In Claxton Engineering Services Ltd v TXM Olaj-Es Gazkutato KFT [2010] EWHC 2567 (Comm), the Court was required to decide on the correct jurisdiction for a claim brought by an English claimant against a Hungarian defendant, where the contract was made on the latter’s standard terms and conditions which contained a Hungarian arbitration clause but which were amended by subsequent agreement to delete that clause and incorporate an English jurisdiction clause.

The Claimant, a manufacturer of specialist engineering equipment, claimed in England against the Defendant for the balance due on invoices issued by the Claimant for goods ordered by and manufactured for the Defendant. The Defendant contested the jurisdiction and applied for a stay of the proceedings, arguing that the contract incorporated a Hungarian arbitration clause set out in its standard terms and conditions. Alternatively, under Article 2 of the Brussels Regulation the Defendant had to be sued in its country of domicile, i.e. Hungary. The Claimant argued that, as a result of exchanges between the parties, amendments to the standard terms and conditions proposed by the Claimant were accepted. These amendments deleted the arbitration clause and incorporated an English exclusive jurisdiction clause. The Defendant submitted that each contract was formed on the basis of the Claimant’s acceptance of the standard terms and conditions containing the agreement to Hungarian arbitration, and a waiver by the Claimant of its own terms and conditions.

The Court decided that in the circumstances, where the Claimant was arguing that the contract was subject to an English jurisdiction clause and the Defendant that it was subject to a Hungarian arbitration agreement, and where both parties agreed that the matter was capable of being determined on written evidence alone, it was appropriate for the English court to resolve the threshold issue of whether an arbitration agreement was reached between the parties.

The conduct of the parties indicated that the contract for each order was concluded when the Claimant received the Defendant’s written instructions to proceed with manufacture (as per the Claimant’s earlier quote) or, at the latest, when the Claimant confirmed that manufacture had commenced. Formation of the contract did not depend on the Claimant’s receipt of the Defendant’s purchase orders, and the signing and returning by the Claimant of two such purchase orders did not mean that the Claimant was agreeing to the Defendant’s terms for the future.

When the Claimant, for the first time, reviewed the Defendant’s terms and conditions and put forward modifications, including the deletion of the Hungarian arbitration clause and incorporation of an English jurisdiction clause, this constituted a counteroffer. That the Defendant continued to trade with the Claimant, without rejecting this counteroffer, amounted to acceptance of it. The correct analysis was therefore that the Defendant accepted the Claimant’s counteroffer of English law and jurisdiction by its subsequent performance.

The Defendant’s application for a stay of proceedings was therefore refused.