#5191 - Lawlor V. Sandwik Mining And Construction - Conflict of Laws BCL

Lawlor v. Sanwik Mining and Construction

Facts

The claimant Mr Lawlor is an Irish citizen now apparently based in Andorra. He joined the defendant as an employed salesman in 1994. After short spells in Germany and in England he moved to Spain at first as an employee but soon as the defendant’s agent in Spain for the sale of mobile screens and crushing equipment. The claimant has a degree in Spanish and speaks the language well. He was undoubtedly a successful agent.

In 2006 the defendant sought to rationalise its agency network and offered existing agents posts as employees. Despite protracted negotiations agreement could not be reached and eventually the defendant terminated the agency. Although the claimant’s right to compensation was initially disputed the claim is now conceded in principle.

The claimant claims that the Regulations apply to his agency because the applicable law of the agency agreement was English law. The defendant claims that any agency agreement was governed by Spanish law. The preliminary issue for determination by the court is what was the applicable law of the agency agreement. It is common ground that the claimant acted as a commercial agent within the meaning of EC Directive 86/653 (the Directive) and that he is entitled to the appropriate relief for the termination of his agency.

Holding

Was there a “clearly demonstrated” choice of law by the parties under Art. 3?

Mr Randolph accepts that there was no express choice but contends that one was implied. The Report points to a previous course of dealing between the parties as an indication of implied choice. It is argued that Mr Lawlor’s employment contract with Extec was “in all probability” expressly governed by English law. The Report gives as another example an express choice of law in related transactions between the parties. Mr Randolph cites as a transaction the express choice of law in the draft employment contract produced by Extec for signature by Mr Lawlor. Mr Randolph points out that since Mr Powell gave evidence that the draft employment contract reflected the terms of Mr Lawlor’s agency, the defendant’s argument that the draft represented a fundamental change to the nature of the relationship between the parties must fall away. But this is to misunderstand the distinction between the commercial business done by Mr Lawlor and the contractual framework within which it was carried out. Mr Randolph argues that the English law provision in contracts with other former agents and in Extec sales agreements albeit between other parties all point to the agency being a standard form known to be governed by a particular system of law. Mr Randolph submits that the Melior contract is irrelevant essentially because one would not expect an office leasing agreement in Spain to be under anything other than local law. Mr Randolph also suggests that the fact that the defendant has not produced evidence that Spanish legal advice was sought points to there being an implied choice of English law.

Mr Parker argues that the agency was entered into in the most informal manner conceivable. There was no real choice of law and the issue is unlikely ever to have occurred to, or to have been discussed by, the parties. The draft employment contract arose from negotiations started in 2006, 12 years after the agency agreement was made and as a result only of Extec’s new policy while seeking to standardise and formalise terms on which sales agents were operating. The draft provides no evidence of what the parties may have agreed in 1994/1995

I accept that if the parties had made a choice it would have been of English law. I accept the evidence of Mr Douglas that in general terms Extec would seek to have its contracts governed by English law. But none of this points to a choice being made. Given the casual and informal circumstances in which the agency took effect it is very unlikely that choice of law was considered, let alone discussed. The court is concerned not with common law perceptions of implied choice but with the Rome Convention. Article 3(1) requires that the choice of the parties be “demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case”.

The issue being considered was an employment contract, although the practical role of the individuals concerned would remain much the same, not an agency agreement. As I have already said, there is no doubt that if agency agreements had been entered into or renewed in 2006 the parties would have sought to make them subject to English law. But that is not what happened 12 years earlier. The agency agreement was informal and unwritten, no consideration being given to the applicable law. In this case, as the Report puts it, the parties “had no clear intention of making a choice” and so the situation is governed by art. 4.

Habitual residence of the person carrying out characteristic performance – Art. 4

It is common ground that, under art. 4(2) Mr Lawlor was the person who was to effect the performance which was characteristic of the contract and that because the agreement was entered into in the course of his trade or profession that location is to be the country in which his principal place of business is situated or, if the contract so dictates, the country in which performance is situated.

Whatever the importance of the visits with customers to...