The Supreme Court has stayed an Irish pharmaceutical company’s approximately €3.5 million damages action against a Dutch supplier after finding that their trading relationship included a clause giving exclusive jurisdiction to the courts at Haarlem in the Netherlands.
Leo Laboratories Limited claimed that bulk molten white soft paraffin supplied by Crompton BV, formerly Witco BV, was contaminated with gas oil or diesel oil when incorporated into its pharmaceutical products, causing loss and damage to its manufacturing process.
The Irish company had ordered the material in late 1998 for delivery during 1999. The parties agreed that Crompton would deliver the product to a ship in the Netherlands for transport to tankers at Dublin Port. Leo complained about alleged contamination in June 1999, while Crompton denied liability.
Crompton began Dutch proceedings in June 2000 seeking declarations that it had no liability or, alternatively, that any liability was limited to the invoice value of the goods. Leo subsequently issued Irish proceedings in February 2003, claiming negligence, breach of duty and damages under the Liability for Defective Products Act 1991.
The High Court refused Crompton’s application challenging Irish jurisdiction, but the Supreme Court reversed that decision.
Mr Justice Fennelly held that Crompton’s general trading terms formed part of the parties’ contractual relationship. Those terms provided that disputes arising out of or on account of a contract were to be determined exclusively by the court having jurisdiction at Haarlem.
The court rejected the argument that Leo could avoid that clause because its Irish action was framed in tort rather than contract. The negligence claim was closely connected with the contractual supply of the allegedly defective material and therefore fell within the jurisdiction clause.
Because that conclusion was decisive, the Supreme Court did not finally rule on whether Ireland also had special jurisdiction under the Brussels Regulation on the basis of where the harmful event occurred. The Irish proceedings were stayed in favour of the Dutch courts.