty any intention of the parties that a particular law has been chosen by them as the applicable law of the contract. At the same time I also draw attention to the provisions of Article 10, which applies to the law applicable to a contract by virtue of both Articles 3 and 4, and in particular to paragraph 2 which states that in relation to the manner of performance and the steps to be taken in the event of defective performance regard shall be had "to the law of the country in which performance takes place". Thus this Article seems to me to underline the premise of Article 4 that looking for the law of the country in which performance takes place is not the primary aim in any determination of what is to be the applicable law. [4] The position adopted by counsel for the reclaimers appeared to be based upon the propositions that the presumption in paragraph 2 of Article 4 was subordinated to the combination of the rules in paragraph 1 and 5, that the presumption was only a weak one and that it came into play only where the circumstances of the case were in the judgment of the court equally balanced as between one law and another. That is to say, the presumption was to be used in effect as a tie-breaker. In my opinion, these propositions do not fit with the provisions of Article 4 itself. There is no doubt that the rules in paragraphs 1 and 5 will be the only relevant rules when the court is unable to determine "the characteristic performance" of the contract which it is considering. But that is not the present case. The Lord Ordinary has found in paragraph 19 of his Opinion that the performance which was characteristic of the contract "was the provision of diving services". He has also found that the pursuers and respondents were the party who were to effect that performance. In the face of those two findings against the background that the parties must be held not to have chosen any particular law as applicable, the presumption must become immediately relevant to the determination of the issue of what is the applicable law. The importance of the presumption is, in my opinion, reflected in the passages from the report on the Rome Convention by Professor Mario Giuliano and Professor Paul Lagarde ("the Report") set out in para. [23] of the Lord Ordinary's Opinion, and in particular in their observation that Article 4(2) gives specific form and objectivity to the, in itself, too vague concept of "closest connection". I would only add to the passages cited by the Lord Ordinary that at pp.20-21 of the Report where the authors say:"Identifying the characteristic performance of a contract obviously presents no difficulty in the case of unilateral contracts. By contrast, in bilateral (reciprocal) contracts whereby the parties undertake mutual reciprocal performance, the counter-performance by one of the parties in a modern economy usually takes the form of money. This is not, of course, the characteristic performance of the contract. It is the performance for which the payment is due........which usually constitutes the centre of gravity and the socio-economic function of the contractual transaction.
As for the geographical location of the characteristic performance, it is quite natural that the country in which the party liable for the performance is habitually resident or has his central administration (of a body corporate or unincorporate) or his place of business, according to whether the performance in question is in the course of his trade or profession or not, should prevail over the country of performance where, of course, the latter is a country other than that of habitual residence, central administration or the place of business. In the solution adopted by the Group the position is that only the place of habitual residence or of the central administration or of the place of business of the party providing the essential performance is decisive in locating the contract."
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord President Lord Cameron of Lochbroom Lord Marnoch
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A2804/01 OPINION OF LORD MARNOCH in RECLAIMING MOTION in the cause CALEDONIA SUB-SEA LIMITED Pursuers and Respondents; against MICOPERISRL Defenders and Reclaimers: _______ |
Act: Swanson, Solicitor Advocate; Maclay Murray & Spens (Pursuers and Respondents)
Alt: Howie, Q.C.; Henderson Boyd Jackson (Defenders and Reclaimers)
12 July 2002
[1] I am grateful to your Lordship in the chair for setting out so clearly the circumstances of this dispute, the submissions made to this court, and the present state of authority so far as relevant to the matter in issue. In the result, I respectfully agree that this reclaiming motion should be disposed of in the manner which your Lordship proposes. To do that it is unnecessary to hold further than that, before para. 2 of Article 4 of the Rome Convention is "disregarded", there must, as your Lordship has said, be "a clear preponderance of factors in favour of another country". However, since the matter is not without importance, I think it right to add that I, for my part, would, if necessary, have applied an even more stringent test. [2] In the first place, it seems to me that the whole structure of Article 4 and its underlying objective of promoting clarity and certainty in the law presuppose that it is only in the exceptional case that resort need be had to para. 5. More often, as it seems to me, the answer will be found by "stopping at" para. 2 - to adopt the language of Mance J. in Bank of Baroda v. The Vysya Bank Limited [1994] 2 Lloyd's Reports 87. In practical terms this means that the para. 2 presumption will provide the prima facie answer to a choice of law problem and that the onus will be on those who seek to disregard it to justify doing so - Bank of Baroda cit. sup. at p. 93; Definitely Maybe (Touring) Limited v. Marek Lieberberg Konzertagentur GmbH [2001] 2 Lloyd's Reports. 455 per Morison J. at p. 458. [3] As to the circumstances which will justify a departure from the para. 2 presumption I attach significance to the use of the word "disregard" where it appears in Article 4(5). It seems to me that that word is inimical to the idea of conducting a balancing exercise in relation to the applicability or otherwise of the presumption. In short, this presumption is not one to be rebutted or overcome but rather one which either applies or falls to be disregarded in its entirety. This, I think, is the reasoning of Hobhouse L.J. in Crédit Lyonnaise v. New Hampshire Insurance Co. [1997] 2 Lloyd's Reports. 1 at pps 5-6. Where, however, I must most respectfully take issue with him is in his conclusion that the presumption in question is accordingly a "very weak" one. On the contrary, it seems to me that it must be strong, indeed determinative, unless it is appropriate - as I would have it, in the very special circumstances of the case - simply to disregard it. [4] For all the foregoing reasons I find myself - at least as at present advised - in complete sympathy with the approach of the Supreme Court of the Netherlands in Socéité Nouvelle des Papeteries de l'Aa S. A. v B. V. Machinefabriek B.O.A. 25 September 1992, unreported. According to that approach the para. 2 presumption"should be disregarded only if, in the special circumstances of the case, the place of business of the party who is to effect the characteristic performance has no real significance as a connecting factor."
In deciding whether the place of business of the performing party does or does not have real significance as a connecting factor it will, of course, be necessary to look broadly at the general circumstances surrounding the contract. However, it should not, in my opinion, be necessary to embark on a detailed comparative exercise which, as your Lordship has said, could involve difficulty and uncertainty and which, if one were to embark on it, would be strongly reminiscent of the sort of enquiry required to ascertain, under the former law, the "proper law" of the contract. It follows, as I see it, that it is only by adopting the Dutch approach that real and practical effect can be given to the objective of Article 4 referred to above, namely that of clarifying and simplifying the law.
