Procedure gets in the way of settlement

Roger Pearson looks at a dispute over the purchase of soya bean meal which is going all the way to the European Court of Justice.

The European Court of Justice is to probe the impact of Brussels Convention provisions on situations where disputes become split between two jurisdictions.

The move comes as a result of an action between Alfred C Toepfer International and Societe Cargill France. The case centres on a dispute over a consignment of soya bean meal pellets which it is claimed failed to comply with a contract.

In 1994, Cargill entered three contracts to buy from Toepfer 9,500 tonnes of soya bean meal pellets which were delivered to Montoir in France. However, a dispute then arose over whether the pellets complied with the contract.

Lord Justice Phillips said in his Appeal Court decision on the case that each contract included a clause that required disputes to be resolved by Grain and Feed Trade Association (Gafta) arbitration to the exclusion of any other tribunal. That, he said, should have ensured that the dispute was resolved cheaply and expeditiously.

But he said the parties had become embroiled in a procedural dispute which raised complex issues as to the interpretation of the Brussels convention 1968.

The companies have become involved in moves in the courts of both France and England over the dispute. In December last year, a High Court judge in London granted, inter alia, a declaration that proceedings started in France by Toepfer constituted a breach of the Gafta arbitration agreement. Cargill was obliged to refer the dispute to arbitration under the Gafta rules and to discontinue the French proceedings.

Now Lord Justice Phillips has referred the case to the European Court for it to decide whether the High court judge's ruling conflicted with Brussels Convention provisions.

Cargill argues that the French proceedings were started first, that the convention applies to those proceedings and that in those circumstances the English High Court is not competent to deal with the matter. But Toepfer claims that the proceedings are not subject to the convention and that the judge was correct in ordering discontinuation of Cargill's proceedings in France.