Somportex, Ltd. v. Philadelphia Chewing Gum Corp.

Starting in 1964, Somportex, Ltd. (plaintiff), an English company, entered negotiations with Philadelphia Chewing Gum Corporation (Philadelphia) (defendant), an American company based in the city of Philadelphia, to represent Philadelphia as its agent in England for a new chewing gum known as Tarzan gum. After a telephone call on December 17, 1966 and the exchange of certain documents, Somportex believed it had a contract with Philadelphia. In reliance on the contract, it obtained a sizeable letter of credit. Philadelphia did not believe there was a contract but that the parties were still negotiating. In 1967, Philadelphia withdrew from the negotiations. Somportex sued Philadelphia in England and, on May 10, 1967, obtained a writ to serve the out-of-jurisdiction defendant, Philadelphia. Philadelphia received notice of the writ. At this point, Philadelphia could have done nothing in response to the writ and then later disputed the validity and enforcement of any English judgment in the United States. Alternatively, it could have responded to the writ on the merits. However, Philadelphia took the option of entering a conditional appearance to challenge the English court’s jurisdiction. Philadelphia later asserted it had not fully understood the implications of the conditional appearance and sought leave to withdraw its appearance based on a mistake. Philadelphia hoped to establish that it had not submitted to the court’s jurisdiction. The English court ruled first on Philadelphia’s motion to set aside the writ, and the court denied the motion. Under English law, a conditional appearance became unconditional if the court denied a challenge to jurisdiction. However, the court gave Philadelphia seven days to appeal before the court entered the dismissal. It also allowed Philadelphia to withdraw its appearance within the same period, which it did. Somportex appealed.