The latest dispute between the two Apple companies raises an important issue – can a contract can be made in two places at once? And if so, does this create a problem in establishing which is the right jurisdiction to try a dispute in respect of that contract?

In April 2003, Apple Computer launched a new web-site called iTunes. Apple Corps, The Beatles' company, claimed this was in breach of an agreement made in 1991, and duly started an action in the High Court in England in August 2003. Apple Computer responded by challenging the jurisdiction of the English Court and in October 2003 launching its own case in California for a negative declaration that it was not in breach.

The judgment of Mr Justice Mann in Apple Corps v Apple Computer, which was handed down in April 2004, will now stand as the definitive jurisdiction ruling between the parties. By consent, Apple Computer has withdrawn its appeal from that judgment and has had dismissed the action it itself started in California.

The ruling provides an excellent example of the court being prepared to recognise new principles of law in the light of the revolution in information technology and modern means of communication. The judge found in principle that a contract can be made in two places at once and that the case in hand was very arguably one of the class contemplated by Lord Diplock (in Gibson v Manchester CC [1979]) in which an analysis of where a contract was made in terms of offer and acceptance is not appropriate.

The judgment arose out of Apple Computer's challenge to the jurisdiction of the English Court. The subject matter of the action is an agreement reached between the parties in 1991, following huge litigation in England (and elsewhere) in the late 1980s and early '90s over the use of the 'apple' name and logos of apples.

The 1991 agreement was negotiated over many months and involved numerous meetings, drafts, correspondence and other communications taking place at various locations. Against a background of hard-fought litigation over a previous agreement made in 1981 (still proceeding in the High Court as the negotiations took place – the trial then occupied more than 100 days before Mr Justice Ferris before settling in October 1991), the parties were simply unable to agree either a governing law clause or a jurisdiction or arbitration clause in their new deal. Therefore, the new contract was deliberately silent on these issues. The parties recognised that, should any litigation arise in the future, it would be a matter of conflict-of-laws principles to establish answers to the questions of which law governs and where the contract was made.

The long process of negotiation and drafting finally culminated, once the draft agreement's terms were finalised, in a telephone conversation between Apple Computer's lawyer in California and Apple Corps' lawyer in London at 11.45pm on 9 October, 1991, when they agreed to close' the deal. Prior correspondence between them had agreed upon a telephone call as the means of "releasing the agreement from escrow".

For the English Court to have jurisdiction over Apple Computer in the subsequent dispute over the iTunes website, Apple Corps had to demonstrate that the 1991 agreement was governed by English law, or that it had a good arguable case that it was made in England. (In the event, Mann found in favour of Apple Corps on both issues and found that England was the appropriate jurisdiction. But it is only the issue of the place of the contract which is relevant to this article).

The traditional common law approach, laid down in Entores v Miles Far East Corporation [1955] and approved in Brinkibon Limited v Stahag Stahl [1983], is to answer the question of where a contract is made in terms of offer and acceptance analysis, the rule being that where instantaneous forms of communications are concerned a contract is made in the place where the acceptance is received. Mann studied the available evidence of the facts, and specifically an attendance note of the 9 October, 1991, telephone conversation, and concluded that Apple Corps had a good arguable case for saying that something amounting to acceptance was uttered in California and was received in England.

What makes the case of interest, however, was that the judge was also prepared to move away from the traditional offer and acceptance analysis. He stated at paragraph 37: "Hence the rule in Entores and Brinkibon to the effect that in the case of instantaneous communications (in those cases telex) the contract is made where acceptance is received. That form of approach assumes that one can analyse the formation of a contract in offer and acceptance terms.

"However, in the post- Brinkibon world, where oral telephone communications are even more common, and where such communications can involve three or more participants in three or more different jurisdictions, and where parties might even conclude a written contract by signing, and observing each other signing, over a video-link, the law may have to move on and to recognise that there is nothing inherently wrong or heretical in allowing the notion of a contract made in two (or more) jurisdictions at the same time. This is not merely a way of avoiding an unfortunate, and perhaps difficult, evidential inquiry. It may well reflect the reality of the situation.

"Take the case of three parties who each agree to complete a written agreement by signing simultaneously over a three-way video-link – where is that contract made? The natural answer is that it is made in all three jurisdictions. Such a conclusion does not necessarily create practical difficulties. If one of those jurisdictions is England, then one of the foundations for the English courts to assume jurisdiction is present, but it does not necessarily follow that jurisdiction will be assumed, because a claimant who seeks to sue here would still have to establish that it is the most appropriate jurisdiction in which to sue."

In conclusion, the judge stated: "The parties had, by a long process of negotiations, arrived at agreed forms of agreement which were not to be made binding until both parties indicated that they were. If both parties had met in order to sign and complete in the same place, it might well have been extremely difficult to find anything amounting to an offer and acceptance. Where completion takes place at a distance over the telephone, it might well be possible to construct an offer and acceptance analysis (indeed, each party has sought to do so in this case) but it might equally be thought that that analysis is extremely forced and introduces a highly random element. The offer and acceptance may well depend on who speaks first and who speaks second, which is likely to be largely a matter of chance in closing an agreement of this sort.

"It is arguably a much more satisfactory analysis to say that the contract was made in both places at the same time. On the facts of this particular case, that would coincide with the clearly expressed intentions of the parties that neither wished to give the other an advantage in terms of governing law and jurisdiction, and… it seems to me that there is a good arguable case for saying that a dual place of contracting coincides rather more closely with the intentions of the parties."

This is a modern judgment, for the modern era, and demonstrates the vitality of the common law in being able to develop and adapt to the changing circumstances of our ever more global society. As the Court of Appeal will not now rule on this issue, it will now stand as a precedent that a contract can, in principle, be made in two (or even more) places at once. This will provide fascinating scope for parties in the future who engage in similar jurisdictional battles.

Nicholas Valner is a litigation partner at Eversheds in London and the solicitor to The Beatles' company, Apple Corps.