[2025] VSC 777
General information, not legal advice.
Supreme Court of Victoria
2025-10-30
Gardiner AsJ
Original judgment source is linked above.
SERVICE OUT OF JURISDICTION - Service effected by plaintiff on Spanish corporation under r 80.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters - Application by Spanish corporation to set aside service of process and for permanent stay of proceeding - Finding that claims made by plaintiff were within ambit of exclusive jurisdiction clause which required such claims to be brought in Spanish court - No features of the matter which warranted departure from prima facie position that plaintiff should be required to adhere to the choice of jurisdiction provision in the agreement between the parties - Orders made setting aside service and for a permanent stay of the proceeding - VS Property & Holding Pty Ltd v Zurzolo [2024] VSCA 199; ; ; ; ; ; applied.
(a) the service of the Writ and the Statement of Claim on it be set aside under r 8.08 of the Rules;
(b) the proceeding be permanently stayed or dismissed under r 8.08 of the Rules on the basis that the Court of Dénia in Spain have exclusive jurisdiction to hear and determine any dispute between the parties;
(c) in the alternative to (a) and (b), the proceeding be permanently stayed or dismissed under r 8.08 of the Rules on the basis that Victoria is a clearly inappropriate forum for the determination of the proceeding;[4] and
(d) Select pay its costs of the application.
(a) María Asunción Cebrián Salvat, affirmed 21 August 2024; and
(b) Michael Vieyra, affirmed 21 August 2024.
(a) Liam Brian Campion, affirmed 12 December 2023[5] and 15 October 2024; and
(b) Daniel Paul Wilson, affirmed 16 October 2024.
15. GOVERNING LAW AND JURISDICTION
The processing of any order and completed purchase implies acceptance by Buyer of these Terms in each and every clause. In the event of any dispute that may arise from the contracted operation, the parties submit to Spanish Law and the jurisdiction of the Courts of Dénia (Alicante), having waived their own jurisdiction.
(a) failing to include filtration systems to filter out small-particle fines or other by-products;
(b) failing to specify streamlined radial supports as the 'radial support' between the inner and outer burner tubes;
(c) designing the air recirculation ducting apparatus in a rectangular shape, where the air flow would transition from the burner and, ultimately, where the almond fines accumulated and caused the fire;
(d) failing to warn Select of the possibility of the fine accumulation and its consequences; and
(e) failing to design appropriate access for inspection and cleaning of the ducting point where the fines were accumulating.
(a) she is a tenured Professor at the University of Murcia;
(b) she was awarded a PhD in Law from the University of Murcia for her thesis titled International Franchise Contracts: International Jurisdiction and Applicable Law in the European Union with the qualification 'outstanding cum laude' and received relevant recognition, including the Extraordinary Doctorate Award and a national award for the best thesis in Private International Law by the Spanish Association of Professors of International Law;
(c) her research area includes Spanish and European Private International Law, International Procedural Law, International Family Law and International Trade Law from predominantly conflictual as well as substantive and procedural perspectives;
(d) she has presented papers and spoken at numerous international conferences;
(e) she has conducted predoctoral and postdoctoral research at many internationally renowned centres;
(f) she has published research articles on Spanish and European Private International Law on high-impact international journals;
(g) she is a peer reviewer for various law journals, as well as for two publishers specialising in private international law, Colex and Comares;
(h) she has participated in national and international research projects; and
(i) she has produced expert opinions which have been presented before Spanish, French and German courts when advising individuals and lawyers as an expert witness through the Technology Transfer Office of the University of Murcia.
(a) are the claims Select advances in the Statement of Claim (being negligence and breach of contract) against Borrell able to be made:
(i) under Spanish Law;
(ii) in the Courts of Dénia (Alicante);
(b) if the answer to (a) is yes, can Select seek the remedies it seeks in the Statement of Claim (being the claims for loss and damages particularised in para 22 of the Statement of Claim and for costs and interest):
(i) under Spanish law;
(ii) in the Courts of Dénia (Alicante); and
(c) if the answer to (a) and (b) is no, is there a similar or analogous claim and remedy available to Select under Spanish law that it could pursue in the Courts of Dénia (Alicante)?
(a) the Writ and the Statement of Claim (in English);
(b) the Writ and the Statement of Claim (in Spanish);
(c) a document described as 'Borrell Almond Blanching, Processing, Pasteurising, Dry-Cooling-Roasting, Screening Line';
(d) the Quotation; and
(e) the Sale Terms.
(a) under art 26 of Regulation 1215/2012 if Select filed the claim and Borrell entered an appearance; or
(b) under art 4, as they are, according to art 63, the Courts of the State of the domicile of Borrell.
(a) it is an action which calls into question the defendant's liability; and
(b) the action cannot be qualified as a contractual matter because:
(i) there is no commitment freely entered into by both parties; or
(ii) the action brought is not considered to arise out of such a commitment.
(a) In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. To answer that question, 'the reasonable businessperson [is] placed in the position of the parties', and the Court applies the following principles:
(b) The rights and liabilities of parties under a provision of a contract are determined objectively. The subjective intentions of the parties are irrelevant.
(c) The objective approach requires reference to the text and its ordinary meaning, together with:
(i) the context, being the entire text of the contract including matters referred to in the text; and
(ii) the purpose of the contract and/or the clause in question.
(d) These matters will ordinarily be identified by reference to the contract alone, but evidence of mutually known objective background circumstances relevant to the purpose is admissible 'no matter how clear the "ordinary meaning" of the words'. Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.
(e) Unless a contrary intention appears in the contract, the court is entitled to approach the task of interpretation on the assumption that the parties intended to produce a commercial result, and should construe it so as to avoid a commercial nonsense. However, the court does not weigh the commerciality of the agreement, and business common sense is a topic on which reasonable minds may differ.
(f) If the language used in the contract 'is ambiguous or susceptible of more than one meaning', then evidence of surrounding circumstances external to the contract is admissible to assist with interpretation of the language in question.
(g) However, 'evidence of the parties' statements and actions reflecting their actual intentions and expectations' is inadmissible. Although evidence of prior negotiations is admissible to establish objective background facts known to both parties and the subject matter of the contract, evidence of negotiations reflective of actual intentions and expectations is not receivable.
(h) Post-contractual conduct is inadmissible to construe the terms of the contract. However, the parties' subsequent communications may be relevant to determine whether the parties intended to enter into a binding contract.
Finally, in my opinion an exclusive jurisdiction clause should be interpreted in the same liberal manner as is authoritatively established with respect to arbitration clauses. The two kinds of clauses have frequently been treated as legally cognate and authorities on the scope of arbitration clauses are frequently cited in authorities on exclusive jurisdiction clauses. In both cases, all disputes which, as a matter of substance, arise from the contractual relationship between the parties are intended to be determined by the same tribunal. It is not appropriate to give general words in such a commercial context a narrow interpretation, with the consequence that some disputes which, in a practical sense, arise from the contractual relationship could be determined by courts or tribunals other than that to which the parties have agreed to submit their disputes.
The oft-quoted decision of Gleeson CJ in Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd [1996] NSWSC 104; (1996) 39 NSWLR 160, made with respect to an arbitration clause, is applicable to exclusive jurisdiction clauses. His Honour said (at 165):
When the parties to a commercial contract agree, at the time of making the contract, and before any disputes have yet arisen, to refer to arbitration any dispute or difference arising out of the agreement, their agreement should not be construed narrowly. They are unlikely to have intended that different disputes should be resolved before different tribunals or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument.
[164] ... The court should, however, construe the contract giving meaning to the words chosen by the parties and giving liberal width and flexibility to elastic and general words of the contractual submission to arbitration.
[165] This liberal approach is underpinned by the sensible commercial presumption that the parties did not intend the inconvenience of having possible disputes from their transaction being heard in two places. This may be seen to be especially so in circumstances where disputes can be given different labels, or placed into different juridical categories, possibly by reference to the approaches of different legal systems. The benevolent and encouraging approach to consensual alternative non-curial dispute resolution assists in the conclusion that words capable of broad and flexible meaning will be given liberal construction and content. This approach conforms with a common-sense approach to commercial agreements, in particular when the parties are operating in a truly international market and come from different countries and legal systems and it provides appropriate respect for party autonomy.
"A strong bias in favour" (Huddart Parker v The Ship "Mill Hill", supra at 509).
"Strong reasons" Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 at 259 per Gaudron J_; Akai v The People's Insurance Co_ supra at 429 per Dawson and McHugh JJ and at 445 per Toohey, Gaudron and Gummow JJ.
"Strong cause" The Eleftheria supra at 99.
"Substantial grounds" FAI v Ocean Marine Mutual supra at 569; Incitec v Alkimo Shipping Corp supra at [42].
"Strong countervailing circumstances_" Incitec v Alkimo Shipping Corp_ supra at [43].
Key principles applicable to considering clauses such as the Governing Law Clause and the Forum Clause in this context may be shortly stated:
(1) The contractual obligation imposed by an exclusive foreign jurisdiction clause does not operate to exclude the jurisdiction of this court, but it may constitute a ground for the court to refuse to exercise its jurisdiction.
(2) Where a contract contains an exclusive foreign jurisdiction clause, "the courts begin with a firm disposition in favour of maintaining that bargain unless strong reasons be adduced against a stay, it being the policy of the law that the parties who have made a contract should be kept to it".
(3) A stay may be refused where the exclusive foreign jurisdiction clause offends the public policy of the forum evinced by statute or judicial decision.
The existence or otherwise of strong reasons is to be determined having regard to the particular facts and circumstances of each case. A review of the case has reveals that a variety of circumstances have fallen for consideration in this context, including, for example: prejudice to parties if a stay is granted; the position of parties to proceedings who are not parties to the exclusive jurisdiction clause or choice of law clause; whether the relevant clause might be seen to offend public policy; whether the relief sought or cause of action being pursued is available in the selected forum; the fragmentation or bifurcation of proceedings and the consequences that may flow from it; multiplicity of proceedings; an unforeseeable change in the procedure of a foreign court; the loss of a legitimate juridical advantage; and issues in a selected forum that may put a fair trial at risk.
(a) there is no juridical advantage to the bringing of the proceeding in Victoria, as compared to Spain as the expert evidence of Professor Salvat reveals each of the claims brought by the Select in the proceeding can be brought against Borrell under Spanish law in the Courts of Dénia;
(b) Borrell is based in Spain and has no corporate presence, employees or assets in Australia;
(c) Borrell's witnesses are located in Spain and speak Spanish;
(d) while the roaster was installed in Victoria and the fire took place in Victoria, the roaster was designed, manufactured and tested in Spain using expertise, technology and engineering resources physically located in Spain; and
(e) all documents relevant to the design, manufacture and testing of the roaster are located in Spain and are in Spanish.
(a) does not apply to the acts and omissions alleged in the Statement of Claim;
(b) amounts to nothing more than a non-exclusive jurisdiction clause;
(c) is, alternatively, unclear, ambiguous and produces a non-sensical result; and/or
(d) the competing connecting factors, on balance, demonstrate that Victoria is not a clearly inappropriate forum.
(a) cl 1.1, which refers to the Sale Terms as governing the purchase and sale agreements for machines, spare parts and services sold by Borrell;
(b) cl 3, which defines the subject matter of the agreement as being Borrell's 'machines, production lines and systems ... Spare parts, components, machinery parts, finished goods, consumables and any other tangible or intangible goods relative thereto, including software' and 'installation and assembly services, commissioning, training and advice, maintenance and technical support';
(c) cl 9.1, which provides for a warranty whereby Borrell undertook to deliver the machinery to Select in accordance with purchase and sale agreements, and is liable to Select for any non-compliance at the time of delivery of the product; and
(d) cl 9.2, which requires Borrell to correct any operational defect stemming from a defect in design, materials or workmanship, subject to the limitations set out in the subsequent provisions.
(a) Clause 15 should be construed as applying only to disputes arising from the original supply and initial commissioning of the roaster, not to events which, as here, occurred some two years thereafter or which might be regarded as being 'in connection with' the original supply; and
(b) by the same reasoning, Clause 15 should be construed as applying only to the legal remedies provided for in the Sale Terms (for instance, Borrell's delivery of machinery or its compliance with warranty requirements), which does not include the damages claimed by Select in the Statement of Claim.
Are Select's claims in the statement of claim 'disputes' which '...arise from the contracted operation'?
Is Clause 15 an exclusive jurisdiction clause which obliges Select to make its claims in the Spanish court?
A significant purpose of an exclusive jurisdiction clause is to ensure that all disputes are determined in a coherent manner by a single jurisdiction. There is a clear commercial interest in minimising the possibility of a dispute being determined by multiple tribunals, with the consequent prospect of divergent findings. Furthermore, the parties, in advance, have determined that a particular jurisdiction is acceptable to them, both in terms of the speed and efficacy of its civil dispute resolution procedures and for the competence and skill of its judges and lawyers. A party to such a clause should be held to its contractual obligations, whether enforced by another party on a contractual basis or by means of the exercise of a discretion conferred upon the court.
Are there any features of the matter which would displace the 'prima facie' or 'firm disposition' that the parties should be held to their bargain in respect of the choice of forum?
(a) the service of the Writ and the Statement of Claim on Borrell by Select be set aside under r 8.08 of the Rules;
(b) the proceeding be permanently stayed under r 8.08 of the Rules; and
(c) Select pay Borrell's costs of the application including any reserved costs.
[1] In the Writ, Select contended in para 6 that there were breaches of the Australian Consumer Law but these are not maintained in the Statement of Claim.
[2] In the Prothonotary's capacity as the 'forwarding authority' under art 18 of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ('Hague Service Convention') and r 80.01 of the Rules.
[3] Form 80A required the Court's signature.
[4] This is no longer pressed by Borrell.
[5] This affidavit was primarily concerned with matters in connection with the extension of the validity of the Writ.
[6] Regulation (EU) No 1215/2012 of The European Parliament and of the Council of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [2012] OJ L 351/1 ('Regulation 1215/2012').
[7] Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations (Rome I) [2008] OJ L 177/6.
[8] Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the Law Applicable to Non-contractual Obligations (Rome II) [2007] OJ L 199/40.
[9] Citing ERGO Insurance SE v If P&C Insurance AS (Court of Justice of the European Union, C‑359/14, ECLI:EU:C:2016:40, 21 January 2016) [44].
[10] Brogsitter v Fabrication de Montres Normandes EURL (Court of Justice of the European Union, C‑548/12, ECLI:EU:C:2014:148, 13 March 2014).
[11] Granarolo SpA v Ambrosi Emmi France SA (Court of Justice of the European Union, C‑196/15, ECLI:EU:C:2016:559, 14 July 2016).
[12] These are detailed in paragraph Error! Reference source not found. above.
[13] [2024] VSCA 199, [54] (Niall, Walker and Kenny JJA) (citations omitted) ('VS Property').
[14] [2010] NSWCA 196; (2010) 79 ACSR 383 (Spiegelman CJ, Giles and Tobias JJA) ('Global Partners').
[15] Ibid [60]-[61] (Spiegelman CJ).
[16] [2006] FCAFC 192; (2006) 157 FCR 45 (Finn, Finkelstein and Allsop JJ) ('Comandate').
[18] Global Partners, 398 (Spiegelman CJ) citing Comandate, 87-88 (Allsop J).
[19] See comments of Spigelman CJ in Global Partners [85]: 'The importance of holding parties to their bargain in this respect has often been emphasised in the context of enforcing exclusive jurisdiction clauses and in the cognate area of enforcing agreements to submit to arbitration.'
[20] Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418, 445 (Toohey, Gaudron and Gummow JJ) ('Akai'); cited in Lew Footwear Holdings Pty Ltd v Madden International Ltd [2014] VSC 320, [232].
[21] Urban Moto Imports Pty Ltd v KTM AG [2021] VSC 616 [20] (Connock J) ('Urban Moto'), citing _Global Partner_s, 402 (Spigelman CJ).
[22] Global Partners, 402 (Spiegelman CJ)
[27] Citing Joshan v Pizza Pan Group Pty Ltd [2021] NSWCA 219; (2021) 106 NSWLR 104, 123-4 (Bell P); Need Pty Ltd v Need Essentials U.S.A. LLC [2023] VSC 184, [105].
[29] Citing VS Property & Holding Pty Ltd v Zurzolo [2024] VSCA 199, [54] (Niall, Walker and Kenny JJA).
[30] Citing Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196, [56].
[33] Citing Ace insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724, [33]; AAP Industries Pty Ltd v Rehau Pte Ltd [2015] NSWSC 468, [16].
[34] Citing Richard Garnett, 'Jurisdiction Clauses since Akai' (2013) 87(2) Australian Law Journal 134.
[35] Citing Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724, [33].
[36] Citing FAI Insurance Co v Ocean Marine Mutual Protection & Indemnity Assn Ltd (1997) 41 NSWLR 117, 127.
[37] Citing Johan v Pizza Pan Group Pty Ltd [2021] NSWCA 219; (2021) 106 NSWLR 104.
[38] Citing Puttick v Fletcher Challenge Forests Pty Ltd [2007] VSCA 264, [12] citing John Pfeiffer Pty Ltd v Rogerson [2002] HCA 10; (2000) 210 CLR 491, 504.
[39] Paragraph 18 of the Statement of Claim.
[40] Global Partners, 398 (Spigelman CJ).
[41] [1996] NSWSC 104; (1996) 39 NSWLR 160 (Gleeson CJ, Meagher and Sheller JJA).
[43] Global Partners, 399 (Spigelman CJ).
[44] Akai, 445 (Toohey, Gaudron and Gummow JJ).
[45] Global Partners, 402 (Spigelman CJ).
Plaintiff
JOSE BORRELL S.A
(1996) 39 NSWLR 160
(2006) 157 FCR 45
(1988) 165 CLR 197
(1996) 188 CLR 418
(2021) 106 NSWLR 104
(1997) 41 NSWLR 117
(2000) 210 CLR 491