Order refusing stay confirmed when wording of jurisdiction
clause giving foreign court jurisdiction was ambiguous.
In these proceedings, an Italian bottle manufacturer appealed a
decision by the SA District Court to stay proceedings .
Kingston claimed damages against the appellant for breach of
contract by reason of the supply of faulty products. Vetreria
sought to stay those proceedings on the basis of a jurisdiction
clause. At issue in this judgment was what meaning should be given
to the word "execution" in a jurisdiction clause. The
appellant, Vetreria, submitted that this term referred to the
performance of the contract and not the formal signing or adoption
Kingston, a South Australian winemaker, entered into an
agreement with Vetreria whereby the appellant agreed to supply wine
bottles of a specified type. Vetreria supplied the bottles but,
according to Kingston, they were faulty and were prone to crack on
the production line during the bottling process. Vetreria in turn
commenced proceedings against Kingston in the Court of Florence
claiming the sum of $173,000 allegedly owed for the supply of
Vetreria said that a jurisdiction clause in a translated
document gave an Italian court jurisdiction in disputes
"arising from the interpretation, execution or
application" of the contract. The question before the court
was whether "execution" was intended to mean
"performance", which would mean that the dispute was
within scope of jurisdiction clause. The contract also provided
that, in the event of dispute as to the wording of the contract,
the original Italian document which included the jurisdiction
clause was to prevail. However, the original Italian document was
not in evidence.
The SA District Court refused to grant the stay. It thought that
there was nothing in the contract which would necessarily require
that the word "execution" to refer to performance. The
clause was ambiguously worded. The judge at first instance noted
the parties had not chosen the Court of Florence as the court for
all disputes arising from particular and specific aspects of their
contract, although it would have been easy for them to do so.
Rather they had chosen particular and specific aspects of their
contract which they agreed, if there is a dispute, would be decided
by the Court of Florence. Therefore, they may well be said to have
made a positive choice to limit disputes which were to be heard by
the Court of Florence, allowing or envisaging disputes arising
otherwise to be heard by courts situated elsewhere.
On appeal, Justice Duggan noted that the ascertainment of the
scope of the clause was a question of the construction of a
contract. Its meaning was to be determined by what a reasonable
person in the position of the parties would have understood it to
mean, having regard to the text, surrounding circumstances, purpose
and object of the transaction.
The contract also provided that "The present document is an
accurate translation of the original document written in Italian.
For any controversy, the original Italian document
The original Italian document, however, was not before either
court. In those circumstances, the court could not say on a proper
construction of the Sales Agreement, whether the parties had chosen
a particular forum or jurisdiction in which the dispute of the
plaintiff's claim is to be resolved. The clause is ambiguous.
However, there was nothing in the contract which would necessarily
require that the word "execution" should be understood as
referring to performance.
The Supreme Court noted that the application for a stay required
it to consider the agreement between the parties. Justice Duggan
thought that the District Court was entitled to have regard to the
fact that the clause was ambiguously worded and that the original
Italian document was not before the court. In the result the
District Court's decision was upheld.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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