Westbase Technology Limited v Vuzix Corporation & Ors [2026] EWHC 138 (Ch)

[2026] EWHC 138 (Ch)Case No BL-2025-000232In the High Court of JusticeChancery DivisionBusiness and Property Courts of England and WalesBusiness ListVenue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 30 January 2026
Before
Deputy Master Valentine
Between
WESTBASE TECHNOLOGY LIMITEDClaimant/ Respondent(1) VUZIX CORPORATIONDefendants/ Applicants(2) ALISON JAMESON, AS REPRESENTATIVE OF THE ESTATE OF MR PETER JAMESON (DECEASED)Applicant(3) MR PAUL TRAVERSApplicant
James Newman (instructed by Broadfield Law UK LLP) for Applicants/DefendantsNicholas Cobill (instructed by Browne Jacobson LLP) for Respondent/ClaimantHearing Hearing date: 11 November 2025
Approved JudgmentThis judgment was handed down remotely on 30 January 2026 by circulation to the parties or their representatives and by release to the National Archives.

Deputy Master Valentine:

[1]This is the court’s reserved judgment following the one-day hearing on 11 November 2025 of the application of the Defendants/Applicants to set aside the order granting the Claimant permission to serve its Claim Form on the Defendants out of the jurisdiction, in the United States (the “Application”).

PARTIES

[2]The Claimant, and Respondent to this Application, is Westbase Technology Limited, a limited company registered in England and Wales (“Westbase” or “C”) with its place of business and registered office in Wales. The First Defendant/Applicant is Vuzix Corporation, a Delaware company with which C had a business relationship (“Vuzix” or “D1”). The original Second Defendant (“D2”), Mr Peter Jameson, was the COO of Vuzix. He sadly died shortly after these proceedings were commenced, and at today’s hearing I approved a consent order to substitute Alison Jameson, solely in her capacity as personal representative of his estate, as Second Defendant and in such capacity join her to the Application. The Third Defendant/Applicant (“D3”) is Mr Paul Travers, the CEO at the relevant time of Vuzix.[3]C makes a claim for breach of contract and negligent misrepresentation against D1, and claims for negligent misstatement against D2 and D3. BACKGROUND 4. Distributor Agreement

BACKGROUND

[4]Westbase and Vuzix were parties to a Distributor Agreement dated 15 June 2022 (the “Distributor Agreement”). Pursuant to that agreement, C agreed to purchase and act as distributor for certain products - extended reality “smart glasses” and accessories - manufactured and supplied by Vuzix.[5]The Distributor Agreement requires the Distributor to meet a “minimum business volume” of $1.3million annually, measured in amount paid to Vuzix. The Distributor Agreement had an initial 3 year term, automatically renewable for one-year periods unless prior notice is given.[6]It describes C as the “non-exclusive” distributor for the specified Vuzix products, but also sets out in Section 3(f) restrictions on D1 appointing other distributors within the “Territory” (defined as EMEA), and those restrictions were extended to 31 December 2023 by an agreed amendment on 11 April 2023 (the “Agreed Amendment”). As amended, that section reads “Until December 31, 2023, Vuzix shall not appoint any new distribution, reseller or channel partners, under substantially the same terms set forth in this Agreement, either directly or indirectly within the Territory without the written agreement of the Distributor”. In addition, Exhibit C includes the language “During the first year of the Agreement, Vuzix agrees not to extend the same or better discount in the Territory to any existing or new distributors, resellers or any other channel partners.” This language in Section 3(f) and Exhibit C is referred to as the “Exclusivity Terms”.[7]This Distributor Agreement contains a “Choice of Law; Venue” clause which expressly chooses the law of the State of New York as the governing law and exclusive venue in the following terms:
“This Agreement shall be governed by and construed in accordance with the laws of the State of New York, United States, without regard to any choice of law principles, and the United Nations Convention on Contracts for the International Sale of Goods shall not apply. Any claim related to this Agreement shall be exclusively brought in the courts located in the State of New York, or at Vuzix’s option and in its sole discretion, any such other venue having jurisdiction over Distributor.”
[8]It contains a number of additional terms said to be relevant to the dispute as to jurisdiction, namely: i) an express termination clause (Section 9(b)), ii) a provision (Section 9(c)) giving Vuzix the option to repurchase unsold stock upon termination and providing a 90-day period following termination for Westbase to sell any such unsold stock that Vuzix declines to repurchase, iii) an entire agreement clause (Section 12(a)) which says the “sole and entire understanding and agreement” of the parties is contained within “This Agreement, together with [Vuzix’s] standard Terms and Conditions of Sale…and including all exhibits and any other attachments hereto or other documents or agreements referenced herein”. After the words “Vuzix’s standard Terms and Conditions of Sale” a link is included in brackets which I am told takes one to a web address which shows not only Vuzix’s standard terms of sale, but also their terms of purchase, and those terms of purchase contain a governing law and jurisdiction clause also naming New York as the governing law and venue for bringing claims, iv) An “Amendment, Waiver” clause (Section 12(b)) in the following terms “Any amendment, modification or waiver with respect to this Agreement shall only be effective if made in a signed writing. No failure or delay of either Party in exercising any of its rights or remedies hereunder shall be construed as a waiver thereof, and any single or partial exercise of any right or remedy shall not preclude any other or further exercise” and v) A “Nature of Relationship” clause (Section 12(c)) indicating the parties are strictly independent contractors with respect to each other.[9]It is disputed whether C’s wholly-owned Dutch subsidiary, Westbase BV (“BV”), who is included along with C within the definition of “Distributor” under that agreement, was also a party to that agreement. It is acknowledged that BV did place orders under the Distributor Agreement and still holds stock so acquired. It did not sign either the Distributor Agreement or the Agreed Amendment.[10]The relationship was not as successful as the parties hoped. In the first year C sold only a small proportion of the stock it had purchased under the Distributor Agreement, about $270,000 out of the $1.3million purchased.[11]On 21 November 2023, C wrote to D1 seeking “a resolution” and threatening legal action for alleged breach of Exclusivity Terms and for misrepresentation as to Vuzix’s “run rate” for the relevant products represented prior to the Distributor Agreement. C then put its “estimate of loss” at $1.797 million, being(i) $1.119 million for the purchase price paid by C for stock it had been unable to sell, plus(ii) $397,000 for the margin it expected to make on sale of such stock,(iii) $105,000 for the cost of stock funding at 7%,(iv) $36,000 for marketing costs expended and(v) $50,000 in respect of internal sales efforts, management time, system integration etc. Alleged Oral Settlement Agreement[12]The parties entered into discussions aimed at resolving their dispute. C says resolution was finally reached pursuant to an oral agreement made in 3 telephone calls in the end of year holiday period – calls between Mr Kakad, director of C (and also of BV) and Mr Jameson, the Second Defendant and COO of D1, on 27 December and 29 December 2023, and a call between Mr Kakad, Mr Jameson and Mr Travers, Third Defendant and CEO of D1, on 3 January 2024 (the “Calls”).[13]It is not disputed that those Calls took place. There are transcripts in evidence of recordings taken by Mr Kakad of the 27 December and 3 January calls. To put it as neutrally as possible, the outcome included an understanding that D1 would buy back the remaining unsold stock in 5 tranches over a period of one year, at the original sale price.[14]It is said by C that this was a legally binding oral contract, entered into in full and final settlement of all claims between the parties, that “replaced” in its entirety the Distributor Agreement including its governing law and jurisdiction clause. In oral argument it was explained that the legal mechanism of this “replacement” was that by entry into a new agreement entirely inconsistent with the Distributor Agreement, the parties rescinded the Distributor Agreement and substituted in its place the new oral agreement.[15]It is said by the Defendants that the transcripts of the recorded Calls show the parties expressly agreed that their understanding would not be legally binding, they lacked intention to create legal relations and no contract arose from those Calls. They say even if those Calls had created a legally binding obligation to repurchase stock, they did not rescind, discharge or vary the Distributor Agreement, and therefore the governing law and jurisdiction clause of that Agreement remains in effect and is wide enough to capture any claim in respect of that obligation. Subsequent Events[16]In 2024, D1 did make two repurchases of unsold stock: $90,000 in January 2024 and $110,000 in April 2024. There were no further repurchases of stock. In September 2024, D1 purported to terminate the Distributor Agreement for various breaches, including failure by C to purchase its minimum business volume of $1.3 million in the prior year and failure to market that stock for sale.

CLAIMS AND PROCEDURAL HISTORY

[17]C wishes to make claims before this court in contract and tort against the Defendants amounting to some £728,905 plus interest, being: i) A breach of contract claim against D1, for failure to comply with its obligation to repurchase stock under the agreement concluded pursuant to the Calls (the “Alleged Settlement Agreement”); and ii) A claim in negligent misrepresentation against D1 and negligent misstatement against each of D2 and D3, in each case based on statements made in the Calls setting out terms of the Alleged Settlement Agreement and saying that they will honour them. C says these representations or statements induced C to enter into the Alleged Settlement Agreement and/or perform its obligations thereunder.[18]On 21 February 2025, C sought permission pursuant to CPR 6.36 and 6.37 to serve the Claim Form on the Defendants outside the Jurisdiction.[19]The jurisdictional gateways relied upon by C were: i) PD 6B, paragraph 3.1(6)(a):
“a claim is made in respect of a contract where the contract was (ii) concluded by the acceptance of an offer, which offer was received within the jurisdiction”; and/or; ii) PD 6B, paragraph 3.1 (6)(c): “a claim is made in respect of a contract where the contract is governed by the law of England and Wales”; and/or iii) PD 6B, paragraph 3.1(9): “a claim is made in tort where – (a) damage was sustained, or will be sustained, within the jurisdiction; or (b) the claim is governed by the law of England and Wales.”
[20]On 25 February 2025, Master Brightwell requested further submissions about the applicable private international law rules. In response, C filed written submissions and a supporting witness statement, and on 10 March 2025 Master Teverson granted permission on the papers to serve out of the jurisdiction (the “Permission Order”).[21]Service was effected on 18 April 2025. On 23 May 2025, the Defendants made the present application. They seek an order that the Permission Order be set aside and an order that the Court has no jurisdiction to hear the claims set out in the Claim Form and the Particulars of Claim, alternatively that the Court should not exercise any jurisdiction that it has, and the Claim Form be set aside.[22]The Defendants argue that C’s case fails every element of the test required for service out of the jurisdiction, and additionally that C has failed in its duty of full and frank disclosure to the court in its ex parte application for the Permission Order, which is a separate and sufficient ground to set aside the Permission Order.

APPLICABLE LEGAL PRINCIPLES

[23]C sought permission to serve the Claim Form outside the jurisdiction pursuant to CPR 6.36. Following Altimo Holdings and Investment Ltd v Kyrgyz Mobile Tel Ltd [2011] UKPC 7 and VTB Capital Plc v Nutritek International Corp [2012] EWCA Civ 808, this requires the claimant to satisfy the court of three things: 1. Serious Issue to be Tried on the Mertis. That, in relation to the foreign defendant to be served with the proceedings, there is a serious issue to be tried on the merits of the claim; 2. Good Arguable Case as to Jurisdiction. That there is a good arguable case that the claim against the foreign defendant falls within one or more of the heads of jurisdiction for which leave to serve out of the jurisdiction may be given as set out in para.3.1 of PD 6B; 3. Appropriate Forum. That in all the circumstances(a) England is clearly or distinctly the appropriate forum for the trial of the dispute (forum conveniens) and(b) the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction. Serious Issue to be Tried[24]The “serious issue to be tried” test of the merits of the claim against the foreign defendant is the same standard as needs to be met in a domestic action to survive an application for summary dismissal, i.e. the claimant must show there is a real, as opposed to a fanciful, prospect of success on the claim. This is not a high bar, and in general the court will consider it on the basis that the alleged facts are true (Okpabi v Royal Dutch Shell Plc [2021] UKSC 3). Good Arguable Case[25]Separately, the claimant must show that there is a “good arguable case” that the claim against the foreign defendant falls within one of the jurisdictional gateways of paragraph 3.1 of PD6B. In this context, “the test is somewhat higher” than the serious issue to be tried merits test “but less stringent than a balance of probabilities” (see Carvill America Inc v Camperdown UK Ltd [2005] EWCA Civ 645; [2005] 2 Lloyd’s Rep. 457 at [45]per Clarke LJ).[26]Lord Steyn in Canada Trust v Stolzenberg [2002] 1 AC 1 approved Waller LJ’s formulation from the Court of Appeal in the same case saying it can otherwise be expressed as “one side has a much better argument on the material available”. This has since been refined to drop the “much” qualifier so that now a claimant is to show they have “a better argument on the material available.”[27]Lord Sumption expanded on the meaning of that test in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80 saying this test should be understood to mean:
“(i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”
[28]In a case such as this where an element required for one or more of the jurisdictional gateways claimed is also a matter for the substantive dispute on the merits (in this case, the existence or otherwise of a contract), the claimant must show that element to the good arguable case standard but the court must be alert not to “even appear to” express a concluded view on such point on the merits (Canada Trust v Stolzenberg [1998] 1 W.L.R. 547) and in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CVAtlantic Tiburon 1 [2019] EWCA Civ 10Green LJ repeated that warning saying “In expressing a view on jurisdiction, the court must be astute not to express any view on the ultimate merits of the case, even if there is a close overlap between the issues going to jurisdiction and the ultimate substantive merits”. Appropriate Forum[29]In respect of the final limb of the exercise, Lord Goff in Spiliada Maritime Corp v Consulex Ltd (The Spiliada) [1987]A.C. 460 set out that the claimant should be able to satisfy the Court that England is the forum in which the case could most suitably and appropriately be tried “for the interests of all the parties and for the ends of justice”, taking into account relevant factors including legal and practical issues involved and expense as well as what he called any “legitimate personal or juridical advantage”. Lord Mance said in VTB v Nutritek that the factor of English law being the governing law is important because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies and Lord Bingham in Donohue v Armco Inc [2001] UKHL 64 indicated that prima facie an agreement between the parties as to jurisdiction should be respected. Lord Sumption in Brownlie clarified this limb of the test, explaining that it is in the nature of a discretion to decline jurisdiction that the English court would otherwise have as a matter of law on forum conveniens grounds and saying the “main determining factor in the exercise of the discretion on forum conveniens grounds is not the relationship between the cause of action and England but the practicalities of litigation.” Full and Frank Disclosure[30]A service out application is made on an ex parte basis, such that a claimant has a duty of full and frank disclosure. This is reflected on the face of the relevant court application form, PF6A, which says the applicant should “bring to the attention of the court any matter which, if the other party were represented, that party would wish the court to be aware of.” If there is a deliberate failure to do so, an order granted on the basis of the deficient application will ordinarily be set aside, and even an innocent failure to do so may result in the setting aside of the order, but the decision whether to do so is an exercise of court discretion to be exercised in line with the overriding objective.[31]Any failure to make full and frank disclosure should be considered in light of the relevant requirements for granting permission to serve out, i.e. the relevant non-disclosure must be of something that is material to the matters the court has to decide at this stage. For this reason Toulson J in MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm) refused to set aside an order for service out on the basis of non-disclosure of matters that, while relevant to the merits, were not relevant to the “serious issue to the tried” test. Relevant matters must be sufficiently brought to the court’s attention, but a full argument of relevant matters is not always required, for example in Wragg v Opel Automotive GmbH [2023] EWHC 2632 (KB) it was sufficient that the possibility of an alternative forum for the dispute in Germany was raised, though the factors in favour of that alternative forum were not included. ANALYSIS THE CONTRACT CLAIMS

ANALYSIS

[32]The Defendants’ primary submission is it is clear on the existing undisputed evidence that no contract was made pursuant to the Calls, there being a demonstrable absence of intention to create legal relations, and there is therefore no serious issue to be tried. It was also common ground that in order to demonstrate a good arguable case that jurisdictional gateway 3.1(6)(a) or (c) is available, C must demonstrate it has a good arguable case that the contract exists.[33]There are now in evidence transcripts of 2 of the 3 Calls said to give rise to the Alleged Settlement Agreement, the first and the last of those calls, on 27 December 2023 and 3 January 2024. As a brief overview: i) On 27 December 2023, after some preliminary chit chat, Mr Kakad of Westbase and Mr Jameson of Vuzix pick up from where they had clearly left off in previous discussions. Both parties seem to have an understanding that Vuzix will repurchase the unsold stock from Westbase. ii) The problem they are discussing is a GAAP accounting rule that would cause difficulties for Vuzix if they formally undertake to make that repurchase, because, as Mr Kakad summarises Mr Jameson’s concern “if I put something in writing, firstly we have to accrue for it in our accounts this year and, secondly, it is just not what we want to do” and Mr Jameson later confirms “I think the risk here is that if there is anything in this agreement that talks about a liability associated with taking product back, I am pretty sure that is going to trigger an accounting event, that, which is something we just can’t do.” iii) It appears to be accepted that this ruled out entering into a written variation of the Distributor Agreement as they had done with the Agreed Amendment, and the tenor of the call is that both parties are brainstorming what “comfort” Mr Kakad could be given that the repurchase would take place. Various options are suggested, including Mr Kakad’s proposal of an unexecuted written agreement “to be executed at a later time”, because as he later explains “I would prefer the writing” which Mr Jameson undertakes to run down with his accounting experts, or as Mr Jameson suggest “to put some…language in place that is softer and less committed but I know that is not going to help you”. In the event the understanding was not reduced to writing at all. iv) Mr Kakad suggests a “first, sort of, good faith take back” meaning a first repurchase of part of the stock of the kind that did in fact happen, which he describes as “proof that a hand shake agreement is working between us”, which Mr Jameson considers and says “the first [payment date] would be April 15 and if you were, if we could get our heads around the gentleman’s agreement I would find a way to take 75 of that and accelerate it into the quarter.” Mr Kakad asks about logistics saying “But let’s just say we were doing this on a gentleman’s agreement. So, we are not putting it in writing. So, from an actual transactional perspective, how would this work?” and Mr Jameson explains Westbase would put in a request for a return of the relevant stock on the relevant date and “we would push you the money, just like we did last time.” v) In this call Mr Jameson recognised Mr Kakad’s concern that “Your worry is that, you know, something material happens inside of Vuzix and you have no claim, no legal claim that you can point to and therefore, right, you are, you are not at the back of the line, you are not in the line”. From this, counsel for the Defendants says it is patently obvious that the parties both knew and understood that if they proceeded with a “gentleman’s agreement” Westbase would have no legal right to enforce the understanding. vi) We do not have a transcript of the next call on 29 December, although in the Particulars of Claim C says that in this call Mr Jameson said “to the extent that it is possible to guarantee it, I will guarantee that Vuzix will stick to the deal.” vii) On January 3 2025, Mr Kakad again recorded the Call and in it he says “we’ve agreed that we’re gonna do this on a gentleman’s agreement”. Both D2 and D3 are on this Call and both make statements that they are committed to the arrangement reached.[34]For its part, C says that while the evidence may show the parties agreed that they could not have a formal, written agreement, it does not allow me to conclude at this stage that there is no good arguable case that the parties did not intend their agreement to be legally binding.[35]C submits the context of the Calls is a business dispute in the shadow of litigation between commercial parties, meaning there is a strong presumption that they did intend their discussions to be legally binding. Throughout the Calls, both D2 and D3 make numerous references to being “committed” to the repurchase plan saying “you can count on us to be there to support this” and “we’re behind it”. There is missing evidence of the content of the second of the Calls which may shed further light on both parties’ understanding of the nature of their agreement. There may be evidence of what was communicated prior to the first Call about the GAAP accounting rule that was the purported bar to making any legally binding agreement and/or recording their agreement in writing. It will be imperative in this case that Mr Kakad and Mr Travers are cross-examined. There may be records of Mr Jameson of his understanding of the Calls at the time.[36]I am satisfied that the issue of whether an oral contract existed passes the “serious issue to be tried” threshold. I turn next to whether it goes further than this to meet the “good arguable case” threshold, which a test higher than that of a serious issue to be tried, but not so high as a balance of probabilities test.[37]Whether these parties intended their understanding to be legally (as opposed to merely morally) binding is a question of fact, to be determined objectively. If the claim progresses to trial, it will be a key substantive point to be determined in the trial.[38]In these circumstances, per Brownlie, I must take a view on the material available if I can reliably do so, but if the nature of the issue and the limitations of the material available at the interlocutory state mean no reliable assessment can be made, I should determine there is a good arguable case if there is a “plausible (albeit contested) evidential basis for it.” As set out in Kaefer this applies where “the court finds itself simply unable to form a decided conclusion on the evidence before it and it is therefore unable to say who has the better argument.” I take that to encapsulate the position not just where the existing evidence does not at that stage point one way or another, but also where it would not be fair to form a decided conclusion on the evidence before the court, given the factual substantive nature of the issue and the necessarily incomplete evidence.[39]In such a situation, Kaefer says the third limb of the Brownlie test “to an extent…moves away from a relative test and, in its place, introduces a test combining good arguable case and plausibility of evidence. Whilst no doubt there is room for debate as to what this implies for the standard of proof it can be stated that this is a more flexible test which is not necessarily conditional upon relative merits.” This is the standard, Kaefer indicates, pursuant to which it is appropriate for a court to “assume jurisdiction if there were factors would exist which would allow the court to take jurisdiction” (as Toulson LJ indicated in WPP Holdings Italy Srl v Benatti [2007] 1 WLR 2316) and if “the claimant’s case had “sufficient strength” to allow the court to take jurisdiction.” (as in Antonio Gramsci [2012] 2 Lloyds Rep 365 per Tere J). In some circumstances therefore the court will be satisfied there is a good arguable case as to the application of a jurisdictional gateway without finding that the claimant’s case is relatively better than the defendant’s. This was the outcome in SMI Group Ltd v Levy & Ors [2012] EWHC 3078 (Ch). It is particularly appropriate in circumstances where the objection to jurisdiction is also a principal objection to the substance of the claim itself, as the courts are clear that a service out dispute is not the time for a mini trial, and it would not be appropriate to express a concluded view on a matter to be decided at trial.[40]In this case there are supportable arguments on both sides, and it is plausible that further evidence exists which may affect the balance. While some of that evidence is in the hands of C and could have been provided, for example Mr Kakad’s notes of the second Call, there is presumably more (e.g. notes or correspondence on the Defendants side, evidence on the meaning of the relevant accounting constraints, cross-examination) that is not and should not be available to me today. I take the guidance in the case law to mean that in this case, where this issue on the jurisdictional gateway is also an issue fundamental to the substantive case, I should not make a determination as to who would win the point if I were deciding it today on the evidence before me at this point. This would be directly contrary to the exhortations against conducting a mini trial or expressing a concluded view on a matter that would be central to substantive determination at trial. While that means I have not determined who has the better of the argument, I nonetheless consider that there is a good arguable case that the contract exists.[41]The Defendants go further and say that even if the contract were to exist, C has not shown there is a good arguable case that it satisfies either contractual gateway relied upon, being: i) PD 6B, paragraph 3.1(6)(a): “a claim is made in respect of a contract where the contract was (ii) concluded by the acceptance of an offer, which offer was received within the jurisdiction”; and/or; ii) PD 6B, paragraph 3.1 (6)(c): “a claim is made in respect of a contract where the contract is governed by the law of England and Wales”;[42]In respect of PD6B 3.1(6)(a), whether the contract was concluded by acceptance of an offer and if so where that offer was received are factual questions. There is no particular clarity as to who made and who accepted the offer, which it is claimed came about through a back-and-forth telephone negotiation. Vuzix, and its representatives, were all in the United States, C and its representative were in England and Wales and I note there is an argument that BV, which is a Netherlands company, should be considered a party to the contract and/or recipient of the offer if one exists.[43]In respect of PD6B 3.1(6)(c), C relies on Article 4 of ((EC) No 593/2008) (“UK Rome I”) which applies to contract where the parties have not chosen the applicable law. This says in relevant part: “Article 4: Applicable law in the absence of choice(1) To the extent that the law applicable to the contract has not been chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows: a. a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; …(2) Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.(3) Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply.(4) Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.” a. a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; …[44]C says (i) the Alleged Settlement Agreement did not include a choice of law and specifically put an end to the existing Distributor Agreement including its choice of law clause (ii) it is a standalone contract in the nature of a contract for sale of goods, and/or the sale or return of the stock by C is the characteristic performance of the contract and therefore (iii) England and Wales, being the habitual residence of C, is the law applicable to the contract.[45]The Defendants say(i) that the parties had chosen New York as the applicable law, either through the choice of law clause of the Distributor Agreement or in Vuzix’s standard terms of purchase so Article 4 of UK Rome I does not apply,(ii) even if that is not the case, properly construed this is not a contract for the sale of goods and it is Vuzix who has the characteristic performance of this contract, being the repurchase of unsold goods,(iii) even if not they now understand that it is BV, not C, that holds most of the stock and therefore even on C’s own case the governing law is just as plausibly the Netherlands, BV’s assumed place of habitual residence, as England and Wales, and(iv) in any event the contract is most closely connected to the United States as it replaces a contract with New York law and jurisdiction clause, requires repurchase by a US vendor and payment in US dollars, and C’s most meaningful obligation under the contract is to refrain from pursuing US legal proceedings.[46]It seems to me there are relevant disputed matters of fact (in particular whether the parties chose the law appliable to the alleged contract) such that I am not in a position at this interlocutory stage to determine the question of applicable law.[47]C is required to show only that it has a “good arguable case” that the requirements of one of the gateways is satisfied, and I am satisfied it has reached that standard. Appropriate Forum[48]In claiming that England and Wales is the appropriate forum for this dispute, C relies on its assertions that(i) the Alleged Settlement Agreement is governed by English Law and(ii) it would be disproportionately expensive and time consuming for the matter to be heard in New York. In addition, the substance of the harm alleged in the contract claim does seem to me to have occurred in England and Wales, which is a relevant factor.[49]The Defendants deny both C’s primary assertions and say in addition(i) the parties expressly agreed that New York would be the venue for all claims “related to” the Distributor Agreement brought by C and it is not suggested that the parties have ever made any other express agreement about venue,(ii) New York is a venue where C would have a fair hearing and(iii) as a practical matter as Vuzix and its witnesses are based in New York there is no overall balance of practical convenience pointing in favour of England and Wales.[50]On the first point, the applicable law, I have made no higher finding than that C has a good arguable case that any Alleged Settlement Agreement is governed by English law. In respect of the arguments that the parties have elected to have their disputes resolved in New York, that is partly a factual question and will also likely have to be decided with reference to both New York law and English law. The Defendants say that the Distributor Agreement’s “venue” provision continues to apply to any Alleged Settlement Agreement as it is still a dispute “related to” the Distributor Agreement. C says on the contrary the new contract stands alone and put an end to all clauses of the Distributor Agreement, including the governing law and jurisdiction clauses (though not the right to sue on pre-existing breaches). In particular Mr Cobill directed me to passages from Chitty on Contracts Volume 1, Sweet and Maxwell, 35th ed, (§26-30 et. seq) to support his argument that the governing law and jurisdiction clauses had ceased to apply. He said as there was such a radical change in the terms of the substituted agreement, the Distributor Agreement was rescinded as it can be as a matter of English law. It seems to me however that it would be a question of New York law whether that mechanism does rescind and replace a New York law contract as well of course as a factual question as to whether it reaches that standard and, if it does not, this dispute falls within the ambit of the continuing venue clause.[51]As to what Lord Sumption cast as the key matter, the practicalities of litigation: C indicates that notwithstanding the possibility of giving remote evidence Mr Kakad, who would be a key witness as well as the representative of C, would want to attend the hearing in person, which would be difficult and expensive if it were in New York. But equally Mr Travers for D1 would have to travel if the hearing were in England and he wanted to give his evidence in person. I note, however that Mr Travers was involved in only 1/3 of the Calls and so compared to Mr Kakad will have a lower minimum level of involvement in the proceedings. It seems to me that evidence on New York law will be necessary if it is heard in England, and evidence on English law will be relevant if it is heard in New York.[52]As to the overall relative cost and time involved in a hearing in England or New York – both will be significant. C claims particularly that the cost will be much higher if the claim has to be litigated in New York. I have a witness statement before me from Eric J Ward, a partner in the US law form Hodgson Russ LLP on behalf of the Defendants, who explains, based on his experience as a trial attorney, how the courts in the State of New York are likely to deal with the claim. In his estimation the costs would not be significantly higher in New York and I have no basis on which to say that is overly optimistic. I do note however that the English costs shifting approach by which the unsuccessful party generally bears the costs of the proceedings is not followed in New York, meaning the litigation will be more expensive for the winning party if it takes place in New York. Mr Ward does also say the median time to disposition at trial is 3-5 years, which is likely longer than in the English court.[53]In circumstances where a claimant based in England and Wales is making a claim that a contract exists, and is governed by English law and both of those issues are disputed, it is not obvious what “the natural forum” is. Taking the matter including its litigation practicalities discussed above overall, I am satisfied that the overall balance weighs in favour of England and Wales as the appropriate forum.

THE TORT CLAIMS

[54]The Particulars of Claim set out in addition two claims in negligence – a claim for negligent misrepresentation against D1, and for negligent misstatement against D2 and D3. All the claims are founded on the same statements by D2 and D3 in the Calls. There are 9 such statements, but they appear to me to fall into two categories: i) Statements that C claims are terms of the contract, e.g. that the settlement payments will “get you to 1.1” (meaning would amount to a total of $1.1million) and “will be cleared by the end of this year as per the plan” but that “it’s in no one’s interest to have this hanging over our heads, so if we, from a Vuzix perspective are fortunate enough to land a big deal someplace else in the world and we think can cover something more than what we’ve agreed to, then we’re going to try do that.” (the “Terms Statements”). ii) Statements that D1 will perform, D2 and D3 will support the deal and ensure Vuzix performs, which are exemplified at their highest by Mr Jameson’s alleged statement that “to the extent that it is possible to guarantee it, I will guarantee that Vuzix will stick to the deal.” (the “Support Statements”)[55]Turning first to the negligent misrepresentation claims. As set out above, the representations relied on are in the nature of statements that D1 would purchase certain amounts on certain dates. Those are the key operative terms of the purported contract, in the nature of promises. I think it would be reductive to say these were statements on which C relied in entering into the contract, nor are they undertakings that could be performed negligently. The Terms Statements are, if they have contractual force, contract terms that incorporate no standard of performance element – they are either performed or not. Nor do I think a statement such as the Support Statements that a contracting party will comply with contractual obligations is capable in the general case of being the basis for a claim in negligent misrepresentation. The law must take the approach that entry into a contract implies the maker will comply with it and it is contractual liability that follows if he does not, there is no general fall-back claim in tort for failure to follow through on contractual obligations. As Charlesworth & Percy on Negligence 16th Edition puts it at §2-226 “there can be no duty of care to perform a promise and … negligence cannot be allowed to undermine basic principles of contract.”[56]The same objections apply to the negligent misstatement claims against D2 and D3. In addition, the Defendants submit there is no pleaded assumption of responsibility creating a special relationship on which a liability for negligent misstatement could be founded under the principles of Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465. It is clear from Williams v Natural Life Health Food[1998] 1 W.L.R 830 that there is no general rule that a director of a company has a special relationship with the company’s contractual counterparties. While that case makes it clear that a director can be found to have assumed a responsibility to the counterparty for performance of the contractual obligation such that the director themself is liable in tort for negligent performance, it appears to me this was in the context where(i) the contractual obligation could be performed negligently, which is not our case, and usually(ii) the director himself was expected to perform the contractual obligation for the company, which again is not our case. I was not directed to any authority in which this liability was extended to a director who merely had the ability to ensure that the company perform a purchase or payment obligation. I consider this applies equally to the Terms Statements and the Support Statements - just as I do not think in an ordinary case the company can be liable in negligent misrepresentation for claiming that it would perform the obligations it is contractually obligated to perform, I do not think the company’s directors can be said to assume that tortious liability. I further consider that in this case the fact that the parties were in adversarial negotiation in the shadow of litigation and C indicated he was taking legal advice militate yet further against finding of a special relationship. There is no suggestion that either executive undertook a personal contractual guarantee that the company would perform what C says are its contractual obligations, and I do not think that in those circumstances the law of tort comes to C’s aid.[57]Even if I am wrong on those points, the Defendants submit further that C has not pleaded how the relevant statements caused C loss. The Particulars of Claim say “But for the representations and/or statements, Westbase would not have entered into the Settlement Agreement and/or performed its obligations under it”[58]I think it is appropriate to look at the pleaded change of position as a whole. It was not suggested that the loss was its loss of the opportunity to hold out for a formal written agreement or an agreement on better terms, or in missing the opportunity to begin legal proceedings in the US in early 2023, all of which would in any event be highly speculative.[59]On C’s case their reliance on the misstatements took C from a position in which it held around $1.1million of unsaleable stock, with an obligation to buy significantly more, to a position in which it held $200,000 plus the remaining unsaleable stock with the right to sue to obtain payment for that amount and was relieved of its obligation to buy more. In terms of secondary legal rights, on the terms of the contract as pleaded, C had not given up its right to sue in relation to the Distributor Agreement as the obligation to refrain from doing so only continued for so long as D1 was complying with the Alleged Settlement Agreement, so the only loss of legal right Mr Cobill points to is that entry into the Alleged Settlement Agreement meant C lost its rights in relation to the Exclusivity Terms. As such, on C’s case as pleaded if C did enter into the Alleged Settlement Agreement on the basis of what it says are the negligent misstatements and misrepresentations of the Defendants, I cannot see that it did result in a net loss.[60]For those reasons I find that the tort claims do not meet the serious issue to be tried merits test and the Permission Order should be varied to exclude the permission to serve the tort claims out of the jurisdiction on each of D1, D2 and D3.

Full and Frank Disclosure

[61]I have determined that in respect of the contract claim against D1 only, the tests for obtaining the court’s permission to serve out have been met. I turn now to consider whether the Permission Order should nonetheless be set aside in respect of that claim as a consequence of the alleged failures in C’s performance of its duty of full and frank disclosure.[62]I have to decide if C has fallen below the required standard, if so whether those defaults were deliberate, and what the consequence should be.[63]As to whether there are problems with C’s level of disclosure: The Defendants say C failed to articulate clearly in its application for the Permission Order that the Defendants could say there was no intent to create legal relations. This is based on a failure to sufficiently draw to the court’s attention that the understanding reached was agreed to be “a gentleman’s agreement” and to produce or refer to relevant evidence. In addition the Defendants say C failed to disclose that BV was a party to the Alleged Settlement Agreement and had a claim to the damages claim, failed to raise the argument that any repurchase of the stock would have had to be under D1’s standard terms and conditions which contain a New York choice of law and jurisdiction clause, and failed to adequately impress upon the court that D1 sought several months later in September 2024 to terminate the Distributor Agreement for C’s material breach.[64]The only one of these matters which is not referenced at all in C’s application for permission to serve out is the argument that D1’s standard terms and conditions of purchase apply to the repurchase of the unsold stock. I understand that argument to be either that it would have been implicit in any offer by D1 to repurchase any stock in these circumstances that it would be under D1’s standard terms and conditions, or that it is explicit because the “Terms and Conditions of Sale” of D1 which are referenced in the entire agreement clause of the Distributor Agreement includes a link to a webpage that includes D1’s terms and conditions of purchase as well as of sale. I consider this to be a supporting or subsidiary argument of the Defendants, adding ballast to what were pursued as the primary arguments that any contract would be a New York law contract. At the time of the Permission Order it was known that the Defendants were New York parties, and that the Distributor Agreement was concluded on the basis of New York law and jurisdiction. The further arguments are certainly not irrelevant to the questions of applicable law and/or agreed jurisdiction, but they do not tip the balance as it relates only to the “good arguable case” standard.[65]In respect of the other purported omissions, C’s Particulars of Claim do include a statement that the parties reached a “gentleman’s agreement”. However, the Particulars of Claim as well as C’s submissions and the supporting witness statements in connection with the application do not reference or exhibit the stronger statements in the Calls recognising C’s concern that they would not be able to enforce a gentleman’s agreement. These documents explain the term “gentleman’s agreement” as being an agreement not to put the understanding in writing, rather than clearly spelling out the Defendants’ position, i.e. that it was an acknowledgement that there is no legal (as opposed to moral) obligation. Similarly, while it seems there is an issue between the parties as to whether BV actually is a party to any of the agreements between them, the Particulars of Claim do say that the Distributor Agreement is with Westbase “including its wholly owned subsidiary Westbase BV” and do also include the fact that D1 sought to terminate the Distributor Agreement in September 2024. In the case of all of these matters, then the question is whether the disclosure of these potential problems for their case were explained clearly enough.[66]In each case C states the dangerous facts, without particular emphasis, and states its own explanation or interpretation without clearly articulating what the Defendants might argue they mean. The relevant matters are not concealed from the court, but nor is the Defendants’ best interpretation of the facts placed squarely before the court as might have been helpful in an ex parte application on the papers. I do not consider this to have been a deliberate or deceitful.[67]I am mindful that if the Permission Order were to be set aside in respect of the contract claim, there is nothing preventing a further application to be made on the same basis again, the intervening time not having changed the circumstances or so far as I am aware created a limitation defence. This would involve further time and cost by both of the parties and further court resource.[68]Exercising my discretion with the overriding objection in mind, I decline to set aside the Permission Order in full.[69]That is my judgment.