Court of Appeal gives guidance on jurisdiction based on place of performance of a contract

The Court of Appeal has set out the principles a court should follow in determining the place of performance of a contract for jurisdiction purposes, and has stressed that the burden of showing a good arguable case that the English courts have jurisdiction falls on the claimant.

JEB Recoveries LLP v Binstock [2016] EWCA 1008 was a rather unusual case in that the claimant partnership was set up for the specific purpose of bringing claims against Mr Binstock and sharing any proceeds amongst the partners. Each of the three partners individually had business dealings with Mr Binstock over a number of years and claimed to have suffered losses as a result of breaches of contract on his part. They assigned the claims in respect of those losses to the partnership, which issued proceedings against Mr Binstock in the Chancery Division. Mr Binstock disputed the court’s jurisdiction on the basis that he was domiciled in Spain and that the contracts were to be performed outside England and Wales. Alternatively, he applied for the claims to be struck out on the basis that they were founded on a champertous assignment.

The judge at first instance accepted that Mr Binstock was not domiciled in the UK and that in relation to three of the four contracts relied on by the partnership, there was no evidence to suggest that they were to be performed in England and Wales. However, he found that the fourth contract was sufficiently connected with England to allow the court to entertain the claim. Under this contract, a Mr Wilson was engaged by Mr Binstock to identify and acquire a listed company on his behalf for the purposes of a reverse takeover of Mr Binstock’s business interests in Spain. Mr Binstock provided Mr Wilson with an apartment in Paris from which to work. Meetings in relation to the project took place in Paris and Amsterdam. Mr Wilson also met with BDO in London to instruct them to set up offshore entities through which he would receive payments from Mr Binstock under the contract. The judge found that the meetings with BDO created the requisite connection with England and rejected the strike-out application. Mr Binstock appealed on both points.

After the judge had handed down his judgment in draft, but before he had issued the final version or heard arguments on costs and permission to appeal, Mr Binstock applied for security for costs. The partnership argued that this constituted a submission to the jurisdiction. On the same day, Mr Binstock served his skeleton argument in relation to permission to appeal.

The Court of Appeal found that it would be unfair to allow the partnership to rely on the security application in relation to submission to the jurisdiction. The partnership delayed almost two months before raising this argument, with the result that Mr Binstock did not have time to consider it fully with his legal representatives before the appeal hearing. Further, given that the jurisdiction challenge had been adjourned to a further hearing and that Mr Binstock’s skeleton argument referred to his appeal, it should have been clear to the partnership that he was not waiving his right to challenge jurisdiction.

As to the jurisdiction challenge itself, the Court of Appeal set out the following principles:

1. As a general rule, the place of performance is the place of the main provision of the services.
2. That place must be deduced, so far as possible, from the provisions of the contract.
3. If that cannot be done because the contract is either silent or provides for several places of performance, the court should look to where services have in fact for the most part been carried out (provided this is not contrary to the parties' intentions, as it appears from the contract).
4. If this is still not sufficient to determine the place of performance, it should be assumed to be the service provider’s place of domicile, as in those circumstances this is the most certain way to fulfil the legislature’s objective of ensuring that the court hearing the dispute meets the criteria of predictability and proximity to the dispute.
5. It is for the claimant to show a good arguable case that the court has jurisdiction. “Good arguable case” in this context means that the claimant’s argument is “much better than” that of the defendant.

In the present case, the main place of performance could not be determined from the contract, and as far as could be gleaned from the evidence, services had been provided in Paris and Spain, not in England. The work Mr Wilson carried out with BDO in London was not an aspect of the services provided under the contract, but rather for his own purposes in obtaining payment. Accordingly, JEB did not have a good arguable case that England was the main place of provision of the services, and Mr Binstock’s appeal on jurisdiction would be allowed. As a result of this decision, the court did not have to decide whether or not the assignment of the claims to the partnership was champertous, and declined to do so.