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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Ophthalmic Innovations International (UK) Ltd v Ophthalmic Innovations International Incorporated [2004] EWHC 2948 (Ch) (16 December 2004) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2004/2948.html Cite as: [2004] EWHC 2948 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		16 December 2004

Mr Justice Lawrence Collins:

I Background

1. The claimant, Ophthalmic Innovations International (United Kingdom) Ltd (“the claimant”), a company incorporated in England, and with its principal place of business there, carries on the business of importing and distributing ophthalmic equipment into the United Kingdom, and, through the United Kingdom, to Europe and Asia. The defendant, which is named in the proceedings as Ophthalmic Innovations International Inc but which is now called OII International, Inc (“the defendant”), is a company incorporated in the State of Delaware, with its principal place of business in Ontario, California. The defendant is a manufacturer of ophthalmic surgical products.
2. The claimant's holding company is Medcorp Europe Ltd (“Medcorp”), an English company. Medcorp entered into a contract with the defendant on October 24, 1994 to act as the sole distributor of the defendant's products in the United Kingdom and the Republic of Ireland (“the Distribution Agreement”). The Distribution Agreement envisaged that Medcorp would incorporate the claimant to market the products. The parties renewed the Distribution Agreement on October 22, 1998 for a further term of five years. Since the expiry of that period on October 22, 2003, the parties have continued to act on the basis of the Distribution Agreement.
3. Clause 14 of the Distribution Agreement provided: “This agreement shall be construed in accordance with the laws of the State of California.”
4. Between 1999 and 2000 the defendant sold to the claimant a number of “AquaSense” lenses pursuant to the Distribution Agreement. AquaSense lenses are designed to be implanted into patients' eyes to correct cataract and other sight-related problems.
5. The claimant's evidence is that the defendant launched AquaSense lenses in March 1999, and the claimant began to import these lenses into the United Kingdom and to distribute them to National Health Service and some private hospitals shortly thereafter. The claimant became aware of problems with the lenses in 1999 after a telephone conversation with a Mr Perry, an ophthalmic surgeon who worked at Kidderminster General Hospital. Mr Perry stated that problems with the lenses had led to patients being subjected to steroid treatment for 5-6 weeks. The defendant was notified of these problems and apparently introduced a new form of packaging.
6. More serious problems became apparent in autumn 2000. Some patients were experiencing opacification (or clouding) of the lenses several months after their implant. The problem was curable only by explanting the clouded lenses, and implanting a fresh lens. Investigations carried out by the defendant on explanted lenses revealed that calcium phosphate had formed on the surface of each lens, thus causing a clouding effect. The claimant says that it now appears likely that the clouding of the lenses was caused by the build up of natural protein on the implanted lense caused by a reaction triggered by residues left on the lense by the new type of sterile packaging used by the defendant's packaging supplier in the United States.
7. The claimant ceased importing the lenses on November 3, 2000. Its evidence is that Morecombe Bay NHS Trust and 7 other private hospitals/clinics are seeking from the claimant the costs of explant/new implant operations. I was told (although this was not in evidence on the application for permission to serve out of the jurisdiction or on the application before me) that from December 17, 1999 (when the new packaging was introduced for the lenses) until November 3, 2000, the claimant imported 2,219 lenses. 906 of these had been used to implant into patients eyes and 1,313 lenses were returned unused. There have been approximately 283 operations to explant clouded lenses. The defendant has paid for 181 operations. The National Health Service or the patient's own health insurance has paid for approximately 102 operations.
8. I was also told that, in addition, a number of individual claims have been made against the claimant: there were three claims with which the defendant's insurers were dealing; there had been a claim which the claimant settled for £2,500 plus costs; there was a claim on which no action had been taken; and there had been an unsuccessful application for a group litigation order pursuant to CPR 19.11.
9. By a complaint dated April 9, 2003 the claimant commenced proceedings against the defendant in the Superior Court of the State of California, County of Saint Bernardino, in which it sought damages for negligence, breach of warranty, and strict liability regarding the sale of the lenses between December 1999 and December 2000. The damages sought were in respect of the claimant's loss of business and loss of reputation, and in respect of third party claims. The claims for loss of business and loss of reputation have been settled through a payment of $43,500 by a way of a credit to the claimant's account. Consequently the only live issue in the Californian proceedings relate to the defendant's liability to compensate (i.e. indemnify) the claimant in respect of claims by third parties.
10. The defendant filed an answer on June 11, 2003 and an amended answer on September 29, 2004, in which the defendant contended that any defect in the lenses occurred as a result of a defects in their packaging. The packaging was designed and manufactured by Limtech Inc, a Wisconsin corporation, and in a cross-complaint by the defendant against Limtech Inc dated April 13, 2004 the defendant seeks a contribution or indemnity. The uncontested evidence is that the trial is due to take place in 2005.

II The Indemnification Agreement

11. On December 4, 2003, the defendant executed under the hand of Mr Aguilera (its President) and Mr Rezanoor (its secretary) what was described as an “Indemnification Agreement.” It reads in its entirety:

“Ophthalmic Innovations International, Inc. will indemnify and hold harmless Ophthalmic Innovations International (UK) LTD., (“OII UK”) each affiliate of OII UK, and their respective officers and directors against any and all claims, suits, proceedings, demands, recoveries or expenses, including without limitation, expenses of total or partial recalls and reasonable attorney's fees that may be brought or instituted against OII UK or any such affiliate, officer or director based on or arising out of the use or sale of the products where such claim or action results from defects in manufacture and/or materials of the products, unauthorised changes to the design of the products or specifications or the failure of the product to conform with the specifications, except to the extent such failure is due to any fault or neglect of OII UK.

Ophthalmic Innovations International, Inc. shall maintain product liability insurance in the amount of at least one million dollars ($1,000,000) and shall provide OII UK with evidence of this coverage, and the naming of OII UK as an additional insured under such policy. OII UK shall promptly notify Ophthalmic Innovations Inc. of any such demand or claim, which comes to its attention.

Effective Date: December 4, 2003”

12. The defendant says that the background to the Indemnification Agreement is that the claimant has for several years purchased lenses from the defendant for distribution in Korea (pursuant to a licence which is not before the court). In about late 2003 a question appears to have arisen as to whether the claimant wished to renew its existing licence with the defendant relating to sales of the defendant's “BioVue” lenses to Korea and as to whether those lenses had passed certain safety tests.
13. On November 5, 2003 Ms Cathey Ellis, the regulatory affairs coordinator of the defendant, e-mailed Mr Rowswell in connection with sales to Korea, and asking him to execute letters certifying that the BioVue lenses had undergone certain tests, and that test reports were rue and accurate copies of the originals. On November 12, 2003 Mr Rowswell replied to Ms Ellis to say that because of all the problems which had been encountered with the AcquaSense lenses, they needed to be particularly careful that BioVue lenses were truly free of defects. He said that he was concerned that the lenses that were being sold in Korea were being manufactured by the defendant but sold under the claimant's name. If the lenses were defective, he needed to be indemnified from harm by the defendant as the manufacturer. A draft Indemnification Agreement was enclosed. According to the defendant, the discussions and surrounding correspondence leave no doubt that the indemnity was intended to apply to a prospective sales of lenses in Korea. It was signed only by the defendant because it was a unilateral contract.
14. It was in this context, according to the defendant, that the Indemnification Agreement the subject of the English proceedings was granted. The reference to “effective date” was inserted by the defendant consistently, as the defendant says, with the parties' intention that the indemnity should relate to prospective sales of lenses to Korea, and not, as the claimant now seeks to contend, to past sales of lenses under the Distribution Agreement.

III The present proceedings

15. By these proceedings the claimant seeks declarations concerning the Indemnification Agreement. The particulars of claim refer to the claims which have been, or may be, made against the claimant by NHS Trusts, private hospitals, and individuals.
16. According to the particulars of claim the Indemnification Agreement was executed when the defendant's United States insurers intimated their intention to refuse an indemnity, and when the claimant instead sought a direct contractual indemnity from the defendant. The proceedings seek a declaration to the effect that the defendant, by virtue of the Indemnification Agreement, will indemnify the claimant for all claims, whenever commenced, related to and arising out of the claimant's importation and distribution of AquaSense lenses to third parties in the United Kingdom.
17. Permission to serve the proceedings on the defendant in California was granted by Deputy Master Jefferis on June 25, 2004, following a without notice application by the claimant.
18. The evidence took the following course. In his witness statement dated June 23, 2004 in support of the application for permission to serve out of the jurisdiction, Mr Rowswell stated as follows: (a) the Indemnification Agreement had been entered into following the refusal by the defendant's United States insurers to refuse any indemnity in favour of the claimant, and when the claimant instead sought a direct contractual indemnity against all claims made against it in the United Kingdom; (b) the application was made under CPR 6.20(3) and/or CPR 6.20(5)(c) and/or CPR 6.20(6); (c) the Indemnification Agreement was governed by English law, and that he was advised that CPR 6.20(3) and CPR 6.20(6) prima facie applied to the circumstances of the claim; (d) the defendant had contended that the Indemnification Agreement was intended to apply only to sales of a different type of lens to South Korea, but the claimant simply pointed to what the Indemnification Agreement stated, and the obvious fact that it was not, on its face, limited to sales to Korea or to sales of any specific lens.
19. Mr Rowswell also stated that the claimant had instructed lawyers in the United States in an attempt to preserve its interests and had been involved in preliminary proceedings in an attempt to enforce a right to an indemnity under the defendant's United States policies of insurance. That had not been achieved and now looked unlikely to be achieved in the United States. Given that the claims in respect of which the United Kingdom indemnity was sought would be litigated in the United Kingdom, it was likely to be less costly and more convenient to determine the applicable law and extent of the indemnity afforded by the defendant in England rather than in United States.
20. Permission to serve out of the jurisdiction was given on the basis of this witness statement, and when no acknowledgement of service was filed, the claimant sought summary judgment. In the witness statement in support of that application, Mr Rowswell repeated what he had said about the Indemnification Agreement in the application for permission to serve out of the jurisdiction.
21. The defendant then applied for an extension of time to file an acknowledgement of service, and then applied for an order declaring that the court has no jurisdiction to try the claim or that it should not exercise such jurisdiction as it might, and setting aside service of the claim form.
22. In support of that application Ms Peatfield, who is employed by the defendant's solicitors, referred to the correspondence preceding the execution of the Indemnification Agreement, and stated that the defendant contended that the indemnity was intended to and did relate only to sales of lenses in Korea. She also said that there was no disclosure of the fact that related proceedings had been pending in the Californian courts for more than a year between the claimant and the defendant.
23. Mr Rowswell replied with a witness statement in which he said that when he made his first witness statement he was fully aware of and familiar with the proceedings in the United States. Before he made his witness statement he had asked the claimant's United States attorney to advise whether the United States proceedings were concerned in any way with an indemnity under the Indemnification Agreement, or were in other ways relevant to a claim under the Indemnification Agreement in the United Kingdom. The clear advice was that there was no overlap between the two sets of proceedings. There never had been nor was there any claim by the claimant under the Indemnification Agreement in the United States proceedings.
24. On this application the principal points made by Miss Bingham for the defendant are these. The first group of points relates to the contention that there were numerous defects in the original application to serve out of the jurisdiction, including (a) reliance on heads of CPR 6.20 on which reliance is no longer placed (6.20(3) and 6.20(6); (b) the failure of the evidence in support to contain the statement required by CPR 6.21(1)(b) that the claimant believed that the claim had a reasonable prospect of success; and (c) the non-disclosure of the Californian proceedings. On this aspect Miss Bingham relied on the point that the exorbitant jurisdiction conferred by CPR 6.20 is always exercised with extreme caution and the court is slow to cure irregularities inherent in applications for permission to serve out.
25. The second group of points relates to whether permission should in any event have been given. They are that the court should not have granted permission to serve out because (a) there is no serious issue to be tried on the merits; (b) there is no good arguable case that the case falls within the only head of CPR 6.20 which is relied on, CPR 6.20(5)(c) (contract governed by English law); and (c) England is not in any event the forum conveniens.
26. On the question whether English law governs the Indemnification Agreement, Miss Bingham argues that the effect of Article 4(2) and Article 4(5) of the Rome Convention on the law applicable to contractual obligations (“the Rome Convention”), to which effect is given by section 2 of the Contracts (Applicable Law) Act 1990, is that in the absence of an express or implied choice of law under Article 3) the contract is presumed to be governed by the law of California as the law of the state where the defendant (being the party who is to effect the performance which is characteristic of the contract) has its central administration; and that the presumption is not displaced by Article 4(5).
27. In particular, Miss Bingham says that in this case, there are no factors which connect the Indemnification Agreement proceedings with England save for the place of incorporation of the claimant. In particular, it is not accepted that the Indemnification Agreement encompasses any claims arising from the sale of AquaSense (or any other) lenses in the United Kingdom. The Indemnification Agreement is only apt to cover claims arising (a) after the “effective date” of the indemnity (December 4, 2003) and (b) as a result of sales of BioVue lenses in Korea. In the circumstances, the evidence falls far short of the compelling evidence required in order to displace the presumption, and the Indemnification Agreement is to be treated as governed by the law of California.
28. Mr Ramsden for the claimant argues that the presumption is very weak and should be disregarded in this case. He relies on Credit Lyonnais v. New Hampshire Insurance Co. [1997] 2 Lloyd's Rep 1, 5, although he accepts that no concluded view was expressed on the strength or weakness of the presumption in subsequent cases. He also He relies on a passage in Dicey & Morris, Conflict of Laws (13^th ed. 2000), para 32-124, approved by the Court of Appeal in Bank of Baroda v. Vysya Bank Ltd. [1994] 2 Lloyd's Rep 87, 93: “Inevitably the solution of individual cases will depend on the facts, but in principle it is submitted that the presumption may be most easily rebutted in those cases where the place of performance differs from the place of business of the party whose performance is characteristic of the contract.”
29. Consequently, he submits that whilst the claimant has the burden of showing that the presumption should be displaced, this burden should be lighter where, as here, the place of performance differs from the place of business of the party whose performance is characteristic of the contract. He accepts that the provision of an indemnity by the defendant is the performance which is characteristic of the contract, and that the presumption therefore is that California law applies. But he submits that Article 4(5) applies to displace the presumption, and that the contract is most closely connected with England under Article 4(1). In particular he says: (a) the Indemnification Agreement provided for the defendant to indemnify the claimant, a company incorporated and domiciled in England, and therefore the defendant's place of performance is England; (b) although the Indemnification Agreement provides for the defendant to maintain product liability insurance cover for the claimant, this is a secondary or supportive obligation to that of providing an indemnity; (c) the claimant is obliged to notify the defendant of any claim made against it in relation to the lenses, and the place of the claimant's performance under the contract is England; (d) the subject matter of the Indemnification Agreement is an indemnity relating to actions arising out of the distribution of the lens in England, which will be heard in England under English law; (e) the potential claimants are likely to be domiciled in England, and there has been no suggestion that any of the claimants seeking compensation for corrective surgery are domiciled outside England.
30. Mr Ramsden submits that the following factors are irrelevant in determining whether Article 4(5) should operate to rebut the presumption in Article 4(2): (a) the origins of the contract, especially that it was signed and negotiated in California, has no relation to the performance of the contract; (b) the choice of law clause in the Distribution Agreement, which is an entirely separate contract, to which the Indemnification Agreement makes no reference.
31. On forum conveniens Miss Bingham argued in her skeleton argument that the question for the court under this head is whether there is another court with competent jurisdiction which is clearly and distinctly more appropriate than England for the trial of this action: Spiliada Maritime Corp. v. Cansulex Ltd [1987] AC 460. The factors to which the court has regard include: (a) the place with which the dispute has the most real and substantial connection, including its governing law; and (b) convenience and expense relating to witnesses, documentation and procedure.
32. As to real and substantial connection, the Indemnification Agreement is a unilateral contract signed in California by two Californian residents on behalf of a company which has its principal place of business in California. The subject matter of the agreement is optical lenses manufactured and packaged in California: the obligation to indemnify arises where claims arise as a result of “defects in manufacture and/or materials”. The “mischief” of the indemnity is therefore acts and omissions taking place in California. The Indemnification Agreement is silent as to where the claims in question are to be brought, but the defendant's position is that such claims could only be brought as a result of sales to Korea (not as a result of sales to the United Kingdom). It is governed by California law.
33. The other factors are: (a) the Californian proceedings are already duly constituted (with each side having instructed and paid for Californian attorneys to plead and present their case: the “Cambridgeshire factor” in Spiliada Maritime Corp. v. Cansulex Ltd); (b) the question of the scope of the Indemnification Agreement could conveniently be determined in the Californian proceedings; (c) all of the relevant witnesses of fact are resident in California save for two (and one of those is based in Texas); (d) all of the documentation relating to the manufacture and packing of the lenses is in California.
34. If the claimant is to bring a claim based on the Indemnification Agreement, there would be a very considerable cost saving if the claim were to be heard with the Californian proceedings. There is no justification for requiring the defendant to instruct new lawyers in England to investigate and litigate matters which are already the subject of proceedings initiated by the claimant in California. Both sets of proceedings raise (via different routes) the same issue, namely “Is the defendant obliged to indemnify the claimant in respect of third party claims arising from sales of AquaSense lenses?” This question should be resolved (if at all) in a single forum, and plainly the forum in which the question can be most conveniently resolved in the interests of the parties and the interests of justice is California.
35. Mr Ramsden for the claimant argues that the claims made in the California litigation do not rely upon, involve or affect the Indemnification Agreement. The litigation is principally concerned with issues of product liability and the question of whether the claimant was told that it would be added as an insured to the defendant's United States policies of insurance covering product and public liability.
36. He accepts that a limited number of witnesses, relevant to determination of the present dispute, are ordinarily resident in the United States, but in practice this inconvenience can be mitigated considerably and certainly ought not to be decisive.
37. Since the Indemnification Agreement forms no part of the claims in the California proceedings, there is considerable convenience in having issues and disputes relating to it determined in England, in separate proceedings, rather than have this issue added to the California proceedings only to become mired in what appear to be protracted and somewhat complex procedural wrangles presently besetting those proceedings. The defendant has sought from its United States packaging supplier, Crawford Technical Services, an indemnity against claims made against it, including by the claimant. Subject to the issue of jurisdiction, the defendant is most unlikely to have a substantive defence to the claimant's claim, whether it succeeds under the Indemnity Agreement or on the basis of some separate cause of action.

IV Relevant principles

38. The relevant principles relating to jurisdiction are these. CPR 6.21(2A) provides that the court will not give permission for service out of the jurisdiction unless it is satisfied that England is the proper place to bring the claim. The claimant has to satisfy the court of three matters: first, that it has a cause of action against the defendant “with a reasonable prospect of success” (CPR 6.21(1)(b)); second, that the case falls within one of the heads of CPR 6.20; and third, that England is the appropriate forum.
39. On the first question, it was held under RSC Order 11, the predecessor of CPR 6.20, that the standard of proof which the claimant had to satisfy in showing that it had a cause of action was whether, on the written evidence, there was a serious question to be tried, i.e., a substantial question of fact or law, or both, which the claimant bona fide desires to have tried: Seaconsar Far East Ltd v Bank Markazi Iran [1994] 1 AC 438. It is not likely that the test under CPR 6.21(1)(b) of a “reasonable prospect of success” is any different.
40. On the second question, the standard to be applied when deciding whether the jurisdiction of the court had been sufficiently established under one or more of the heads of what is now Rule 6.20 is that of good arguable case, which is a concept with some degree of flexibility depending upon the issue: Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, at 558, per Waller LJ, approved [2002] 1 AC 1, at 10, per Lord Steyn.
41. On the third question, which goes to the discretion of the court, the claimant must show good reason why service on a foreign defendant should be permitted: see Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460.
42. In Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 at 478 et seq, Lord Goff of Chieveley confirmed that in service out of the jurisdiction cases the burden of proof was on the claimant, whereas in stay cases the burden was on the defendant. In the case of service out of the jurisdiction the claimant is seeking to persuade the court to exercise its discretionary power to permit service on the defendant outside the jurisdiction:

“The effect is, not merely that the burden of proof rests on the plaintiff to persuade the court that England is the appropriate forum for the trial of the action, but that he has to show that this is clearly so. In other words the burden is, quite simply, the obverse of that applicable where a stay is sought of proceedings started in this country as a right.” ([1987] AC at 481)

43. Two other matters must be mentioned. The first is that because service out of the jurisdiction is an assertion of extra-territorial jurisdiction which could have international repercussions, it is carefully controlled by rules of civil procedure. It was held under the previous regime of Order 11 that it was very important to ensure compliance with the rules, and that irregularities should be cured only in exceptional cases: Camera Care Ltd v Hasselblad AB [1986] 1 FTLR 348. In my judgment the same principle applies under the CPR.
44. The second point relates to the duty to make full disclosure on an application without notice in the context of an application for permission to serve proceedings out of the jurisdiction, which I discussed in Konamaneni v Rolls Royce (India) Ltd [2002] 1 WLR 1269, 1301. These principles have long been applied to applications for permission to serve out of the jurisdiction: see, e.g. The Hagen [1908] P 189 at 201 (CA). In that context it has been held that it would not be reasonable to expect an applicant for permission to serve out to anticipate all the arguments or points which might be raised against his case: see The Electric Furnace Co. v. Selas Corporation [1987] RPC 23 at 29 (CA). A failure to refer to arguments on the merits which the defendant might raise at trial should not generally be characterised as a “failure to make full and fair disclosure”, unless they are of such weight that their omission may mislead the court in exercising its jurisdiction under the rule and its discretion whether or not to grant permission: BP Exploration v. Hunt [1976] 1 WLR 788, approved in Electric Furnace at 29. In BP Exploration v. Hunt, Kerr J warned (at page 894) that:

“the Court should not consider the supporting affidavit as though it were marking an examination paper, deciding one way or the other merely on the basis of the extent to which the affidavit could have been improved. The primary question should be whether in all the circumstances the effect of the affidavit is such as to mislead the court in any material respect concerning its jurisdiction and the discretion under the rule.”

45. The existence of overlapping proceedings in a foreign jurisdiction between the same or related parties (whether pending or prospective) is likely to be a particularly relevant matter which in normal circumstances must be disclosed, and the non-disclosure of which may well of itself lead to the order for permission being set aside: see GAF Corp v Amchem Products Ltd [1975] 1 Lloyd's Rep 601, 607 (Megarry J, affd CA); Konamaneni v Rolls Royce (India) Ltd [2002] 1 WLR 1269, 1301.
46. By section 2 of the Contracts (Applicable Law) Act 1990 (“the 1990 Act”) the Rome Convention on the law applicable to contractual obligations (“the Rome Convention”) is to have the force of law. The Rome Convention is contained in Schedule 1 of the 1990 Act.
47. Where there is an express or implied choice of law, that choice is given effect by Article 3 of the Rome Convention. Article 4 deals with the applicable law in the absence of choice. It provides:

“4(1) To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected…

4(2) Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, … in the case of a body corporate or unincorporated, its central administration …

…

4(5) Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.”

48. By section 3(3) of the 1990 Act, the report on the Rome Convention by Professors Giuliano and Lagarde (“the Giuliano-Lagarde Report”) may be considered in ascertaining the meaning or effect of any provision of the Rome Convention. In its commentary on Article 4(2) the Giuliano-Lagarde Report says: “Identifying the characteristic performance of a contract obviously presents no difficulty in the case of unilateral contracts.”
49. It has been held by the Court of Appeal that the Article 4(2) presumption should only be disregarded in circumstances which clearly demonstrate the existence of connecting factors justifying the disregarding of the presumption in Article 4(2): Samcrete Egypt Engineers and Contractors SAE v. Land Rover Exports Ltd [2003] EWCA Civ 2019, [2002] CLC 533, para 45, adopting the approach in Dicey & Morris, para 32–123. That decision was applied in Ennstone Ltd v Stanger Ltd [2002] EWCA Civ 916; [2002] 1 WLR 3059, at (para 41), when Keene LJ said that if the presumption was to be of any real effect, it must be taken to apply except where the evidence clearly shows the contract was more closely connected with another country.

V Conclusions

50. I am satisfied that the application to set aside the order granting permission and service of the claim form should succeed. My reasons are as follows.
51. First, there was no proper disclosure of the United States proceedings in the witness statement in support of the application to serve out of the jurisdiction. When the witness statement was signed on June 23, 2004 the proceedings in California had been on foot for more than a year. They were between the same parties, and yet Mr Rowswell merely referred to “preliminary proceedings in an attempt to enforce a right to an indemnity under the Defendant's US policies of insurance.” In fact, by the time he made his witness statement the Californian proceedings were exclusively concerned with claims seeking an indemnity against the defendant (albeit not on the basis of the Indemnification Agreement). I accept that Mr Rowswell made these statements in good faith on the basis of advice, but I do consider that this was inadequate disclosure.
52. Second, Mr Rowswell failed to comply with the requirement in CPR 6.21(1)(b) that he believed that the claim had a reasonable prospect of success. This would not matter if it were a purely formal defect, but in my judgment the claim under the Indemnification Agreement does not, on the basis of the material before this court at any rate, raise a triable issue. I consider that it is clear (at least as a matter of English law) that the exchanges immediately prior to the execution of the Indemnification Agreement are part of the factual matrix, and show that it was concerned with exports to Korea. What is more, they show that Mr Rowswell's repeated statement that it was sought following the refusal of indemnity by the United States insurers is at best questionable. I should emphasise that my decision on this point is made for the purposes of this application only, and that if this claim is added to the California proceedings, it will be for the judge in the those proceedings to decide on the interpretation of the Indemnification Agreement.
53. Third, whether or not the Indemnification Agreement is to be regarded as a unilateral contract, there can be no doubt that the party which is to effect the characteristic performance is the defendant. Consequently, the presumption is that it is Californian law which applies to the Indemnification Agreement. I am satisfied that the evidence does not clearly show that the contract was more closely connected with England. I do not consider that the fact that payments might be due in England, or that the third party claims might be in England, shows clearly that the contract is more closely connected with England. Indeed, on the contrary, the form and language of the documents shows signs of being a United States document, and it is intended to deal with claims that arise out of products supplied by the defendant to the claimant under a contract, the Distribution Agreement, which was expressly governed by Californian law.
54. Fourth and finally, I am satisfied that the claimant has not shown that England is clearly the appropriate forum. It is true that the compass of the English proceedings would be very limited. It would involve only a question of interpretation of the Indemnification Agreement, namely whether it applied only to exports to Korea and/or to supplies after December 2003, and the only evidence would be whatever evidence might be admissible as factual matrix to determine those questions. But there are proceedings in California due to be tried in 2005 involving the question whether the defendant is liable to indemnify the claimant, and all of those who are likely to be witnesses in these proceedings will be witnesses in those proceedings also. In those circumstances I am satisfied that the claimant cannot show that England is clearly the appropriate forum.