Lord Justice Rix :

1. The claimants, Scottish & Newcastle International Limited, sold cider to the defendants, Othon Ghalanos Limited. The cider was loaded into containers in Hereford, and shipped at Liverpool for Limassol in Cyprus. I shall refer to the parties as sellers and buyers respectively. In this the sellers are respondents, and the buyers are appellants. Their dispute at present is as to where the sellers may found jurisdiction for their claim for the price of the cider. The sellers say that they can found jurisdiction in England, on the ground that that was where the cider was delivered. The buyers, who are a Cypriot company, and used to be the sellers' exclusive distributors in Cyprus, say that they must be sued in Cyprus. This issue has to be decided under the Judgments Regulation (Regulation (EC) No 44/2001).

2. It is well known that the basic rule of the Judgments Regulation is that defendants domiciled in a member state must be sued in the of that state (article 2). However, there are alternative bases of "Special Jurisdiction", such as that found in article 5, which provides, so far as relevant, as follows:

"A person domiciled in a Member State may, in another Member State, be sued:

1. (a) in matters relating to a , in the courts for the place of performance of the obligation in question;

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

- in the case of sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

- in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

(c) if subparagraph (b) does not apply then subparagraph (a) applies."

3. The contract of sale, which it is common ground was governed by English , was for CFR (or cost and freight) Limassol. The buyers allege that that amounted to, or that there was in any event a specific term of overriding importance for, delivery in Limassol. That is disputed by the sellers, but it is acknowledged that, were it so, then article 5.1(b), as well as article 2, would lead to jurisdiction in Cyprus. The buyers also allege that, even if there was no specific agreement for delivery in Limassol, the application of article 5.1(b) to the typical case of a C&F, CFR or CIF contract under should lead to the conclusion that the place where the goods are delivered is at destination. They conclude therefore, that, on either basis, there is no alternative jurisdiction in this case in England.

4. The , Andrew Smith J, rejected similar (albeit not identical) submissions, and confirmed jurisdiction for the sellers' claim in England. The buyers appeal with the permission of the judge.

The contract

5. There was one contract for eleven separate containers, separately shipped under eleven separate bills of lading. As the judge explained, the background to the contract was the appointment in 1990 of the buyers, or of a subsidiary in the buyers' group, as the exclusive importers and distributors of Bulmers cider in Cyprus. HP Bulmers Limited was acquired by the Scottish & Newcastle Group, whose headquarters are in Edinburgh. No formal contract was ever entered into between Bulmers and the buyers, but matters proceeded informally for many years, although there is now litigation in Cyprus concerning the sellers' purported termination of the distributorship by letter dated 29 March 2004. The sale contract with which we are concerned was entered into at about that time. The sellers' claim in these proceedings was brought on 12 December 2005. The buyers' litigation in Cyprus was subsequently commenced in February 2006. In effect, the buyers would prefer all aspects of their disputes with the sellers to be conducted in Cyprus. If the judge's solution in this claim is correct this will possibly be another instance of the bifurcation of litigation caused by the jurisdiction rules contained in the Brussels Convention or what has now become the Judgments Regulation.

6. The sale contract originated in the buyers' letter to the sellers dated 3 March 2004. The buyers there ordered the cider on terms specified in their letter, which included the following:

"SHIPMENT

From Liverpool or Felixstowe per Zim Line vessel as per attached shipping schedule…

DELIVERY

CFR Limassol.

PAYMENT 90 (ninety) days from the date of the arrival of the vessel.

PACKING

…The containers should be stuffed to the maximum and sealed by you with an one way padlock and a high security bolt seal before delivery to the carriers.

FREIGHT

Prepaid at the rate of Stg £275,00 liner terms all in plus BAF ( Adjustment ) per 20' container, as agreed with the Cyprus agents of Zim line.

INSURANCE

Our care.

INVOICE

For each container separately…stating…FOB prices as stated below, total FOB value, freight, container number and container high security bolt seal number. All copies should be signed.

BILL OF LADING

For each container separately, should state "Notify Othon Galanos Ltd" and a high security bolt seal number. Original and copy non negotiable, each in three copies.

DOCUMENTS

For each container separately, should be issued in the name of Othon Ghalanos Lts and forwarded to us, immediately upon shipment by registered and express mail."

7. On 21 April 2004 the sellers responded, raising some queries. The acknowledgment of order forms which they issued at that time showed their then (ultimately mistaken) understanding that the proposed contract was to be on FOB terms. These forms stated at their foot the standard printed term as follows:

"This order shall be governed by Scottish and Newcastle International Limited's standard Terms and Conditions, or in the event we have a contractual agreement with you, the terms of said agreement. For the avoidance of doubt, English law shall apply, and delivery will be in accordance with 2000." 8. The buyers answered by their letter dated 3 May 2004, explaining –

"Our prices are FOB U.K. port, but as per our agreement you prepay the freight on our behalf, thus making the delivery terms CFR. The delivery terms CFR should be stated on the . The amount of the freight prepaid should also be stated on the invoice, separately…"

9. In the circumstances, the contract contemplated by the parties differed very little from a form of FOB contract, although it was expressed to be CFR. Clearly, there was to be no opportunity for the sellers to buy the goods afloat. Even the carriage was arranged by the buyers, albeit the freight was to be prepaid "on our behalf". See, in general, the discussion of forms of FOB contract in Benjamin's Sale of Goods, 7th ed, 2006, at paras 20-001ff.

10. Proforma dated 18 June 2004 were issued. Two of them still mistakenly referred to "Terms of delivery" as "Free on board"; the other nine correctly said "Cost and freight Limassol". All of them gave Limassol both as "Port/airport of discharge" and as "Place of delivery".

11. In the event, the containers were despatched by three vessels: 6 containers left Liverpool on the Britain Star on 26 June 2004, 3 more on the City of Glasgow on 6 July, and the final 2 on the Westmed II on 16 July. The eleven invoices, issued on 18, 23 and 29 June and 6 July 2004, were in the following form: "Country of destination" was named as "Cyprus"; "Terms of delivery and payment" stated "Cost and freight Limassol. PAYMENT DUE 90 DAYS FROM DATE OF ARRIVAL"; "Port/ airport of loading" stated "LIVERPOOL"; "Port/airport of discharge" stated "Limassol"; and "Place of delivery" was given as "LIMASSOL". The goods were specified as were their prices, to which was added a separate freight charge, and a total was then calculated.

12. The bills of lading were not in before the court. The buyers' order had stipulated that the bills were to be non-negotiable, and the judge found that the buyers were probably named in them as , and that title to the goods was not transferred by the bills' indorsement and delivery. On appeal, those findings were not seriously disputed, save that it was, in my judgment forlornly, submitted that the expression "Original and copy non negotiable" meant that at any rate the originals of the bills were negotiable, viz to order. The bills, I find, were not taken by the sellers to their order, but straight consigned to the buyers, to whom credit was extended for 90 days after the arrival of the vessels at Limassol. In other words, there was no attempt by the sellers to delay the passing of title until transfer of the bills against payment. It follows, in my judgment, that risk and title passed on shipment (see further below): something that Mr Richard Lord QC, counsel on behalf of the buyers, did not really attempt to dispute.

The submissions

13. The judge did not state precisely what he considered to be the terms of the contract. On the basis of the submissions advanced to him below, that would not seem to have mattered: for it was not submitted, as it was to us by Mr Lord who did not appear below, that both the original letter's "DELIVERY CFR Limassol" and the invoices' "Place of delivery LIMASSOL" meant that it was an express term of the contract that the place of delivery was Limassol. Before the judge, the parties appear to have treated the contract as a typical C&F contract. Thus he recorded the parties submissions in these terms:

"7. The [sellers'] case that the English court has jurisdiction is put…First they say that "the goods were delivered" within the meaning of article 5 in Liverpool where the goods were shipped…

8. The [buyers] dispute the jurisdiction of the English court, arguing that the "goods were delivered" for the purposes of article 5 elsewhere than England. They put forward two alternative candidates for the place "where the goods were delivered": first where the documents were tendered under the CFR contract, and secondly in Limassol upon the arrival of the vessel, and therefore of the goods."

14. Before us, however, Mr Lord adopted a significantly different stance, at any rate as to his primary case. He submitted, first, that the contract expressly provided for delivery in Limassol; and secondly, that even if that were not so and the contract was a typical C&F or CFR contract with no express term as to delivery save as might be derived from the provision for CFR Limassol, the purposes of article 5.1(b) were best met by superseding the intricacies of the English law as to delivery under international C&F or CIF sales by a simple and certain rule to the effect that goods under such were delivered where they arrived at their contractual destination.

15. On behalf of the sellers, however, Mr Michael Bools submitted that the contract was a classic C&F contract under which the sellers performed all their obligations at latest on shipment, when delivery occurred; that the invoices' reference to Limassol as the "Place of delivery" was an erroneous box entry merely reflecting the fact that there was no further destination beyond arrival of the ship in Limassol; and that the purpose of article 5.1 was best met by recognising England as the place where all obligations connected with delivery took place.

International sale of goods under English law 16. Before turning to Mr Lord's primary submission, that this was effectively an ex ship contract for delivery in Limassol, it is necessary first to say something about the general rules under English law relating to delivery under international sales, especially those on C&F and CIF terms.

17. The contemplates that where, pursuant to the contract, a seller ships goods for transmission to a buyer, the delivery to the carrier is prima facie delivery to the buyer; and that risk, title and possession of the goods are transferred on shipment.

18. Thus under sections 17 and 18 relating to the passing of property, the general rule is that it passes when intended to pass, that for the purpose of ascertaining the parties' intention regard shall be had not only to the terms of the contract but also to the conduct of the parties and the circumstances of the case, and that the prima facie rule, in the absence of a different intention, is that property passes when unascertained goods are unconditionally appropriated to the contract, such as by delivery of them to a carrier. Thus Rule 5 under section 18 states:

"(1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods then passes to the buyer; and the assent may be express or implied, and may be given either before or after the appropriation is made.

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract."

19. Section 19 then deals with the exceptional case (although of course a frequent case in international sales) where a right of disposal is reserved, eg by a seller taking a to order. That, however, neither occurred nor was supposed to occur in this case, where the bills of lading were contracted to be non-negotiable, the buyers were promised 90 days credit from arrival of the vessel, and the cider was unconditionally appropriated to the contract at earliest when the containers were stuffed in Hereford and at latest when those containers were shipped at Liverpool.

20. Section 20 of the Act then provides that risk will normally pass with property, and that that will occur "whether delivery has been made or not". Mr Lord relies on the fact that delivery may post-date the transfer of both risk and title.

21. As for delivery itself, that is defined in section 61 as meaning "voluntary transfer of possession from one person to another". The concept is dealt with under Part IV of the Act, which is headed "Performance of the Contract". Section 27 says that it is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them. Section 28 provides that, unless otherwise agreed, these duties are concurrent conditions. Section 29, headed "Rules about delivery" states that the default rule is that delivery is to take place at the seller's place of business, and that otherwise it is a matter for agreement. Section 30 (delivery of wrong quantity) and section 31 (instalment deliveries) do not concern us. It is section 32, headed "Delivery to carrier", which deals expressly with the concept in our context, of an international sale of goods involving carriage by sea, providing:

"(1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier (whether named by the buyer or not) for the purpose of transmission to the buyer is deemed to be delivery of the goods to the buyer.

(2) Unless otherwise authorised by the buyer, the seller must make a contract with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case; and if the seller omits to do so, and the goods are lost or damaged in the course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself or may hold the seller responsible in .

(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit; and if the seller fails to do so, the goods are at his risk during such sea transit."

22. A new subsection (4), dealing with consumer contracts, was inserted by the Sale and Supply of Goods to Consumers Regulations 2002, as follows:

"(4) In a case where the buyer deals as consumer or, in Scotland, where there is a consumer contract in which the buyer is a consumer, subsections (1) to (3) above must be ignored, but if in ignorance of a contract of sale the seller is authorised or required to send the goods to the buyer, delivery of the goods to the carrier is not delivery of the goods to the buyer." It may be noted, therefore, that in this respect the law merchant that had developed and then been codified in Chalmers' Sale of Goods Act is now specifically disapplied from consumer sales. This perhaps reflects a feeling that a consumer would not expect the goods to be at his risk until physical delivery had been effected: see Benjamin at para 5-098. If so, it highlights the difference between what one might call a layperson's view of delivery as being something essentially physical, and a merchant's or lawyer's view of it as being more conceptual. It should be noted that the Judgments Regulation has its own special provisions for consumers in its section 4.

23. Thus prima facie delivery under the present contract was effected on shipment, together with the transfer of title and risk: unless, as Mr Lord submits, the references to CFR Limassol and/or to Limassol as the place of delivery displace that rule and turn the contract into one for ex ship delivery in Limassol.

24. For these purposes, Mr Lord submits that a CFR, C&F or CIF sale is a documentary sale under which different aspects of delivery can and do take place at different times and places. In this connection he refers to passages in Benjamin such as the following:

"19-072. Three stages of delivery. In a c.i.f. contract, there are "three stages of delivery": a "provisional delivery" on shipment; a "symbolical delivery" on tender of documents; and a "complete delivery of the " when the goods are handed over to the buyer at the destination. The duties of the seller so far discussed relate to the first two of these stages; if the seller performs those duties he is not normally in breach merely because the third stage is not reached. This follows from the nature of a c.i.f. contract and from the rules as to risk as they apply to such a contract. Having shipped proper goods and tendered proper documents, the seller is not normally concerned with what happens to the goods in transit: the buyer's remedies (if any) in respect of the failure of the goods to arrive are against the carrier or the underwriter, not against the seller…"

25. Benjamin reverts to the three stages of delivery in the context of considering the buyer's opportunity of examining the goods at destination, at para 19-157, thus:

"…Although some dicta can be cited in favour of the view that one or another of these stages is "the" time of delivery, the best view is that, for the present purpose, there is no single time of delivery. The buyer's opportunity of examining the documents arises at the second stage, when the documents are tendered; and his opportunity of examining the goods arises at the third stage of complete delivery unless the contract expressly provides that he must examine the goods at the port of shipment. The buyer is allowed a reasonable time after discharge for examining the goods and then a further reasonable time for deciding whether he intends to reject…"

26. Mr Lord also submitted that since goods sold C&F or CIF can be bought by a seller afloat, it may be impossible to talk of any delivery at the time of shipment; and that, where a seller takes a bill of lading to order in order to reserve to himself a right of disposal and to prevent the passing of title save on payment against tender of documents, the critical delivery may be the tender of documents. He did not go so far as to submit, however, that a C&F or CIF sale is a sale of documents rather than a sale of goods (see the discussion in Benjamin at para 19-008). However, his overall submission was that the uncertainties of the concept of delivery under an international documentary sale under English law were such as both to justify an express provision for delivery only at destination and in any event to lead to the conclusion that, for the purposes of article 5.1(b), the necessity for clarity and certainty was in favour of a rule that the third or so-called "complete delivery" stage should be regarded as "the place…where the goods were delivered or should have been delivered". He describes such a rule as one of English law, not as an autonomous meaning required by article 5.1(b) irrespective of English law.

27. In this connection, he relied, as an example of the complications of English law, on the following analysis in Fawcett, Harris and Bridge on International sale of Goods in the Conflict of at para 3.185:

"The essential feature of a CIF contract is that shipping documents are transferred to the buyer, as a result of which a contractual relationship is established between the buyer, on the one hand, and the insurer and carrier on the other hand. Payment of the price of the goods becomes due when these documents are tendered. Under a CIF contract, the seller never delivers the goods to the buyer or even to the buyer's agent. Since the documents stand in for the goods, the place where the goods were delivered or should have been delivered must refer to the place where the documents were transferred or should have been transferred. This is so even though a documentary sale is a sale of goods and not of documents. There are a number of variants of the CIF contract, such as the C&F (or CFR) contract and, more rarely, the CIF and C contract, the CIF and E contract, and the CIF and C and I contract. All of these involve different obligations from the normal CIF contract, but in none of them is the parties' agreement as to delivery any different and the position under Article 5(1)(b) will be the same as that for a CIF contract." 28. Unlike in the court below, where the buyers' primary submission was, in accordance with that passage, that the article 5.1(b) place of delivery was in Cyprus where the documents were received by the buyers, Mr Lord, as I understand his submission, refers to that passage, not as providing the answer in this case, nor indeed in any case, but as exemplifying the difficulties to which English law might lead in the absence of either an overriding term agreed between the parties as to the place of delivery, or at least a standard and certain English law view as to the place of delivery under a documentary sale.

29. I therefore turn to consider the two strands of Mr Lord's submissions in this case.

An express term for delivery in Limassol?

30. As stated above, the judge did not have to determine the question of where exactly the terms of the contract were to be found, or whether the invoice reference to Limassol as the place of delivery was a term of the contract.

31. In my judgment, the terms of the contract are best found in the exchange of letters between the parties and there is nothing there to suggest that this was a contract for delivery in Limassol, in other words an "ex ship" contract. It was not so submitted before the judge. The invoices are not themselves documents of contract. The formal "acknowledgments of contract" are contractual documents, even though the errors in them had to be subsequently superseded. Nevertheless, I see no reason why the incorporation of Incoterms found in those acknowledgments should not be regarded as a surviving term of the contract. It may be observed that the definition of CFR or Cost and Freight in Incoterms (a set of terms published by the ICC) is –

"The seller delivers the goods when they pass the ship's rail in the port of shipment and must pay the costs and freight necessary to bring the goods to the named port of destination. The buyer bears all additional costs and risks after the goods have been delivered (over the ship's rail at the port of shipment)."

32. Mr Bools on this appeal did not rely on Incoterms, and so I make this observation merely in passing and not as leading to my decision on the construction of this contract. In any event, a specific agreement for delivery in Limassol may be thought of as overriding such a general provision. However, this definition would seem to indicate that delivery at the place of shipment under a documentary sale is an internationally well- known concept. 33. Turning to the letters between the parties, I note that the critical term, which comes through into the final invoices, is for "DELIVERY CFR Limassol". In the invoices this is expressed as "Terms of delivery… Cost and freight Limassol". In my judgment that means in context, in accordance with the well-known rules discussed above, that possession will prima facie be transferred to the buyers on shipment on terms that the sellers will procure for the buyers a to carry the goods to Limassol. There is no question here of the goods being bought afloat. Nor is there any question of title being retained until payment, or transfer of the documents. Thus risk, title and possession were all intended to pass on shipment, at latest.

34. The question then arises as to whether the additional reference in the invoices (and also in the proforma invoices issued shortly prior to the final invoices) for "Place of delivery LIMASSOL" turned this contract into an ex ship contract for delivery in Limassol. In my judgment, however, it did not. I accept Mr Bools' submission that this is an error, a merely administrative filling in of an extra box on the standard invoice form. That box was designed to cater for the case where the agreed final destination might be subsequent to the port of discharge. Its filling in here simply reflected the fact that the ultimate agreed destination of the cider under the contract went no further than the port of discharge. It did not fundamentally change the agreed contractual basis of the sale. Although it would be theoretically possible to have title and risk pass before delivery, that would in the circumstances be a most odd contract to make. It would, as Mr Lord accepted, mean that if delivery never took place because the goods were lost at sea, the sellers could not be liable for that loss, and would be entitled to the price despite non-delivery (and despite the fact that prima facie the price is the quid pro quo for delivery). In the meantime, the bills of lading, consigned to the buyers, had on shipment been posted to the buyers, a requirement of the contract reflecting the fact that the sellers had ceded possession and control over the goods to the buyers. In such a case, what does it mean for delivery to be effected only at Limassol? In makes no sense.

35. Thus Mr Lord did not seek to support his primary submission by reference to the argument, advanced to the judge below, that Limassol had been impliedly agreed as the place of delivery because of the contractual term that payment would be 90 days from arrival. As the judge remarked, that went only to the time of payment and did not alter the effect of the CFR term. Similarly, Mr Lord did not submit that reference to payment being due 90 days "after arrival" meant that in the absence of safe arrival the price was not due. Mr Lord accepted that risk and title had passed on shipment, and that the buyers had agreed to look to their contract of carriage and to their insurance in the case of loss. In such circumstances, if the goods had been lost, payment would in my opinion have been due 90 days after the vessel arrived (or ought to have arrived, if it too was lost). The payment term was not 90 days "after delivery in Limassol" but "after arrival of the vessel" (as stated in the buyers' original letter), or "from date of arrival" (as expressed on the invoices).

36. The only authority cited by Mr Lord to exemplify the situation he contended for was Galbraith & Grant Ltd v. Block [1924] 2 KB 155. That was the sale of a case of champagne by wine merchants to a licensee. It was a term of the contract that the champagne should be delivered to the licensee's premises. The case was lost because it was signed for at those premises by a rogue. Lush and Greer JJ, on appeal from the county court, held that good delivery had been effected when it was made to a person at the buyer's premises apparently authorised to receive the goods. It seems to me, however, that this case is of no assistance to Mr Lord. That was the most straightforward of contracts, where unascertained goods are to be delivered directly to the buyer, at his premises, by the seller. It was not an international sale. It was not a documentary sale. The agreed place of delivery was at the buyer's premises. Although a carrier was involved, he was the seller's agent. It was just as though a department store had delivered an item which had been bought on the telephone for delivery at the customer's home, using its own delivery service.

37. Mr Lord sought to support his submission by observing that the sellers' claim form itself refers to the invoices as being the foundation of their claim. However, it was natural for a straightforward claim for the price to be particularised by reference to an invoice. Mr Lord also referred to a witness statement made on behalf of the sellers, which referred to "such order and contract being evidenced by the invoices". However, it was not said that the contract was contained in the invoices, and the self- same witness statement relied on all the contractual documents, including the acknowledgment of order forms and their reference to Incoterms.

38. In my judgment, therefore, the buyers' primary submission, that it was an express term of the contract that delivery was to be effected at Limassol and not before, fails.

Destination as a characteristic place of delivery for the purposes of article 5.1(b)?

39. The sellers' alternative submission was that the agreed destination should be adopted as a matter of English law as a characteristic place of delivery for the purposes of article 5.1(b). In effect the place of "complete delivery" should be adopted as the "place…where…the goods were delivered or should have been delivered". Mr Lord did not describe this as an autonomous meaning to be imposed on all sales under all national systems of law. He accepted that the answer had to be found under English law. In that I think he is correct. First, article 5.1(b) stresses that the solution has to be found on a contract by contract basis ("where, under the contract, the goods were delivered…"). That necessarily involves a of the proper law. Secondly, it may be said that the whole of article 5.1(b) is an autonomous meaning itself, because it states the conventional rule for the "place of performance of the obligation in question" for the "case of sale of goods". Thirdly, in Industrie Tessili Italiana Como v. Dunlop AG [1976] ECR 1473, the European Court of Justice, speaking of the original article 5 of the Brussels Convention , concluded that the "place of performance of the obligation in question" must be determined by reference to the substantive (national) law applicable under the conflict of laws rules of the forum court (see at paras 14/15).

40. Mr Lord supported his submission by reference to the purpose of the Judgments Regulation. In this connection he referred to paragraph 11 of its preamble, which states:

"(11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant's domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor."

41. On this basis, Mr Lord submitted that article 5.1(b) must be applied so as to provide a certain and easily predictable answer to the relevant jurisdictional question. He also emphasised that article 2, providing jurisdiction in the defendant's domicile, remained the primary rule. There was therefore no need to give a special jurisdiction such as was to be found in article 5.1 any wider latitude than was necessary, since the country of domicile was a place where the defendant could always be sued, and it was well recognised that for these reasons such special jurisdictions should be interpreted restrictively: see Kleinwort Benson Ltd v. Glasgow City Council [1999] 1 AC 153 at 167B, citing the European Court of Justice in Kalfelis v. Bankhaus Schröder Münchmeyer Hengst and Co (Case 189/87) [1988] ECR 556 at paras 19/20. Unless some such approach was adopted, Mr Lord said, the intricacies and difficulties of the English law would render article 5.1(b) effectively futile.

42. In my judgment, however, this submission overstates the difficulties. The ramifications of documentary sales have become well known. In their essence they can be succinctly expressed, for instance, in this passage of Benjamin (at para 19-010): "In general. The duties of a c.i.f. seller are, first to ship (or procure a shipment of) goods in accordance with the contract and, where necessary, to appropriate such goods to the contract; secondly to procure or prepare the proper shipping documents; and thirdly to tender these documents to the buyer, or as the buyer directs. He is not under any duty to ensure the actual physical delivery of the goods at the c.i.f. destination; though he is under a duty not to take active steps to prevent such delivery."

43. Talk of the "three stages of delivery" is an attempt to highlight different aspects of the contract: but, save where delivery and the transfer of title are delayed either by the need to purchase goods afloat or the reservation implicit in the retention of the documents, which is not this case, everything occurs at latest at shipment. The third stage, albeit called "complete delivery", essentially reflects only the facts that the seller might (in theory) wrongly attempt to divert the goods at the last moment and that the buyer might still have an opportunity to reject the goods following inspection at the port of arrival. In every other respect, however, and, most significantly, in the sense that arrival of the goods at destination is no part of the seller's duty (as Benjamin observes in the passage just cited), actual physical delivery of the goods at destination is no part of the seller's obligations in performance of his contract. If, therefore, any stage of delivery is to be selected for the purposes of article 5.1(b), it seems to be least likely that it is the third stage.

44. In the court below, counsel then representing the buyers did not submit that the place where the goods are unloaded from the vessel would normally be the place where the goods are delivered under a cif or c&f contract (which is Mr Lord's alternative submission): see Andrew Smith J at para 21, where he continued:

"He was right not to do so: the only connection between the destination of the goods and the contract is that the seller is obliged to arrange for a contract for the carriage of the goods to the agreed destination or to acquire goods that are to be carried there."

45. In a typical case (albeit not this case), where the bill of lading is taken to the seller's order and he intends to retain title until he is paid on tender of the shipping documents, there is, I see, an argument that the place where the goods are delivered might be said to be not the place of shipment but the place where the documents are tendered: as Fawcett, Harris and Bridge have argued (see above at para 27). As to that argument, however, the judge below said this:

"While acknowledging the respect to be paid to a work of such authorship, I am unable to accept that the Regulation confers jurisdiction upon the courts of the place where the documents are transferred. This is not to question the analysis of the nature of cif and c&f contracts. However, this view does not seem to me to recognise the purpose of article 5 and in particular its purpose in relation to sale of goods contracts. There is simply no reason to suppose that the place where the documents are transferred will typically be connected with the dispute between the parties or the action. This can readily be illustrated by considering how documents are transferred under letter of credit arrangements. Moreover, this interpretation of the Regulation does not even have the virtue of clinging to the literal wording of the article, which refers to the transfer of the goods: the fact that possession of the goods is transferred symbolically by the delivery of documents affects when they are transferred or taken to be transferred, but not where they are at that time: in reality, the goods might well be at sea when the documents are tendered."

46. The judge later (at para 23) reserved his view as to where goods are delivered in a case where the seller buys them afloat.

47. I am inclined to agree with the judge about the case where the transfer of the shipping documents completes at any rate the symbolic delivery of the goods. What article 5.1(b) looks to is where the goods are delivered, not where the documents are tendered, however much, in Bowen LJ's famous phrase the bill of lading is "a key which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be" (Sanders v. Maclean (1883) 11 QBD 327 at 341). Where then are the goods delivered in the typical case of goods shipped by a seller under a bill of lading taken to the seller's order? Wherever the goods happen to be at the time of transfer of the documents? If so, that might be at sea – in which case article 5.1(b) would provide a merely illusory alternative place of jurisdiction. Or it might be at destination, if the sea voyage is short and/or there is delay in transferring the documents. And often the buyer might anticipate the bill of lading and even obtain actual physical delivery at destination on the provision to the carrier of a letter of indemnity: in such a case, is article 5.1(b) delivery delayed until the shipping documents are finally tendered and paid for?

48. These questions are not easily answered, and do not have to be answered in this case. I would venture the opinion, but no more, that the solution may be to look to what has been described as the provisional delivery which takes place at shipment. After all, in the case of documentary sales what the parties are primarily concerned with is not actual physical delivery at destination – something which may never take place even though the seller has fulfilled all his obligations and the buyer is still obliged to pay the price – but a legal concept of delivery. Moreover, albeit in such a case title may not be transferred at shipment, risk is, and, subject to transferring the documents, which the seller is in any event bound to do against of the price, the goods are delivered, under the contract, to the carrier for carriage to the buyer.

49. Such a solution would, but I speculate, reflect a broad international consensus on the effect of documentary sales (see for instance the Incoterms definition cited above).

50. In this context it is also important to consider what article 5.1(b) is concerned with: and that is the significance of the place of performance of contractual obligations as a connecting factor with a particular jurisdiction. As paragraph (12) of the preamble to the Judgments Regulation states:

"(12) In addition to the defendant's domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice."

51. In his Jenard Report on the original Brussels Convention (OJ 1979 No C 59 at p22), Mr Jenard commented on articles 5 and 6 as follows:

"Adoption of the 'special' rules of jurisdiction is also justified by the fact that there must be a close connecting factor between the dispute and the court with jurisdiction to resolve it."

52. The same point was made by the ECJ itself in Tessilli (at paras 12/13):

"Article 5 however provides for a number of cases of special jurisdiction at the option of the plaintiff. This freedom of choice was introduced in view of the existence in certain well-defined cases of a particularly close relationship between a dispute and the court which may be most conveniently called upon to take cognizance of the matter."

53. In Shenavai v. Kreischer Case 266/85 [1987] ECT 239 the ECJ said this (256, at para 18):

"On the other hand, no such uncertainty exists for most contracts if regard is had solely to the contractual obligation whose performance is sought in the judicial proceedings. The place in which that obligation is to be performed usually constitutes the closest connecting factor between the dispute and the court having jurisdiction over it, and it is this connecting factor which explains why, in contractual matters, it is the court of the place of performance of the obligation which has jurisdiction."

See also Custom Made Commercial Ltd v. Stawa Metallbau GmbH [1994] ECR I-2913, 2955, at para 12. 54. The concept of the "obligation in question" under the Brussels Convention has given rise to difficulties: see, for instance, in this jurisdiction Royal & Sun Alliance Insurance plc v. MK Digital FZE (Cyprus) Ltd [2006] EWCA Civ 629, [2006] 2 All ER (Comm) 145 at paras 92/100. There has been oscillation between identifying a characteristic obligation of a contract as being the obligation in question, and, as the ECJ finally determined, outside the special case of contracts of employment, "the contractual right on which the plaintiff's action is based" (Custom Made at para 23). In effect, the Jurisdiction Regulation by its article 5.1(b) (and 5.1(c) in relation to contracts for the provision of services) has reverted to defining a characteristic obligation as being the definitive obligation in question. In Briggs & Rees, Civil Jurisdiction and Judgments, 4th ed, 2005, at para 2.123 the learned editors give a characteristically vibrant account of the historical forces at work in this narrative. They express the view that the original article 5.1 has been eviscerated ("Apart from the sale of goods and the supply of services, and remembering that contracts of individual employment have been removed to the new Section 6 of Chapter II, what other contracts are there?"). They continue (at p147):

"But sub-paragraph (b) operates within the context of the law which developed under the original Article 5(1) of the Brussels Convention. It is, after all, only the identification of the obligation in question which is re- defined for the purposes of Article 5(1) of the Judgments Regulation."

55. I agree: and that is among the reasons why I would reject Mr Lord's alternative submission that the place of delivery is the place of physical delivery to the buyer at destination even in cases where the seller has already performed all his obligations by shipment. Sub-article (b) remains an example of the selection of "the place of performance of the obligation in question" as constituting that close connecting factor which justifies an alternative jurisdiction in that place. Therefore, the "place… where, under the contract, the goods were delivered or should have been delivered" ought to reflect a matter of obligatory performance under the contract. In a CIF or C&F contract, the seller has no obligation to deliver to destination, only to procure the shipment of goods for carriage to destination.

56. The importance of that connecting factor may perhaps be tested by reference to a number of typical situations where contract of sale of goods could lead to litigation. Thus, where the claim is a simple one for the price, it is natural to think that the place of delivery is closely connected with that obligation (although of course, by agreement, the price might be payable either in advance or, on credit, after delivery). There seems no logic, however, to sue for the price at the place of destination, where that is not the same as the place of contractual delivery. Moreover, since a buyer is typically quite likely to be found at the country of destination, an article 5.1(b) which focuses on the place of destination as the place of delivery would hardly seem to offer an alternative jurisdiction to that of domicile. Where, moreover, there is a dispute about the price because of a dispute about the quality of the goods, it will be their quality prima facie at the point of shipment that will typically be in issue, not their quality at the place of destination. Similarly, where it is the buyer who sues, typically he does so on the ground of non-delivery or mis-delivery or delivery of defective goods. There again, it makes sense to look to the place where the contractual obligations of the seller mandate such delivery, rather than at destination where that is different. That remains the case, even though it may turn out in individual situations, or even typically, that goods which are defective on arrival at destination are surveyed there. What, however, remains critical in a typical documentary sale is the quality of the goods which were shipped. Inspections on shipment are also frequently carried out in international trade.

57. Thus, although a general rule may not fulfil its function in every case, an interpretation of article 5.1(b) as referring to the place where delivery is due under the contract, rather than to the place of the goods' destination where that differs, would far better fulfil the general purpose of article 5.1 of putting forward an alternative place of jurisdiction (to that of domicile) which reflects the place where the typical contractual obligation of delivery is performed. It is that obligation which is deemed to be the "obligation in question". A place of destination which differs, as it typically does in documentary sales, from the contractual place of delivery where the seller's obligations are generally performed does not meet the purpose of a jurisdictional rule which is seeking a close connecting link between place of performance of the obligation in question and forum.

Conclusion

58. For these reasons, I would dismiss this appeal. Although the submissions have to some extent changed, my reasons are, I think, very largely the same as those of the judge.

Lord Justice Waller:

59. I agree.