UK firm's contract dispute must be heard under German law
An English company has been told that its dispute with a supplier over faulty goods must be heard under German law as stated in the contract.
The case involved TRW Ltd and Panasonic Industry Europe GMBH, and Panasonic Automotive Systems Europe GMBH.
The issue arose when TRW claimed that electronic resistors supplied by Panasonic were defective.
The two groups had had commercial relations since 1998. Each of Panasonic’s customers was asked to sign a customer file accompanied by a document containing its general conditions (GC) that subjected the contract to German law.
The GC document stated that it applied exclusively to the entire business relationship between the parties unless Panasonic agreed otherwise in writing.
TRW signed a customer file in 2011. It purchased resistors in 2015 and 2016, for which its purchase orders purported to be governed by English law. In 2020 it served a claim against Panasonic based on an allegation that the resistors were defective.
Panasonic applied for service of the claim against it to be set aside on the basis that the English court lacked jurisdiction.
TRW argued that, applying the "last shot" doctrine, its purchase order was the last document sent before performance took place via delivery of the goods, and it was therefore the governing document.
The High Court found in favour of Panasonic.
It said that Panasonic had the better of the argument by a comfortable margin.
Its GC document and the practice of having purchasers sign a customer file document accompanied by the GC were a familiar feature in the trade done over the years with TRW. It was reasonable to infer from the practice of signing the customer file that TRW regularly contracted with Panasonic on the terms of the GC, including being subject to German law and jurisdiction.
Panasonic’s GC protected it from falling victim to the "last shot" doctrine, as it disapplied any conditions of the buyer that diverged from the GC's terms, even if delivery was made without reservation.
It followed that the German court had exclusive jurisdiction over the claim.
Please contact Mandeep Singh if you would like more information about the issues raised in this article or any aspect of contract law.