BFC Aircraft v. AGES

[ Home ] [ Up ]

Summary
A choice of an English law clause in a contract where neither party is immediately connected with the jurisdiction is a strong indication of an expectation that England will be the dispute forum
This case note is based on an article prepared by Chris Robinson for the February 2002 edition of ‘The Brief’, a free e-newsletter produced by Davies Lavery Solicitors. This note is published with their permission. The Brief is accessible from the Davies-Lavery website at www.Davies-Lavery.co.uk.

DMC Category Rating: Developed

Facts  
BFC Aircraft Sales and Leasing Ltd were an aircraft leasing broker based either in Spain or the Bahamas. The AGES Group LLP, based in Florida, USA, was engaged in the business of letting aircraft on hire. BFC were appointed AGES' exclusive leasing agents for the leasing of aircraft to AIRES, a Colombian airline. The leases so entered into were subject to Florida law. 
Ê
The exclusive agency contract between BFC and AGES was for 5 years or "until such time as the lease is terminated as provided." It further provided, amongst other things, that any rental payments received would be paid to AGES in Florida, that BFC would receive monthly commission fees payable from the net rental payments and that it was to "be governed by and construed in accordance with the laws of the United Kingdom" (agreed as meaning the laws of England).
Ê
A dispute arose when AGES stopped paying commission to BFC after 31 December 1999. They did so because of an alleged default by AIRES under one or more of its aircraft leasing agreements, by virtue of which they claimed to be entitled to back-date termination of the leases to 31 December 1999.

Judgment
Referring to the judgment of Lord Goff in Spilliada Maritime Corporation v Cansulex Ltd (1984), Morison J found in favour of BFC and dismissed AGES' application with costs. The question before the Court was not simply whether the relevant jurisdiction was the most convenient, but whether it was the most suitable or appropriate for this particular dispute and the parties involved.
Ê
He placed considerable weight on the choice of law clause in the agency contract, bearing in mind that neither party to it was immediately connected with England. Although a choice of applicable law clause is not so strong a feature as a choice of jurisdiction clause, he believed that in the circumstances of this case it was a strong indication that the parties expected England to be the forum for their disputes. This was so regardless of and perhaps bearing in mind the fact that both parties must have been aware at the relevant time that the aircraft leasing contracts arising from their exclusive agency contract would be governed by Florida law. The parties' mutual commercial expectation was a factor which carried considerable weight.

These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.