HIGH COURT, ACCRA
DATE: 27 NOVEMBER 1967
BEFORE: AMISSAH J.A.
CASES REFERRED TO
(1) Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202; 71 L.T. 1; 58 J.P. 540; 10 T.L.R. 479; 6 R. 188, H.L.
(2) Kwik Hoo Tong Handel Maatschappij (N.V.) v. James Finlay & Co., Ltd. [1927] A.C. 604; 96
L.J.K.B. 902; 137 L.T. 458; 33 Com.Cas. 55, H.L.
[p.652] of [1967] GLR 651
NATURE OF PROCEEDINGS
RULING on a preliminary objection that an action by the plaintiffs against the defendants should not be tried in the courts of Ghana since the parties had contracted that disputes between them should be settled by the courts in Italy. The facts are sufficiently stated in the ruling.
COUNSELS. Annancy for the plaintiffs.
G. Djabanor for the defendants.
JUDGMENT OF AMISSAH J.A.
A preliminary objection has been raised to this action proceeding in the courts of this country. The objection is based on the ground that the parties themselves have contracted that disputes between them should be settled by a court in Modena in Italy. The endorsement to the plaintiffs’ writ is as follows:
“The plaintiffs’ claim is against the defendants jointly and severally for (a) recovery of the sum of N¢63,061.60 (It. Lit. 37,837,020) being the total value of the plaintiffs’ goods as per particulars of claim, sold by the defendants and which the defendants have made use of it and have refused to refund the same sum to the plaintiffs in spite of repeated demands, and (b) the return of the plaintiffs’ goods of `O.B.C.’ 225 cases of shirts shipped by the Bia River in March 1967, the bills of lading of the said goods which the plaintiffs gave to the defendants and which the defendants have refused to release to the plaintiffs.”
The plaintiffs are a company incorporated in Italy. The first defendant is one of the four original shareholders of that company and also one of its three administrators. Until this dispute arose he was the plaintiff-company’s local representative in Ghana. Whether he still continues to hold that position or not is a matter for debate. The plaintiffs say in their statement of claim that his representation has been terminated whilst he claims in his defence, that the purported termination was unlawful and of no effect.
The second defendants, now described as Timber Imports and Exports of Takoradi (that is, if the first defendant’s assumption that by this description the plaintiffs meant the Timber Imports & Exports Co., Ltd., for there is that subtle difference), is another company incorporated in Italy. The statement of claim avers, and the averment is admitted in the defence, that the second defendants are a foreign company incorporated in Ghana. This must be some error because at best if they are a foreign company then they would only have been registered in this country. The first defendant is the managing director of the second defendant-company.
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Some time in March this year the plaintiffs consigned a large quantity of goods to Ghana. The person to whom they were consigned, the capacity in which he received as consignee and the nature of the transaction which brought the goods into his hands are all matters of violent disagreement. The plaintiffs’ case is that they sent the goods through a notifying address, which incidentally happens to be the address of the second defendants. The plaintiffs requested the first defendant as their representative in Ghana to secure an import licence for the goods, consequently they say they issued the invoices in the name of the second defendants. It is difficult to understand the logic of this unless one further accepts the plaintiffs’ claim that they issued the invoices in this manner because the first defendant who is a shareholder in their company and was their representative in Ghana requested it so, as the second defendants were already registered in Ghana. The plaintiffs say that they did not contract to sell the goods to either of the defendants.
The defendants on the other hand claim that there was a sale by the plaintiffs to the second defendants alone. That this is borne out by the invoice being made out to the second defendants. The sale, the defendants further claim, was on credit terms. That this is also borne out by the fact that as to the terms on which the arrangement invoiced was made it was stated that payment was deferred.
I believe this is in essence the relative positions of the parties as disclosed by the pleadings and by the twodocuments that were exhibited without objection in the course of the argument on the cross-allegations. But I do not think they make much difference to the objection raised. As I said earlier this objection of the defendants is that as the parties themselves have contracted that disputes between them should be determined by a court in Italy, our courts have no jurisdiction to entertain this claim. In support of the objection one of the invoices covering the goods was produced. Apart from its characteristics which I have already mentioned, the invoice gives the description and weighty of the goods the cost c.i.f.
Takoradi and then there is this all important note upon which the defendants rest this leg of their argument. It is as translated as follows:
“The goods are dispatched at the risks and perils of the buyer and also sale of the goods at the destination. After three days on receipt of the goods no complaint is accepted. At the lapse of the terms of payment the company has the power to charge six per cent interest. Payment is valid directly only to the company or its authorised representative. For every dispute only the forum of the judicial authority in Modena is competent.”
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Either in addition or as an alternative the defendants produced the articles of association of the plaintiff-company and drew the court’s attention to three of their provisions. They are: “Article 4. The domicile of the shareholders, where it concerns their financial relations with the company, is to be interpreted to the full effect of law to be at the head office of the company . . . Article 30. The judicial authority of the town where the head office is situated is the one recognised by means of contract as competent to discuss the controversies arising between the company and its components. Article 31. The controversies deriving from the present articles of association which may arise between the company and the shareholders, the administrators and liquidators, will be decided by a committee of three arbitrators, appointed one by each party; the President of the Chamber of Commerce of Bologna shall appoint the third party if the two parties fail to agree.
The Committee of Arbitrators will act with power of friendly reconciliators, with exemption from formalities included the deposit of the award within (30) days from the acceptation of the third arbitrator.” If I may deal with this second leg first, I find that article 4 has no bearing on the question now before me. I do not see what the suggested methods of interpretation of the domicile of shareholders has to do with the jurisdiction of this court in this case, especially where the defendants are ordinarily resident in this country and are properly before me. The plaintiffs say they claim in detinue, the defendants resist on the ground that there was a sale. Whether the claim be in tort or in contract, the domicile of the parties seems to me irrelevant in the instant case as a test to determine whether this court has jurisdiction.
Article 31 seems to me equally unhelpful. It is true that the first defendant is a shareholder and an administrator. But if I appreciate the opposing claims of the parties, this action is not brought against the first defendant qua a shareholder or administrator of the company. With regard to article 30, I must confess to my difficulty in understanding what is exactly meant in this context by the expression the “components” of the company. It would appear to cover the branch offices of the company as opposed to the head office. It could possibly cover the shareholders. I have said that the first defendant is not sued in his capacity as a shareholder. If the point is stretched, he could as he is said to be or to have been the representative of the plaintiffs in Ghana qualify as a branch office. But that is to stretch a point and I am not prepared to hold that the words are free enough
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from doubt to enable me to decline jurisdiction on that point.That leaves me with the submission on the note on the invoice. The plaintiffs contend that the note affects only buyers and as they never sold the goods to the defendants the note does not apply to them. As to this all the evidence on the invoice is against the plaintiffs. The first defendant was their representative. But the goods were not invoiced to him. The second defendants had no apparent connection with them but they were chosen as the persons to whom the goods should be invoiced. The c.i.f. value of the goods was given and it was said that payment was deferred. Presumably the plaintiffs would try to rebut this by oral evidence. Even so this does not conclude the matter. The note does not say that disputes arising from the sale should be submitted to the judicial authority in Modena, it speaks of “every dispute.” To my mind this means all disputes arising out of the subject-matter of the invoice. This should include disputes over the nature of the transaction itself which is covered by the invoice. Whatever the transaction, I am of the opinion that the parties to it contracted to submit disputes arising therefrom to the judicial authority at Modena. Does this oust the jurisdiction of this court? Mr. Annancy for the plaintiffs has rightly submitted that our courts have jurisdiction to entertain actions relating to contracts, wherever made, in all cases where the parties are effectively before the court, as where personal or substituted service of the writ has been effected on the defendants here or where leave has been given to serve the writ or notice of it out of the jurisdiction or when the parties have voluntarily submitted to the jurisdiction. But here is an arrangement which was entered into in Italy. The documents on it are in Italian. The parties to it agreed that the judicial authorities of Modena in Italy should adjudicate upon disputes arising from it. Should effect not be given to this intention? I think it should. There is for example no objection to an agreement that a dispute arising out of a contract should be submitted to arbitration.
Thus in Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202, H.L. a contract between an English and a Scotch firm, signed in London but to be performed in Scotland, contained this stipulation: “Should any dispute arise out of this contract, the same to be settled by arbitration by two members of the London Corn Exchange, or their umpire, in the usual way.” It was held that the arbitration clause was valid, and deprived the Scottish courts of jurisdiction to decide upon the merits of the case, unless the arbitration proved abortive. And it is also clear that parties may choose the law to apply to their contracts by choosing a particular forum. In N. V. Kwik Hoo Tong Handel Maatschappij v. James Finlay & Co., Ltd. A.C. 604, H.L. where a dispute arose between Scottish
[p.656] of [1967] GLR 651
merchants carrying on business at Bombay and certain merchants of Hong Kong, it was held by the British House of Lords that the parties in submitting their dispute to an English forum, impliedly consented that the law which was to regulate the decision was the law of that forum. With the exception of the oblique references to agreements to submit disputes to the jurisdiction of the English courts made by Lord Phillimore in the Kwik Hoo Tong Handel Maatschappij case (at pp. 609-610), direct authorities on contractual agreements to submit to a particular court as opposed to an arbitration in a particular country are not easy to find. But I think the principle should be the same. Just as parties to contracts regularly and freely opt to submit their disputes to arbitration and effect is given to their option, so, I think, should effect be given to such an expressed intention of the parties if they opt that their disputes should be submitted only to the judicial authority of a particular place. And the case for this is even stronger if, as in the present case, the judicial authority in question is one so closely connected with the place and the language in which the contract was made. Looking through the pleadings, I cannot help thinking that the full story of the arrangement between the parties has not been told. I cannot further escape the thought that if allowed to continue here, the full story will never be told. Various ends keep popping up from time to time. It seems to me that the partiesthought rightly at the beginning that the judicial authorities of Modena would be better equipped than any other court to dispose of disputes between them. And I think on that account this court should decline jurisdiction on the merits and encourage the parties to keep to their original bargain. I finished writing this ruling before this morning and I am reinforced in my view by the submission which has just this morning been made by learned counsel for the plaintiffs. He says that the second defendants have been liquidated in Italy since 1965. But earlier in the case he told me of how the first defendant, the managing director of the second defendants with their offices in Italy next door to the plaintiffs’ chairman signed the invoices in the name of the second defendants in March 1967. The best court to investigate such inconsistencies is no doubt the Italian court chosen by them.
I accordingly strike out the case.
DECISION
Case struck out.
S. E. K.
