Company costs in jurisdiction fight threaten to swamp disputed sum

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.