CH Offshore Ltd v PDV Marina SA & Ors [2015] EWHC 595 (Comm)

[2015] EWHC 595 (Comm)Case No 2013/955
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12/03/2015
Before
THE HON. MRS JUSTICE CARR DBE
Between
CH OFFSHORE LIMITEDClaimant(1) PDV MARINA SADefendants(2) ASTILLEROS DE VENEZUELA CAThird Party(3) PDVSA PETROLEO SA
Mr Charles Kimmins QC and Mr Edward Ho (instructed by Stephenson Harwood) for Third PartyMr Dominic Happé (instructed by E.G Arghyrakis & Co) for Second DefendantHearing Hearing date: 2nd March 2015
JudgmentMrs Justice Carr :Introduction
[1]This is an application by the Third Party, PDVSA Petroleo SA (“Petroleo”), to set aside service of the Part 20 Claim Form and Particulars of Additional Claim issued against it by the Second Defendant, Astivenca de Venezuela CA (“Astivenca”) (“the Petroleo claim”). Permission to serve on Petreleo out of the jurisdiction was granted by Burton J on 28th March 2014 upon Astivenca’s application dated 24th March 2014. Acknowledgment of Service was filed by Petroleo on 15th August 2014 indicating an intention to contest jurisdiction. The challenge is brought accordingly pursuant to CPR Part 11 and by way of application dated 24th October 2014.[2]The grounds of application are, in summary : a) that Astivenca cannot establish gateway jurisdiction pursuant to CPR Part 6.36 (and paragraph 3.1 (4) of Practice Direction 6B) (“the Practice Direction”); and in any event, b) having regard to all the circumstances, the courts of England and Wales are not the proper place in which to bring the claim (see CPR 6.37(3)).[3]Witness statements have been served in connection with the application as follows : a) for Petroleo : Mr Luis Alvarez (of Petroleo) dated 23rd October 2014 and 23rd February 2015; Mr Haris Zografakis (of Petroleo’s solicitors) dated 20th February 2015; b) for Astivenca : from Ms Watton (of Astivenca’s solicitors) dated 24th March 2014 (in support of the application for permission to serve out of the jurisdiction) and 19th January 2015; Mr Victor Gonzalez Urdaneta, in-house counsel at Astivenca, dated 17th January 2015.[4]The parties have additionally referred to witness statements and expert evidence served in the main proceedings, including an expert report served in the main action from a Mr Ian Perrott addressing charter hire rates.[5]Each party has also served foreign (Venezuelan) law expert evidence : a) for Petroleo : two reports from Mrs Adriana Padilla Alfonzo of Arenessen, Padilla & Associates (“Mrs Padilla”) dated 23rd October 2014 and 19th February 2015: b) for Astivenca : a letter from Mr Arturo Bravo of Bravo & Asociados (“Mr Bravo”) dated 21st March 2014 and an expert report from Mr Bernado Bentata of Bentata Associates (“Mr Bentata”) dated 18th January 2015. A further report from Mr Bentata was served around 4.30pm on 27th February 2015, the last working day before this hearing, without notice. Petroleo objects to the admission of that report in circumstances addressed in more detail below.[6]The main action (including claims between the Defendants) (“the main action”) has proceeded without any delay on account of Petroleo’s outstanding jurisdictional challenge. There have been several case management conferences. Disclosure has taken place and witness statements have been exchanged between all parties to the main action. Indeed, the trial in the main action is fixed to commence on 20th April 2015.

The Charterparties and the Protocol

[7]The Claimant, CH Offshore Limited (“CH”), is the owner of the “AMETHYST” and “TURQUOISE”, anchor handling tugs and supply vessels (“the vessels”). The First Defendant, PDV Marina SA (“Marina”), is a wholly owned subsidiary of the Venezuelan state owned energy company Petroleos de Venezuela SA (“PDVSA”). Astivenca is a private Venezuelan company. Petroleo is another wholly owned subsidiary of PDVSA and carries out offshore exploration and production in Venezuela.[8]By two separate BIMCO Supply Time Form 2005 charterparties dated 22 January 2008 Marina chartered the vessels from CH (“the Charterparties”). The Charterparties were for an initial period of four years at a daily rate of US$47,600 and contained an option in Box 9 to switch to (bareboat) “Barecon 2001” charterparties, which option was required to be exercised by the end of the first year of the Charterparties. The options were not exercised. The Charterparties were expressly governed by English law.[9]On 6 March 2008 CH, Marina and Astivenca entered into a Protocol of Assignment (the “Protocol”) which provided, amongst other things, as follows :
“(F) For the duration of the Assignment, Astivenca shall for all purposes of the [Charterparties] act as the Charterer in place of PDV Marina and shall be fully liable and responsible for the [Charterparties] obligations in every respect and undertakes to procure the full and prompt performance of the said [Charterparties]. (G) Without prejudice to Article (F) above PDV Marina shall remain fully liable and responsible to CHO for the [Charterparties] in every respect and undertakes to procure the full and prompt performance by Astivenca of all their respective obligations under the [Charterparties] and this Assignment.”
[10]The “AMETHYST” (in April 2008) and the “TURQUOISE” (in July 2008) were duly delivered to Marina and Astivenca. CH, Marina and Astivenca entered into the First Supplemental Agreements dated 5th May 2009, supplemental to the Charterparties and the Protocol, varying the hire rates. The vessels were returned to CH in January 2013.[11]CH commenced these proceedings by claim form dated 17th July 2013.

The Services Contract

[12]Astivenca operated also as a ship repair yard. On 14 February 2008 Astivenca and Petroleo entered into a Services Contract under which Astivenca agreed to provide and operate vessels in connection with Petroleo’s off-shore exploration and production activities (“the Services Contract”). This followed upon a tender process which had commenced in late 2007. The services were to include the provision of two anchor handling tugs and supply vessels (“AHTS vessels”) and one platform supply vessel. The tender process was only open to Venezuelan companies.[13]The Services Contract was initially for the provision of two AHTS vessels and one platform supply vessel for an initial period of 3 years, extendable by up to 2 years. The initial service period commenced on 17th April 2008, thus expiring on 17th April 2011. The daily rate was over US$70,000.[14]Clause 12 of the Services Contract provided (translated from Spanish) :
“TWELFTH – RESPONSIBILITIES The parties are responsible for the duties and obligations assumed by each one of them towards the other pursuant to the contract. 1. On behalf of [Petroleo] [Petroleo] shall respond to [Astivenca] for any debt, claim, suit, obligation, legal action and ruling of any nature arising out of, or in connection with the Service, only when attributable to [Petroleo], its employees, agents or both in the execution of the Service, damage or loss caused to [Astivenca] or third parties…”
[15]Clauses 7 and 31 of the Services Contract provided (translated from Spanish):
“SEVENTH – DISPUTE RESOLUTION In case disputes arise from the performance or interpretation of this CONTRACT, THE PARTIES shall make their best efforts to reach an amicable solution. In case an agreement cannot be reached between the REPRESENTATIVES of THE CONTRACTOR and THE COMPANY within thirty (30) working days, the dispute shall be submitted by a Director of THE CONTRACTOR to the highest level of managerial authority of THE COMPANY’s Contracting Function, for consideration and resolution. In case the dispute cannot be resolved at this level, the President of THE CONTRACTOR shall submit it to the Director responsible for THE COMPANY’s Contracting Function to resolve it and, if the dispute or difference were to persist, THE PARTIES may submit such disputes to the jurisdiction of the Courts of the Bolivarian Republic of Venezuela in accordance with Venezuelan laws. … THIRTY-FIRST – COPIES, APPLICABLE LAW, EXCLUSIVE JURISDICTION. This CONTRACT is issued in two (2) identical copies for a single purpose and shall be governed by and interpreted in accordance with Venezuelan laws. The parties choose and consent to the exclusive jurisdiction … of the courts of the City of Cumana, State of Sucre, to the exclusion of any other.”
[16]Astivenca’s Venezuelan law expert, Mr Bentata, proposes an alternative translation of the second sentence of Clause 31 as follows :
“The parties select as special domicile the city of Cumana, State of Sucre, and declare to submit to the jurisdiction of its courts to the exclusion of all others.”
[17]On 30th October 2008 Petroleo and Astivenca concluded Addendum No. 1 to the Services Contract, expanding the scope of the contract to include an additional AHTS vessel. In May 2011 Petroleo and Astivenca concluded Addendum No. 2, extending the term of the Services Contract by nine months to 10th January 2012.[18]Under the Services Contract between April 2008 and January 2012 Astivenca provided Petroleo with eight vessels in total. The first three vessels supplied (in April 2008) were “NORSEMAN”, “NOBLEMAN” and “AMETHYST”. Astivenca (allegedly unilaterally) withdrew “NORSEMAN” and “NOBLEMAN” on 10th September 2008, without tender of immediate replacements. Petroleo contends that this withdrawal caused it significant losses. “TURQUOISE” was supplied in November 2008 as a substitute for “NOBLEMAN”.[19]“AMETHYST” and “TURQUOISE” were sourced by Astivenca from Marina, as set out above. However, the other vessels supplied were sourced from entities unconnected with Petroleo.[20]There is a dispute between Astivenca and Petroleo as to whether a further extension to the Services Contract was agreed. Whilst there were negotiations to extend, Petroleo contends that the Services Contract terminated on 10th January 2012. Astivenca continued to provide services to Petroleo until 14th November 2012, Petroleo contends under an implied contract on market rates (which are said to be far lower than the contractual rates).[21]Astivenca commenced its Part 20 claim against Petroleo on 31st January 2014.

The main action

[22]CH claims hire and demobilisation charges said to be due under the Charterparties. CH contends that pursuant to the Charterparties and the Protocol : a) Astivenca became the charterers of the vessels and were fully liable and responsible for the obligations under the Charterparties in every respect; b) Marina remained “fully liable and responsible” for the obligations under the Charterparties in every respect and undertook to procure and/or undertook the full and prompt performance by Astivenca of its obligations under the Charterparties and the Protocol.[23]CH alleges in the alternative that pursuant to the Protocol Marina guaranteed performance by Astivenca of the Charterparties.[24]Marina denies liability. Whilst the original charterer under the Charterparties, it was not the charterer at any material time. It ceased to be charterer upon the Protocol being entered into. Whilst it was guarantor under the Protocol, the guarantee has been discharged and, if not discharged, Marina brings a claim for an indemnity against Astivenca.[25]Astivenca alleges that Marina remained primarily liable to CH for the charterers’ obligations under the Charterparties but as between Marina and Astivenca, Astivenca was to act as the vessels’ charterers.[26]By way of amendment permitted on 26th February 2015 Astivenca alleges that Marina acted in breach of a separate alleged oral agreement reached between Marina, Astivenca and Petroleo before the Protocol (“the alleged oral agreement”). It is said to have been agreed that Astivenca would remain primarily liable to CH but that, provided that Petroleo paid Marina under the Services Contract, Astivenca would, on behalf of Marina, discharge Marina’s payment obligations under the Charterparties. Astivenca alleges that relevant payments were not made by Petroleo under the Services Contract with the result that Astivenca was under no obligation to Marina and Petroleo to discharge Marina’s obligations on its behalf. (The alleged oral agreement (or understanding) was pleaded at the outset by Astivenca, but only then as an aid to construction of the Protocol.)[27]In the alternative, Astivenca claims an indemnity and/or damages from Marina in respect of any liability to CH.[28]There are considerable sums at stake. The claim on the “AMETHYST” charterparty is for some US$25m plus interest, on the “TURQUOISE” charterparty again for some US$25m plus interest.

The Petroleo claim

[29]Astivenca’s claim against Petroleo is based on an alleged failure by Petroleo to pay the prices for services received under the Services Contract. Astivenca contends that, in the event that it is liable to CH in the main action, Petroleo is liable to indemnify Astivenca in respect of such liability pursuant to clause 12 of the Services Contract (see paragraph 18 of Astivenca’s Particulars of Additional Claim). Astivenca also claims in debt and/or damages loss in like amount (see paragraphs 21 and 22 of Astivenca’s Particulars of Additional Claim).[30]Despite the pleaded references to a claim for an indemnity only in respect of any liability of Astivenca to CH in the main action, Ms Watton for Astivenca deposes as follows (in her witness statement of 24th March 2014) :
“23. PDV Petroleo have failed to pay Astivenca sums in excess of USD 156 million for sums due under the Services Contract. Astivenca claims an indemnity in the sum of USD 99,808, 029.16 and Bolivars 5,378, 891.84 in relation to the services provided through the use of the AMETHYST and TURQUOISE under the Services Contract…”
Thus the claim said to be for an indemnity is in fact for a far greater amount than Astivenca’s alleged liability to CH in the main action. In answer to questioning from the court, Astivenca expressly maintained this position.[31]Petroleo denies the claim, alleging in summary : a) a substantial counterclaim for some US$ 22 million arising out of Astivenca’s failure to deliver vessels on time; b) a quantum defence based on lower rates after 10th January 2012. By reference to Mr Perrott’s evidence, the value of this defence is said to be some US$20million; c) a dispute as to the extent of alleged non-payment. The value of the dispute is estimated at some US$35 million.[32]There is an outstanding application to amend the Particulars of Additional Claim against Petroleo. Petroleo contends that the amendment application is no more than an ill-founded attempt by Astivenca to improve its position on jurisdiction. But in any event, this application must proceed on the basis of Astivenca’s Particulars of Additional Claim as they presently exist and for which permission to serve out was granted. Ultimately, this was common ground between the parties.

This application

[33]In headline terms, Petroleo relies on the following facts and matters : a) the claims brought by CH against Marina and Astivenca and the claims brought between Marina and Astivenca between themselves all arise under different contracts to that relied upon by Astivenca against Petroleo. Only Astivenca and Petroleo are party to the Services Contract. And the Services Contract is a very different contract in nature to the Charterparties; b) the claim has been brought in breach of an exclusive jurisdiction clause in the Services Contract in favour of Venezuela. There are no strong reasons for accepting jurisdiction in defiance of the agreed forum. Even if the agreement is non-exclusive, the Petroleo claim has been brought in the face of a non-exclusive jurisdiction agreement; c) there are other disputes between Astivenca and Petroleo under the Services Contract in respect of other vessels, over and beyond the “AMETHYST” and “TURQUOISE”. Astivenca has alleged that Petroleo has failed to pay sums in excess of US$156 million in total under the Services Contract.

Applicable principles

[34]CPR 6.36 provides for service out of the jurisdiction with the permission of the court. CPR 6.37 provides :
“(3) The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.”
[35]Astivenca relies only on the gateway in paragraph 3.1(4) of the Practice Direction which provides as follows :
“3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where …. (4) A claim is an additional claim under Part 20 and the person to be served is a necessary or proper party to the claim or additional claim.”
[36]The purpose of this gateway is to enable the English court to exercise jurisdiction over a foreign defendant if it is just to do so, because he is a necessary or proper party to litigation, which is already before the court (see Goldstone v Goldstone [2011] EWCA Civ 39 at paragraph 61).[37]In Altimo Holdings v Krygyz Mobil Tel Ltd [2011] UKPC 7 at paragraph 87 the Privy Council considered the “proper party” test as follows :
“…the question whether D2 is a proper party is answered by asking : “supposing both parties had been within the jurisdiction would they both have been proper parties to the action?” : Massey v Heynes & Co 21 QBD 330, 338…D2 will be a proper party if the claims against D1 and D2 involve one investigation :…and in Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd’s Rep 257, para 48, where Clarke LJ also used, or approved, in this connection the expressions “closely bound up” and “a common thread” : at paras. 46, 49. ”
[38]Although a single burden test, there are thus three hurdles for Astivenca to overcome : a) it must show a serious issue to be tried against the foreign defendant; b) it must show a good arguable case that Petroleo is either a necessary or property party to the main action between CH and Marina and Astivenca (“the main action”) or to either of the Part 20 claims as between Marina and Astivenca (“the inter-defendant Part 20 claims”); c) it must show that England is clearly or distinctly the proper place in which to bring the claim.[39]In VTB Capital v Nutritek International [2012] 2 Lloyd’s Rep 313 at paragraph 99 Lloyd LJ stated that “good arguable case” in this context means that the claimant has a much better argument than the foreign defendant. This is consistent with Bols Distilleries v Superior Yacht Services [2007] 1 WLR 12 where, in the context of Article 6 of the Brussels Regulation, “a good arguable case” was said to mean that the claimant has to show a “much better argument”than the defendants on the material that the requirements of the relevant gateway (there the Brussels Regulation) were met. Aikens LJ considered this dictum in Joint Stock Co Aeroflot – Russian Airlines v Berezovsky and others [2013] EWCA Civ 784. At paragraph 50 he stated :
“There has been debate on whether the qualifier “much” to the phrase “the better of the argument” adds anything. In Briggs & Rees “Civil Jurisdiction and Judgments” the authors suggest…that the use of “much”…should be “allowed to slip from view”
. I respectfully agree. The only point of the word is to emphasise the fact that if the two arguments are equal, then the party asserting the Article 23 jurisdiction will not succeed. Too much emphasis on the word “much” would simply lead to the error of imposing too high a standard of proof on the party wishing to establish the Article 23 jurisdiction. The whole point of the jurisprudence on the standard of proof in jurisdictional disputes is to emphasise that such decisions are made at an early stage in a dispute and the same or very similar questions on the substantive dispute…may have to be decided at the trial.”[40]I, in turn, respectfully agree. Astivenca must show simply that it has the better argument that the jurisdictional gateway under paragraph 3.1(4) of the Practice Direction is engaged.

Serious issue to be tried

[41]Petroleo does not dispute for present purposes that there is a serious issue to be tried between Astivenca and Petroleo, save in respect of Astivenca’s claim to an indemnity. The merits of that claim are dealt with more conveniently within a consideration of the “necessary or proper party”test. Is there a good arguable case that Petroleo is a necessary or proper party to the main action?[42]Astivenca submits that the Petroleo claim is a “classic” third party claim. Astivenca claims to be entitled to an indemnity under clause 12 of the Services Contract or damages for breach of contract in respect of its liability to CH under the Charterparties entered into by Marina for the same vessels for Petroleo and operated by Petroleo, such liability arising as a result of non-payment by Petroleo.[43]Astivenca emphasises the closeness of the relationship between Marina (which has submitted to English jurisdiction) and Petroleo. It points to the history leading up to the Charterparties and the evidence of Captain Valladares, a director of Marina at the material time. The call to the market in 2007 was made by Petroleo. It was always intended that Petroleo would be operating the vessels and that the Charterparties would be for its benefit. Astivenca submits that references to PDVSA permeate the Services Contract. Thus a pre-condition to performance of the Services Contract was the provision of insurance by Astivenca for PDVSA and its subsidiaries (including Marina). By clause 20 of the Services Contract, for example, sums could be set off against amounts due to Astivenca in respect of sums owed by or not only Petroleo, but also PDVSA or its subsidiaries. PDVSA letter-heading appears throughout the technical specifications within the Services Contract. Either PDVSA was the proper party to the Services Contract or there is no clear distinction between PDVSA and its various subsidiaries. Notably, says Astivenca, it was at a PDVSA management board meeting in August 2008 that a decision to change the scope of services required for support vessels under the Services Contract was taken.[44]In my judgment it cannot be said that Petroleo is a necessary party to the main action. So much is demonstrated by the fact that the proceedings in the main action have proceeded unhampered by the absence of Petroleo. In the event, Astivenca’s submissions focussed on the contention that Petroleo is a proper party to the action.[45]I turn then to the submission that Petroleo is a proper party to the main action.[46]On analysis, there is in my judgment no single investigation to be carried out in the main action and the Petroleo claim, nor are the claims closely bound up by a common thread.[47]The claims in the main action and in the Petroleo claim arise under very different contracts giving rise to different and separate issues, as set out above. Even ignoring the overwhelming Venezuelan flavour (and the application of Venezuelan as opposed to English law) to the Services Contract, a comparison of the Charterparties and the Protocol on the one hand, and the Services Contract on the other, is striking. The Charterparties and the Protocol are very short. The Services Contract runs to well over 100 pages. More importantly, the contracts are for different periods (initial term 4 years versus initial term 3 years) and provide for services at different rates (US$40,000 per day versus approximately US$70,000 per day). The Charterparties and the Protocol relate expressly to the “AMETHYST” and the “TURQUOISE”. The Services Contract is generic, which is to say, non-vessel specific.[48]In short, the contracts the subject of the main action and the Service Contract cannot be said in any way to be “back-to-back”.[49]The fact that Petroleo was or may have been behind or directly involved in the arrangements leading up to the Charterparties or Protocol, or intended as the original charterer, is nothing to the point. Nor does it matter that the vessels the subject of the Charterparties and Protocol were chartered for the benefit and use of Petroleo. The issues in the main action are whether or not Marina and/or Astivenca have breached their contractual obligations to CH and/or have remedies against each other in that respect. The issue in the Petroleo Claim is whether or not, as against each other, Astivenca and Petroleo have contractual claims against each other under the Services Contract.[50]Nor do the closeness of the parties and references to PDVSA in the Services Contract impact materially on the investigation to be carried out on liability in the claims, nor do they mean that the claims are closely bound up by a common thread. There is no suggestion that Marina, Petroleo and PDVSA are anything other than separate entities in law. Nor is there any dispute as to the identity of the contracting parties on each occasion.[51]Whilst the issue was not pressed in submissions for Astivenca, for the avoidance of doubt, I do not consider that the alleged oral agreement is sufficient to make Petroleo a proper party to the claim : a) the short point is that there is no claim against Petroleo on the alleged oral agreement. The effect of the alleged oral agreement is in any event only to place liability on Marina, subject only to agency arguments against Petroleo. Again, no permission for any agency arguments has been granted; b) to the extent that there are relevant witnesses from Petroleo who can speak to the alleged oral agreement (and at present it is difficult on Astivenca’s pleaded claim and evidence to see who those witnesses might be), there is nothing to stop such witnesses being called at trial.[52]As for common issues and the risk of inconsistent judgments, Astivenca was able to point only to one common issue, namely the extent of any liability on the part of Astivenca to CH. This raises the question of the validity of the indemnity claim in principle. If there is no significant issue on the indemnity claim, then there is no common issue and no risk of inconsistent judgments.[53]Petroleo submits that the indemnity claim is “result-driven” and essentially a “charade”for the true and natural claim which is no more than a simple claim for debt and/or damages. It is disputed that clause 12 is a true indemnity provision. But in any event the indemnity claim adds nothing. Astivenca emphasises the fact that its claim for an indemnity is in addition to its claim for debt and/or damages.[54]In my judgment, it is difficult to see how the indemnity claim relied on is a true indemnity claim arising out of the main action in the light of the assertions of Ms Watton. The claim for indemnity is said to be for far more than Astivenca’s alleged liability to CH. It cannot therefore be said to add anything in any meaningful sense. If Astivenca fails in its claim for debt and/or damages, it will not succeed on the indemnity claim. Moreover, there is an even wider claim for damages arising under the Services Contract which has nothing to do with the chartering of either the “AMETHYST” or the “TURQUOISE”.[55]In any event, I accept Petroleo’s submission that it is unrealistic to suggest that Petroleo would in any event challenge the finding of an English court on Astivenca’s liability to CH. Petroleo fell short of giving an undertaking in this regard, though indicated that it would wish the opportunity to consider doing so in the event that it proved decisive to the outcome of its application.[56]In short, there is no real chance of an inconsistent finding on a significant and material issue.[57]For all these reasons, I do not consider that there is a good arguable case that Petroleo is a necessary or proper party to the claim.[58]This conclusion is reached before the question of any exclusive jurisdiction clause is considered. For the reasons set out below, however, I conclude also that there is a valid and operable exclusive jurisdiction clause covering Astivenca’s claim against Petroleo to which the parties should be held. As Walker J commented at paragraph 159 in Standard Bank plc and anr v Just Group LLC and ors [2014] EWHC 2687 (Comm), the words “proper party” might not be thought apt to refer to a party if it has the benefit of a contractual entitlement to insist that proceedings must not be brought against it in England and Wales. This amounts to an additional and separate reason why there is no good arguable case that Petroleo is a proper party. Is England and Wales clearly and distinctly the proper place in which to bring the Petroleo claim?[59]In the event that I am wrong in the conclusion that Petroleo is not a necessary or proper party (independently of the existence of exclusive jurisdiction clauses), I consider the question of whether or not England and Wales is the proper place in which to bring the Petroleo claim.[60]The procedural gateway under which Astivenca proceeds is one of great breadth. Whilst factors making a defendant a necessary or proper party normally weigh heavily in favour of a finding that England is the appropriate forum (see Eras Eil Actions [1992] Lloyds Rep 570 at 591B), they are not conclusive and it is nevertheless right that the Court should exercise caution to avoid exercising exorbitant jurisdiction. In Konkola Copper Mines plc v Coromin Ltd [2006] 2 Lloyds rep 446 Colman J stated (at paragraph 35) :
“In the present case it is important not to lose sight of the fact that the only basis upon which application to serve these defendants out of the jurisdiction was made and the application granted was that they were necessary or proper parties under CPR 6.20(3). Accordingly, none of them could have been the subject of an order for service out on the basis of any other connecting factor under CPR 6.20. Their status as potential parties to these proceedings is therefore founded only on the kind of case management considerations which would justify joinder of defendants within the jurisdiction: see CPR 19.2(2). In other words KCM/ARH's claim has no connection whatever with this jurisdiction…”
[61]Assuming, contrary to my conclusion above, that Petroleo is a necessary or proper party to the proceedings, there are nevertheless here distinctive features to consider, including clauses 7 and 31 of the Services Contract.

Clauses 7 and 31 of the Services Contract

[62]I turn first to the question of exclusive jurisdiction agreement by reference to clauses 7 and 31 of the Services Contract. Petroleo accepts that it carries the burden of establishing such a relevant agreement – see Astrazeneca UK Ltd v Albermarle International Corporation and another [2010] 2 Lloyd’s Rep 61 at paragraph 35 (“Astrazena”). It is common ground that there is territorial jurisdiction in Venezuela. The dispute is whether or not there is an exclusive jurisdiction agreement.[63]In a case where the parties have agreed to submit their dispute to the exclusive jurisdiction of the English courts, the English court will normally exercise its discretion to secure compliance with the contractual bargain, unless the party suing in the non-contractual forum can show very strong reasons for suing in that forum : see Lord Bingham in Donohue v Armco [2001] UKHL 64 at paragraph 24 and Euromark Ltd v Smash Enterprises Pty Ltd [2013] EWHC 1627 (QB) (“Euromark”) Strong reasons do not include factors of convenience foreseeable at the time the contract was entered into (save in exceptional circumstances involving the interests of justice). This is demonstrated readily by the decision of Colman J in Konkola Copper Mines plc v Coromin Ltd [2006] 2 Lloyd’s Rep 446 (“Konkola”) at paragraph 42 : “In the present case….the just, cost-effective and consistent determination of all the issues could only be achieved if they were all determined by the same tribunal. However, for this court to permit KCM to pursue these proceedings against the Zambian insurers in the interests of avoiding fragmentation of the proceedings would in substance be permitting KCM to avoid the foreseeable consequences of the contractual structure which they themselves created. In my judgment, in these circumstances justice does not require that KCM should now be permitted to break their contract in order to cure the consequences of the very fragmentation which they have created. To enable joinder of these defendants would be a serious misuse of the necessary or proper party jurisdiction.” (See also Euromark at paragraph 29 and Astrazeneca UK Ltd v Albermarle International Corporation and another [2010] 2 Lloyd’s Rep 61 at paragraphs 111 and 112).[64]The merits of the claim are of limited, if any, relevance. In Euromark at paragraph 35 Coulson J stated :
“...Even if one concludes that the claimant is very likely to win at trial, the issue still remains as to where that trial should take place. There is no basis in law for concluding that a strong case should be heard in England, whilst a more arguable case should be in Australia… . Ultimately, … it seems to me that the strength of the claimant’s claim on liability is either not a relevant consideration for the purpose of this application or, if it is, it remains a matter of very little significance.”
[65]In considering the potential existence of a relevant exclusive jurisdiction agreement, it is necessary to consider the expert evidence.[66]At the outset I propose to exclude the further report of Mr Bentata. It has been served incompletely and without notice. Astivenca points out that it responds to the second report of Mrs Padilla which itself was not served until 19th February 2015 (pursuant to an agreed extension). But the vice remains not only in the very late timing of Mr Bentata’s response but more importantly in the lack of notice – it was not presaged even in Astivenca’s skeleton argument served the day before, on 26th February 2015. This lack of notice has meant that Petroleo has not been able to secure the assistance of Mrs Padilla in addressing it (nor obtain translation of the Spanish authorities referred to). This results in substantive unfairness to Petroleo. In any event, in so far as it is complete and can be relied on safely, it does not appear to me to advance Astivenca’s cause materially.[67]Before turning to the detail of the argument, it is fair to stand back and consider the Services Contract as a whole through a jurisdictional lens. The Services Contract was made in Venezuela between Venezuelan parties. It was performed in Venezuela. It is governed by Venezuelan law. Its terms are very heavily influenced and framed by reference to local Venezuelan legislation, on several occasions through specially negotiated provisions. Astivenca submitted that such references are immaterial unless the clause in question is one relevant to liability here. I do not accept that. The references point objectively to Venezuelan jurisdiction and forum and provide relevant factual matrix.[68]Additionally, given that it is common ground that there is territorial jurisdiction in Venezuela, the question is begged as to why the parties would agree a non-exclusive jurisdiction clause in favour of a jurisdiction which already exists. Such a point was made by Waller J in British Aerospace plc v Dee Howard Co [1993] 1 Lloyd’s Rep 368 (at 374) : “… In the instant case the parties have expressly agreed English law and there would be no need to expressly agree that the English Court should have jurisdiction for the English Court to have non-exclusive jurisdiction. The English court would in any event have such jurisdiction and by expressly agreeing to English jurisdiction they must be seeking to add something ie that England should have exclusive jurisdiction.” (and see also paragraph 23 of the judgment of Colman J in Konkola.)[69]Astivenca submits that there is no place for the application of these English authorities. But this is not so much a point of English law as a point of commercial common sense.[70]The function of the expert evidence is primarily to identify for this Court any relevant maxims of construction. Three relevant principles are potentially in play : a) whether or not under Venezuelan law a purposive construction is to be adopted in the event of ambiguity : Mrs Padilla contends that it is (see paragraph 27a) of her first report). The court would focus on what the parties intended by their words and would give effect to such intention. Mr Bentata does not appear to disagree, at least not in terms. His position is simply that, if “the law amongst the parties is clear”no purposive construction is adopted, the words are simply given their literal meaning (see paragraphs 35 and 36 of his first report); b) whether or not there is a requirement in Venezuelan law for an exclusive jurisdiction clause to be express and unequivocal. Mr Bentata relies on the Supreme Court decision dated 20th March 2006 in Jialing Motorcycle (America) Corporation v Pacific Motors CA (“Jialing Motorcycle”). There the Constitutional Chamber stated :
“…the agreement on jurisdiction must show the intention of the parties expressly and unequivocally to submit their controversies to the jurisdiction of the courts of a specific country…”
Mrs Padilla states that this authority provides guidance only and is not directly relevant on the facts. It, together with another authority (Construction and Maintenance SYP CA vs NATCO GROUP OF VENEZUELA dated 28th September 2005 in the Administrative Chamber), supports at best only the proposition that the intention to confer jurisdiction on a foreign court and remove jurisdiction from the Venezuelan court must be clearly and unequivocally expressed. There was no such intention here; c) whether or not it is well settled in Venezuelan law that discrepancies are interpreted against the drafter of terms and conditions. Mr Bentata asserts that it is (see paragraph 25 of his report). Mrs Padilla disagrees, stating that there is no such general rule. Rather, there are two specific situations (under insurance and fair price law) where it arises. Those situations do not arise here. Mr Bentata has not taken issue with Mrs Padilla’s response (in his excluded further report or elsewhere), and I accept Mrs Padilla’s position.[71]In my judgment, under Venezuelan law clause 31 contains an exclusive jurisdiction agreement. The allocation of competence to the Cumana Court necessarily implies the allocation of jurisdiction. The words “to the exclusion of any other”confer exclusive jurisdiction. This conclusion on construction carries the benefit, as already indicated, of according with commercial common sense.[72]It is to be noted that Astivenca’s position originally, through Mr Bravo, was to accept that this was an exclusive jurisdiction clause. The only point made (and still maintained now) was that Astivenca’s claim, being a maritime claim, was not caught by clause 31.[73]However, Mr Bentata contends that clause 31 is a “competence” only clause, and does not address jurisdiction. He places emphasis on the phrase “domicilio especial”. It is said that a domicile is a place not a court. Choosing a special domicile is not the same as choosing jurisdiction. Mrs Padilla’s position puts an unacceptable gloss on the phrase.[74]In my judgment, Petroleo’s construction is to be preferred : a) the heading to clause 31 provides (in Spanish) :
“EJEMPLARES, LEY APLICABLE, DOMICILIO ESPCIAL, Y JURISDICCION”
(emphasis added); b) a choice of competence imports a choice of jurisdiction; c) it is significant that Mr Bentata accepts (at paragraph 10 of his report) that the phrase “domicilio especial” may be selected for jurisdictional purposes. That option has been exercised clearly here.[75]I do not consider that this conclusion breaches any of the relevant maxims of construction identified (even as advanced by Mr Bentata). In so far as necessary, however, I would prefer the reasoning of Mrs Padilla in relation to Jialing Motorcycle which, on any view, provides guidance only.[76]On clause 31 that then leaves Astivenca’s challenge on the basis that the Petroleo claim falls outside it. Ultimately in submission this was Astivenca’s main submission on exclusive jurisdiction. Two matters are relied on : a) because the Petroleo claim is a maritime matter which, under Venezuelan law can only be heard by the Maritime Courts in Caracas; b) because Petroleo is a state entity and claims against it cannot therefore be brought in the Cumana courts.[77]As to the first objection, many different types of dispute could arise under the Services Contract. Certain disputes must be heard in specialist courts. It is common ground that the Petroleo claim is such a claim, namely a maritime claim that must be heard under mandate of law by the Maritime Courts in Caracas.[78]However, it is also common ground that once submitted to the Cumana Courts the Court could and would transfer the matter to the appropriate court. Mr Bentata says (at paragraph 38b) of his report) :
“…If a claim is filed before a Court that lacks subject matter competence, the Court would not dismiss the claim. Rather the Court would declare its own incompetence and should remit the case to the court that it considered had subject matter competence without dismissing it.”
[79]I therefore reject the submission that Clause 31 is inoperable or ineffective to catch the Petroleo claim. All disputes under the Services Contract must be submitted to the courts in Cumana which will then order transfer to a specialist court if necessary.[80]It is not common ground that the Cumana courts do not have jurisdiction over Petroleo as a state entity. Mrs Padilla sets out in paragraph 37 of her second report her reasons for disagreement. The issue does not need to be resolved since, even if Mr Bentata were correct and all claims against Petroleo would have to be tried in the Contentious Administrative Court or the Administrative Chamber of the Supreme Court, the Petroleo claim could be transferred there by the Courts of Cumana.[81]Finally, Astivenca submits that clauses 7 and 31 must be read together, and that the permissive word “may” in clause 7 should lead to the conclusion that, together, clauses 7 and 31 do not create exclusive jurisdiction but rather merely an option to submit to the courts of Venezuela. But clause 31 is a self-contained and separate clause in the Services Contract which can properly be construed and applied in isolation. Further, the submission does not sit comfortably with Astivenca’s submission elsewhere that clause 7 is in fact only addressing settlement and is not a jurisdiction clause at all.[82]Further and in any event, the word “may” in clause 7 does not in my judgment connote an option as to jurisdiction but rather an option to commence proceedings after unsuccessful engagement in the settlement procedures earlier provided for. This is either clear or unambiguous from the structure and grammar of clause 7 itself. Alternatively, to the extent that there is ambiguity as to the scope and nature of the option, and the law between the parties is not clear, a purposive approach by reference to the parties’ intentions leads to the same result.[83]Having reached this conclusion, I turn to consider whether there are very strong reasons for disregarding the parties’ contractual agreement.[84]Without any obvious enthusiasm, Astivenca suggests that there would be judicial bias in favour of Petroleo such that Astivenca would not receive a fair trial in Venezuela. The evidence comes nowhere near making good such a proposition to the necessary high standard.[85]The Venezuelan judiciary is autonomous and independent from other public branches and the Constitution contains provisions to guarantee judicial independence. Mrs Padilla dismisses the suggestion and refers to a number of cases where she states that the Venezuelan courts have found against PDVSA and other state owned entities. Moreover, the quality of the administration of justice in Venezuela was considered by the Court of Appeal in Limit (No 3) Ltd v PDV Insurance Co [2005] 2 All ER (Comm) 347 in the context of allegations of bias in favour of PDVSA. The assertions were not made out (see paragraphs 63 to 66).[86]Mr Bravo’s report states that the Venezuelan courts “almost never”issue decisions adverse to PDVSA and its subsidiaries. But he has not apparently been asked to consider Mrs Padilla’s evidence, as Mr Bentata has. Whilst Mr Bentata seeks to criticise Ms Padilla’s reliance on various authorities as evidence that Astivenca can have a fair trial in Venezuela (because they are all employment or personal injury cases), he is silent on the actual question of whether or not Astivenca can have a fair trial. The inference must be that he does not consider that Astivenca cannot have a fair trial in Venezuela.[87]Finally and in any event, the alleged bias was foreseeable at the time of the Services Contract.[88]As for an alleged risk of irreconcilable judgments, this cannot amount to a strong reason. Even if I am wrong that there is no real risk, the risk was one accepted by the parties when they agreed to exclusive jurisdiction.[89]In a similar vein, any inconvenience in dealing with the Petroleo claim in Venezuela or in having separate or concurrent proceedings cannot amount to strong reasons for disregarding the parties’ contractual bargain when such matters were foreseeable at the time of the Services Contract. I am in any event far from convinced that there would be any such inconvenience when Astivenca’s total claim against Petroleo is for some US$156 million and the relevant witnesses and documents are in Venezuela. As for separate or concurrent proceedings, there can in any event be no presumption that permitting the claim against Petroleo to continue in this jurisdiction would not result in separate trials. As already indicated, trial in the main action is fixed for next month. The Petroleo claim would not be ready for trial by then. CH’s solicitors have (understandably) made it very clear that any application to adjourn the trial in the main action would be opposed strenuously. A separate and subsequent trial in the Petroleo claim would be a distinct possibility in any event.

General considerations

[90]Even if I am wrong in my conclusions on exclusive jurisdiction, and only a non-exclusive jurisdiction clause exists between the parties, clauses 7 and 31 remain relevant to the question of forum. As Colman J said in BP Plc v AON Ltd (No.1)[2006] 1 Lloyd's Rep. 549 at paragraph 23:
“There can be no doubt that it is implicit in a non-exclusive jurisdiction clause that both parties accept when they agree to it that it will be appropriate for that court in the interests of justice, as distinct from obligatory, to exercise jurisdiction over all disputes which may reasonably be envisaged as arising in relation to their agreement.”
[91]At paragraph 32 Colman J went on to say that, where there was a non-exclusive jurisdiction clause in favour of a foreign forum in which proceedings have not yet been brought, the English court will only accept jurisdiction if :
“…although the [foreign forum] is an appropriate place there is a clear balance of justice and fairness as between the parties in favour of London. By a clear balance I mean one which substantially relies on considerations which would not have been obvious to the parties at the time when they were entered into [their contract] and a balance which, while not overwhelming, is substantially more than a fine balance.”
[92]There is in my judgment no clear balance of justice and fairness in favour of England and Wales.[93]This conclusion is one that is wholly consistent with an intuitive response to the facts: Astivenca and Petroleo are both domiciled in Venezuela, the Services Contract was concluded and performed entirely in Venezuela. Indeed only Venezuelan companies were eligible to provide the services in question. Venezuelan law governs the dispute. The majority of the relevant documents are in Spanish and in Venezuela, and Petroleo’s witnesses are Venezuelan and would in many cases require interpreters. Both Venezuelan law experts are based in Venezuela and there are substantive issues of Venezuelan law arising (particularly in connection with liabilities post-termination). It is appropriate for the dispute between Astivenca and Petroleo to be litigated in Venezuela.[94]Put another way, were the exercise to be carried out by reference to the considerations identified in Spiliada Maritime Corp v Cansulex Ltd (The Spiliada) [1987] AC 460, the result would be the same.[95]Accordingly, in my judgment, England and Wales is not clearly and distinctly the proper place in which to bring Astivenca’s claim against Petroleo.

Conclusion

[96]For the reasons set out above, I allow the application to set aside service. I invite the parties to agree so far as possible an order reflecting the above and all consequential matters, including costs.

Cited in 3 later judgments