HIGH COURT, ACCRA
DATE: 13 APRIL, 1967
BEFORE: EDUSEI J.
CASES REFERRED TO
(1) Littaeur Glove Corporation v. Millington (F.W.) (1920) Ltd. (1928) 44 T.L.R. 746.(2) McDonald v. Mabee 37 Sup.Ct 343; 243 U.S. 90; 61 L. Ed. 608 (1917).
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(3) Ralli Brothers v. Compania Naviera Sota y Aznar [1920] 2 K.B. 287; 89 L.J.K.B 999; 123 L.T.
375; 15 Asp.M.L.C. 33; 25 Com.Cas. 227; sub nom. Sota and Aznar v. Ralli Brothers 36 T.L.R.
456; 64 S.J. 462, C.A.
NATURE OF PROCEEDINGS
PRELIMINARY OBJECTION to the jurisdiction of the High Court in an action for breach of contract.
The facts are sufficiently stated in the ruling.
COUNSEL
E. K. Mensah for the applicants.
Miss A. A. Ayisi for the respondent.
JUDGMENT OF EDUSEI J.
The respondent, an Israeli national, is suing the applicant, a French firm, in this court for damages for breach of contract. The applicant company has raised the preliminary point that this court has no jurisdiction to entertain the suit and its objection to the court’s jurisdiction is based on two main grounds: that the contract between the company and the respondent was couched in the French language and the salary of the respondent was payable in Paris in French francs. There is no doubt that the issue that calls for determination by this court raises a fundamental question of interest in private international law. By consent an English translation of the contract of employment was put in evidence as exhibit A. It is to be observed at this stage that if the objection of the company proves to be well-founded, the jurisdiction of this court will be automatically ousted and the respondent will have to seek his remedies, if any, in the French courts which the company contends is the proper forum for the determination of the rights and obligations of the parties. Mr. E. K. Mensah, counsel for the applicant company, has argued with some force that this court must decline to exercise jurisdiction in this case. He contends that having regard to exhibit A the company was incorporated in Paris where alone there is the “directing power and control” and that it has no established place of business in Ghana and so a writ of summons cannot properly be served on it. In short counsel is saying that the company is not amenable to this jurisdiction, and in coming to this conclusion he further submitted that the proper law of the contract was French law. It is to be observed that matters of jurisdiction and proper law of the contract are distinct legal concepts, though it is admitted that the proper law of the contract may in certain circumstances decide the jurisdictional aspect of a case of this nature. Having mentioned the proper law of the contract I feel compelled, without dwelling on any lengthy exposition of this juridical concept, to state that all that it means is the law of the
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country with which factually the contract is most closely connected. This definition of “the proper law of contract” is accepted by the two great writers on the subject, namely, Cheshire in his Private International Law (7th ed.), and Dicey in his Conflict of Laws (7th ed.). Miss Akua Asaabea Ayisi, counsel for the respondent, contends that this court has jurisdiction to entertainthe suit and I was referred to a host of authorities. From exhibit A the contract between the parties was made in Accra and its performance by the respondent as works supervisor of building operations was at Tema. It was a further term of the contract that cash advances could be made to the respondent at Tema in cedis and pesewas which would be deducted from his salary that was payable in Paris in French francs. Clause (8) of exhibit A stipulates thus, “You [referring to the respondent] will be under the authority of our management and its representative in Tema, at whose disposal you are to remain according to his orders.” Beyond all question it is my considered opinion that the proper law of the contract is the law of Ghana. Suppose a Chilean and an Australian resident in Ghana enter into a contract here, which is to be performed here, decide to have the contract couched in Latin or Greek, perhaps out of sheer love for the classics, can it be said that an action for a breach of contract should be instituted in Rome or Athens? I shall answer this with an emphatic negative. What difference does it make if one of the parties is a company carrying on business in this country? This brings me to the question of residence of the company – an artificial person. Mr. Mensah contends that the company is not resident in Ghana. Whether a corporation aggregate, like the applicants, is resident in Ghana for the exercise of the court’s jurisdiction, will be dependent on the fact that, at the commencement of the action, business is being carried on at some definite and more or less permanent place in the country that arrogates to itself, the right to adjudicate: see Littauer Glove Corp. v. Millington (F.W.) (1920) Ltd. (1928) 44 T.L.R. 746. The company at the time of the action was carrying on the business of constructing estate houses at Tema. The company in its affidavit of 3 September 1966, which was in opposition to the respondent’s application for an order for security, contained these facts: “I, Guy Maillard, Manager of the Societe Generale de Compensation of Tema make oath as follows:
(1) That I am the manager of the defendant company and have the authority of the company to swear to this affidavit on its behalf.
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(2) That the plaintiff’s allegation that the defendant company cannot cope with the contract with the Ghana Government per the Tema Development Corporation is false. It is also untrue that the contract is being terminated by the government . . .
(6) That there is no probable cause for which this honourable court can believe the allegation that the defendant company is about to leave the jurisdiction of the court or that it has disposed of or removed its property, factory or assets from Ghana.
(7) That the defendant company owns a factory for prefabricated elements in Tema and has a fleet of vehicles, cranes and other plant and machinery valuing not less than £250,000 or ¢600,000.
(8) That even if the said contract is terminated, which I deny, the company’s assets and capital will still remain in Ghana.” (The emphasis is mine.) In the face of these averments on oath can the company seriously assert that it is not carrying on business at Tema? The only logical and common-sense answer is that it is doing business at Tema and therefore it is present in this country and its presence confers jurisdiction on the courts of Ghana. The elementary fact several times stated by Holmes J. in McDonald v. Mabee 243 U.S. 90 at para.91 (1917) is that, “The foundation of jurisdiction is physical power.” In this is enshrined the principle of effectiveness because the company was present at the time of service of the writ in Ghana. Service of the writ was effected on the company’s secretary and this fact has been endorsed on the writ and this is proper service: see Order 9, r.8(1) of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A). The argument of counsel that the company has no “established place of business” in Ghana is untenable. Section 302(3) of the Companies Code, 1963 (Act 179), to which I was referred, defines “established place of business” as “a branch, management, share, transfer, or registration office, factory,mine, or other fixed place of business . . .” (The emphasis is mine.) It cannot be denied that the company has a factory or fixed place of business at Tema in view of the averments contained in paragraphs (1) and (7) of Mr. Guy Maillard’s affidavit of 3 September 1966 to which I have just referred, and the deponent is the company’s manager in Ghana. It is to be noted that failure of any external company to comply with provisions of sections 303-317 of Act 179 does not change the character of the company; instead penalties are provided for such a situation and the rights of other parties against the company in respect of any contract made in [p.216] of [1967] GLR 212
Ghana are preserved and can be enforced by an action in Ghana despite the fact that the company itself is in default of certain provisions of the Companies Code: see section 313 of the Code. I venture to add that the defendant company voluntarily submitted to the jurisdiction of the courts of Ghana, because it entered appearance to the writ, not conditionally or under protest. Again the company, at the first opportunity, when the motion for an order for security for costs was being argued failed to object to the jurisdiction of the court. There is not the slightest suggestion in its opposing affidavit that it was protesting against the jurisdiction of the court. Here also the principle of submission is triumphant. I am fortified in this my view by the following passage that appears in The Annual Practice, 1966, p. 131 that: “Where a defendant enters an ordinary appearance, without any condition or protest reserving his right to object to the irregularity of the writ or service, or the jurisdiction of the Court, he is debarred from raising an objection afterwards. The effect, therefore, of an ordinary or unconditional appearance is a waiver of irregularity, if any, as well as a submission to the jurisdiction of the court.” There is one other matter that merits consideration. The company is further contending that the courts of Ghana should not enforce the contract, exhibit A, since its performance involves the violation of sections 6 and 7 of the Exchange Control Act, 1961 (Act 71). The said sections read thus: “6. Except in such circumstances as may be prescribed, no Ghana resident shall make any payment outside Ghana to or for the credit of an external resident. 7. Except in such circumstances as may be prescribed, no person shall in Ghana, and no Ghana resident shall outside Ghana, make any payment to or for the credit of a Ghana resident as consideration for or in association with (a) the receipt by any person of a payment made outside Ghana, or the acquisition by any person of property which is outside Ghana, or (b) the transfer to any person, or the creation in favour of any person, of a right (whether present or future, and whether vested or contingent) to receive a payment outside Ghana or to acquire property which is outside Ghana.” “Prescribed” is defined in section 37 (1) to mean “prescribed by regulations made under section 38 of this Act” and section 38 says, “The Minister may by legislative instrument make regulations
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prescribing anything that is to be prescribed under this Act or otherwise making provision for the purposes of this Act.” The company in paragraph (5) of its amended statement of defence avers the following: “that 87 per cent of the price of the contract being executed at Tema by the defendant is paid for by the Ghana Government in French francs to the defendants’ bankers in Paris and that only 13 per cent of the said contract price is paid in Ghana to meet local expenses for purchase and local labour.” Section 40 of Act 71 stipulates that: “40. This Act binds the Republic, but (without prejudice to any express terms) no term shall be implied in any contract entered into by or on behalf of the Republic that the Government will ensure that aconsent required by or under this Act is given or that any other function conferred by or under this Act is exercised in a particular way.” The most important words here are “without prejudice to any express terms” and reading this in conjunction with paragraph (5) of the amended statement of defence there is a strong presumption that what is alleged in the said paragraph (5) is correct and that 87 per cent of the contract price is payable by the Ghana Government to the company in Paris in French francs. If this is so, I envisage the situation where a judgment obtained by the respondent in Ghana may be registered in France and enforced against the company. Alternatively the judgment debt and costs which may be adjudged to the respondent here can be paid into this court. This alternative proposition is covered by paragraph 2 of the Third Schedule to Act 71. It says that, “Nothing in this Act shall be construed as preventing the payment by any person of any sum into any court in Ghana . . .” This contention of learned counsel for the company in this respect therefore fails.As stated earlier on, the law applicable to this contract is the law of Ghana and this principle is stated with characteristic lucidity and precision in that great work by Dicey on Conflict of Laws (7th ed.), r.153 atp.779 that: “The material or essential validity of a contract is (subject to the Exception hereinafter mentioned . . .) governed by the proper law of the contract.” The exception, however, states that a contract (whether lawful by its proper law or not) is, in general, invalid in so far as the performance of it is unlawful by the law of the country where the contract is to be performed (lex loci solutionis). It is true that payment to the respondent is to be made by the company in Paris but no suggestion has been put forward in the course of the argument that payment to the plaintiff in France is forbidden by its
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domestic laws. The whole principle is stated by Scrutton L.J. in the case of Ralli Brothers v. Compania Naviera Sota y Aznar [1920] 2 K.B. 287 at p. 304, C.A. as follows: “I should prefer to state the ground of my decision more broadly and to rest it on the ground that where a contract requires an act to be done in a foreign country, it is, in the absence of very special circumstances, an implied term of the continuing validity of such a provision that the act to be done in the foreign country shall not be illegal by the law of that country.” So one comes to what would indeed be an important question if there were really and solid foundation—as I think there is not—for the contention put forward for the company. There is no doubt in this case that the proper law of the contract is the law of Ghana and that the courts in this country have jurisdiction also. If I may be permitted a reminiscence, I have been reminded, on hearing the argument of counsel for the defendant and the reference to Professor Dicey’s book, that when I had the privilege of being taught by Dr. Morris, reader in conflict of laws at University of Oxford and general editor of Dicey’s Conflict of Laws, he was always anxious to insist on this, that students of law heard so much about exceptions to rules, and comparatively speaking, so little about the rules themselves, that they were apt to think that the law was to be found rather in the exceptions than in the rules. I think, perhaps, in a case like this there is a danger that the rule may be somewhat submerged in argument and forgotten. One starts with the rule that Ghana law is the law that governs the performance of this contract. An elementary principle of any civilized law is that people should keep their contracts and carry them out unless there are justifiable reasons to break them.
In the result I dismiss the company’s contention of lack of jurisdiction in this court and uphold that this court is seised with jurisdiction to adjudicate on the matter in dispute. I allow the respondents costs of N¢50.00. I wish to offer my personal congratulations to Miss Akua Asaabea Ayisi, counsel for the respondent, who calmly but forcefully was able to put her points across.
DECISION
Preliminary objection overruled.
S.Y.B.-B.
