Cases in Private International Law

Cases In

Private International Law

ii

Produced and published by Għaqda Studenti tal-Liġi (GħSL), the University of Malta’s Law Students’ Society.

Correspondence in relation to this publication should be forwarded to: The Publications Officer / The Resources Officer Room 219, GħSL Office Faculty of Laws University of Malta Msida, Malta or Email us at: publications@ghsl.org or resources@ghsl.org © Għaqda Studenti tal-Liġi 2020 All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of the copyright holder and the publisher, application for which shall be made to the publisher.

Proofreading and editing done by the GħSL Publications Office.

Opinions expressed in this publication do not necessarily represent the views of Għaqda Studenti tal-Liġi.

Printed in Malta by Progress Press Co. Ltd Żona Industrijali, Triq L-Intornjatur, Mrieħel, BKR 3000, Malta Cover and Publication Design by Matthew Charles Zammit ISBN no: 978-9918-9506-0-7

iii

Introduction Dpresent to you, on behalf of the Għaqda Studenti tal-Liġi, as

ear reader, it is indeed a privilege and an honour to be able to

well as the Faculty of Laws, this law student organisation’s newest publication.

This project is the end result of a multi-annual effort, by numerous students and contributors, spanning no less than three different Executive Boards. Few projects in this history of this organisation have withstood the test of time so diligently: Even Id-Dritt, which this year we were proud to launch the 30th Edition of, still remains an annual publiication with an already pre-established framework.

This project, though, was without precedent: The study unit of Private International Law, while a staple of the LL.B (Hons) Course, remains still a difficult maze for both students, as well as academics, professionals and researchers alike, to successfully navigate through.

The vast volume of material pertinent to this area of study is not only vast in its inherent nature, but also touches upon a large number of other fields of study, not all of them legal.

Keeping pace with all such changes is of course not a one-time task, but rather a continuous development which will still occur years into the future. In this light, this publication should not be considered as a mere conclusion to these efforts; but rather, it’s a solid, tangible foundation on which this organisation’s volume of work is set to increase in the years to come, hopefully way after the present contributors would have left the Law Course.

I would like to thank a select number of people who have made this project possible: •

iv

My direct predecessors, Ms Emma-Marie Sammut and Mr Matthew Charles Zammit, who were not only directly involved in this publication during their respective tenure within this organisation, but also provided their guidance and their counsel whenever called upon, without hesitation; I’d also like to thank

Mr Zammit specifically for once again helping in the design this publication; •

To all of the contributors, some of whom have actually become legal professionals in their own; your efforts have been invaluable in ensuring the successful conclusion of this publication;

•

I would also like to thank Dr Ivan Mifsud, as the Dean of the Faculty of Laws, as well as Dr Natalino Caruana De Brincat, and Dr Alex Sciberras Trigona and Dr Frank Chetcuti Dimech, for proposing this idea in thie first place, as well as their guidance in ensuring that this project is successfully carried out; your instruction and your supervision throughout the years were invaluable;

•

Lastly, to you, dear reader: We hope that this publication will help you in your academic pursuits, and we gladly welcome any feedback that you might have, in ensuring that this publication remains as relevant as ever.

Thanking you once again,

Justine Xuereb

GħSL Publications Officer 2019-2020

v

Foreword Iinvitation to prepare the foreword for this collection of reports on

t gives me great pleasure to accept the GħSL Editorial Board’s

landmark judgments concerning Private International Law.

Three years ago, Dr Lara Attard (then President of GħSL), Dr Alexander Sceberras Trigona, Dr Frank Chetcuti Dimech and I, set the impetus which led to this useful tool, which Law Students and legal professionals alike will undoubtedly find of use. Students tend to be wary of Private International Law; legal professionals possibly even more so, because to their mind, it is a nebulous cobweb of complicated rules which they would rather not get into, if only they could avoid it.

The bare truth however, is that we have become truly global, with people moving to other countries, entering obligations beyond their boarders, doing business overseas, starting families with foreigners, and so on. For so long as things go well, all is fine and all are happy. When an issue arises, whether it is an unpaid bill or other unfulfilled obligation, whether it is an accident abroad or a foreigner having an accident in Malta, then Private International Law becomes unavoidable: it is that body of rules used to assess and resolve legal disagreements between private individuals, which disputes would have a foreign element. Where a dispute arises between two, or more, parties in different countries having different legal systems, Private International Law rules will assist a Court or Tribunal to determine which country’s substantive law shall be adoperated to determine and solve the matter presented before the Court or Tribunal.

It is not really ‘international law,’ but rather that body of rules used to assess and solve legal disputes between parties from different countries. Our domestic laws require it, our international activities expose us to it. The European Union on the other hand, contributed to its codification thanks to the likes of Brussels 1 Recast, Rome I and Rome 2. The Courts interpreted these rules, putting flesh to the bones of those rules we refer to as ‘private international law’, which leads us to this present publication which I am proud to have seen develop vi

from a mere idea which initially took time to germinate, to the present compendium of landmark judgments, another achievement for GħSL which should be considered not merely as a body of Law Students, but rather a net contributor towards the active development of the legal profession.

I congratulate the entire GħSL Committee, past and present members, especially those involved in this unique compilation of landmark judgments.

Natalino Caruana De Brincat

B.A. (Hons), LL.B, Dip. Notary Public (Melit), Dip Infosys, MBA (Leics), LL.D (Melit)

vii

Contents C-12/76 Industrie tessili italiana v Dunlop AG

1

C-14/76 De Bloos v Bouyer

5

C-21/76 Handelskwekerij Bier v Mines de Potasse d’Alsace

9

C-24/76 Estasis Salotti v Ruewa

13

C-29/76 LTU v Eurocontrol

17

C-73/77 Sanders v Van der Putte

23

C-15/78 Société générale de banque alsacienne v Koestler

26

C-23/78 Meeth v Glacetal

29

C-143/78 / C-120/79 De Cavel

33

C-25/79 Sanicentral SA v Collin

36

C-56/79 Zelger v Salinitri

40

C-125/79 Denilauler v Couchet

43

C-814/79 Netherlands v Rüffer

45

C-150/80 Elefanten Schuh GmbH v Jacqmain

48

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C-27/81 Rohr v Ossberger

50

C-38/81 Effer Spa v Kantner

53

C-228/81 Pendy Plastic Products BV v Pluspunkt Handelsgesellschaft

57

C-34/82 Peters v Zuid Nederlandse Aannemers vereniging

59

C-288/82 Duijnstee

61

C-71/83 Tilly Russ v Nova

63

C-129/83 Zelger v Salinitri

66

C-241/83 Rösler v Rottwinkel

70

C-49/84 Debaecker and Plouvier v Bouwman

73

C-221/84 Berghoefer Asa

75

C-266/85 Shenavai v Kreischer

79

C-313/85 Iveco Fiat v Van Hool

82

C-144/86 Gubisch Maschinenfabrik v Palumbo

85

C-145/86 Hoffmann v Krieg

88

ix

Contents C-218/86 SAR Schotte v Parfums Rothschild

93

C-9/87 Arcado v Haviland

98

C-189/87 Kalfelis v Schröder and Others

101

C-220/88 Dumez France and Others v Hessische Landesbank and Others

104

C-305/88 Lancray v Peters und Sickert

108

C-365/88 Hagen v Zeehaghe

113

C-190/89 Rich v Società Italiana Impianti

118

C-214/89 Powell Duffryn v Petereit

122

C-351/89 Overseas Union Insurance Ltd v New Hampshire Insurance Company

125

C-261/90 Reichert and Kockler v Dresdner Ban

129

C-280/90 Hacker v Euro-Relais

132

C-26/91 Handte v TMCS

134

C-89/91 Shearson Lehman Hutton v TVB

138

C-172/91 Sonntag v Waidmann

142

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C-125/92 Mulox IBC v Geels

145

C-129/92 Owens Bank v Bracco

148

C-288/92 Custom Made Commercial v Stawa Metallbau

152

C-294/92 Webb v Webb

157

C-406/92 Tatry v Maciej Rataj

160

C-68/93 Shevill and Others v Presse Alliance

164

C-318/93 Brenner and Noller v Dean Witter Reynolds

168

C-341/93 Danværn Production v Schuhfabriken Otterbeck

173

C-346/93 Kleinwort Benson v City of Glasgow District Council

175

C-364/93 Marinari v Lloyd’s Bank

178

C-439/93 Lloyd’s Register of Shipping v Campenon Bernard

185

C-474/93 Hengst Import v Campese

189

C-78/95 Hendrikman and Feyen v Magenta Druck & Verlag

191

C-106/95 MSG v Les Gravières Rhénanes

193

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Contents C-220/95 Van den Boogaard v Laumen

195

C-269/95 Benincasa v Dentalkit

199

C-295/95 Farrell v Long

204

C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and Others

206

C-85/96 Martínez Sala v Freistaat Bayern

210

C-99/96 Mietz

214

C-351/96 Drouot assurances v Consolidated metallurgical industries and Others

217

C-51/97 Réunion européenne and Others

220

C-159/97 Castelletti

224

C-260/97 Unibank

228

C-269/97 Coursier

231

C-420/97 Leathertex

235

C-440/97 GIE Groupe Concorde and Others

240

C-7/98 Krombach vs Bamberski

242

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C-8/98 Dansommer

246

C-240/98 Océano Grupo Editorial and Salvat Editores

248

C-381/98 Ingmar GB

252

C-387/98 Coreck Maritime

255

C-412/98 Group Josi

261

C-456/98 Centrosteel

265

C-518/99 Gaillard

269

C-37/00 Weber

272

C-208/00 Überseering

276

C-334/00 Tacconi

279

C-167/01 Inspire art

282

C-159/02 Turner

285

C-281/02 Owusu

287

C-96/04 Standesamt Stadt Niebüll

290

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Contents C-210/06 Cartesio

294

C-353/06 Grunkin and Paul

297

C-185/07 Allianz vs West Tankers Inc.

300

C-133/08 ICF

304

C-585/08 / C-144/09 Pammer / Hotel Alpenhof

316

C-256/09 Purrucker

322

C-509/09 eDate Advertising and Others

326

C-29/10 Koelzsch

329

C-144/10 BVG

339

C-514/10 Wolf Naturprodukte

348

C-527/10 Erste Bank Hungary

354

C-302/13 flyLAL-Lithuanian Airlines

357

C-352/13 CDC Hydrogen Peroxide

369

C-557/13 Lutz

387

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C-649/13 Comité d’entreprise de Nortel Networks and Others

399

C-223/14 Tecom Mican and Arias Domínguez

411

C-135/15 Nikiforidis

420

C-191/15 Verein für Konsumenteninformation

423

C-54/16 Vinyls Italia

426

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Contributors

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Lara Attard Nathaniel Falzon Cynthia Duncan Elle Borg Xuereb Natalia Camilleri Giselle Axiaq Kenneth Xuereb Ethan Brincat Sean Portelli Justine Xuereb Matthew Charles Zammit Emma-Marie Sammut Marc Dimech Jessica Spiteri Danielle Gauci Evgeny Caruana Graziella Scembri Jurgen Micallef Lenka Portelli Michela Galea Seychell Martina Darmanin Stephanie Bonnici Shelby Aquilina Valentina Cassar Ylenia Busuttil

xvii

C-12/76

Industrie Tessili Italiana Como v Dunlop AG 06 October, 1976

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C-12/76 Industrie tessili italiana v Dunlop AG

Facts The case concerns an agreement concluded in April 1971 between Industrie Tessili Italiana Como (hereinafter referred to as ‘Tessili’) based in Como, Italy and Dunlop AG (hereinafter referred to as Dunlop) based in Hanau, Germany for the former to supply the latter with 310 women’s ski suits. Printed in Dunlop’s letter were its conditions of purchase which included the clause: ‘Jurisdiction: the Court in Hanau am Main shall have jurisdiction to deal with disputes arising from this contract.’

A dispute arose between the two parties after Dunlop considered that there were defects in the manufacture of the suits. In June 1973, Tessili brought an action against Dunlop before the Hanau Regional Court for annulment of the contract. Tessili argued that the German Courts had no jurisdiction. On the other hand, Dunlop claimed that the Hanau Court did have jurisdiction. The Regional Court dismissed Tessili’s objection to its jurisdiction.

In July 1974, Tessili appealed the decision to the Frankfurt Higher Regional Court. Dunlop cited Article 5(1) of the Convention which provides that a person domiciled in a Contracting State may be sued, in matters relating to a contract, in the Courts for the place of performance of the obligation in question. In January 1976, the Higher Regional Court stayed proceedings and asked the Court of Justice to give a preliminary ruling on the interpretation of the concept of ‘place of performance of the obligation in question’.

Judgement This case presented the Court with a particular difficulty. Mainly, the absence of a uniform definition of the term ‘place of performance of the obligation’ which presented the difficulty of the various meanings given in different national Courts. This leads to the undesirable effect

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C-12/76 Industrie tessili italiana v Dunlop AG

of uncertainty and the possibility of different outcomes in different cases with the same facts.

This difficulty was highlighted in practically all the written observations1 submitted to the Court.

The Court held that ‘in the case of an action relating to contractual obligations Article 5(1) allows a plaintiff to bring the matter before the Court for the ‘place of performance of the obligation’ in question. It is for the Court before which the matter is brought2 to establish under the Convention whether the place of performance is situated within its territorial jurisdiction. For this purpose, it must determine in accordance with its own rules of conflict of laws what is the law applicable to the legal relationship in question and define in accordance with that law, the place of performance of the contractual obligation in question.’3 The Court recognised that it could not go any further than the above statement due to ‘the differences between national laws of contract and to the absence at this stage of legal development of any unification in the substantive law applicable.’4 On these grounds, the Court answered that the ‘place of performance of the obligation in question’ in Article 5(1) ‘is to be determined in accordance with the law which governs the obligations in question according to the rules of conflict of laws of the Court before which the matter is brought.’

This judgment was criticised by authors and Advocates General.

Criticisms included that fact that the judgment leads to a lack of harmonisation in the law of jurisdiction and that the process to be gone through is complex and difficult to apply.5 1 Submissions were made by Tessili, Dunlop, The Governments of the Federal Republic of Germany and the United Kingdom, the European Commission and Advocate-General Mayras.

2 In this case, the Regional Court of Hanau 3 C-12/76 Tessili v Dunlop para. 13 4 Ibid para. 14 5 Cheshire, North & Fawcett; ‘Private International Law’ 15th ed. p.254

3

C-12/76 Industrie tessili italiana v Dunlop AG

This problem now seems to have been addressed in Article 7 (1)(b) of Brussels I Regulation (Recast) which provides: (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 the 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; It is also pertinent to point out that the directly applicable nature of a Regulation ensures uniformity within the Member States.

4

C-14/76

A. De Bloos, S.P.R.L. vs Societe’ en commandite par actions Bouyer 06 October, 1976

5

C-14/76 De Bloos v Bouyer

Facts The parties, two undertakings based in Belgium and France respectively, reached an agreement in 1959 whereby De Bloos was conferred the exclusive right to distribute products bearing the ‘Bouyer’ mark for Belgium, Luxembourg and the Belgian Congo.1 In 1973, De Bloos brought proceedings against Bouyer in front of the Commercial Court of Tournai, Belgium, claiming that the French company unilaterally breached the contract conditions, and it sought the dissolution of the agreement on the basis of wrongful conduct of the grantor and payment of damages. Bouyer objected that by virtue of the 1968 Brussels Convention, the Court that was seised of the proceedings had no jurisdiction.

The Commercial Court of Tournai agreed with the defendant, concluding that it lacked jurisdiction, on the grounds that the ‘place where the obligations arose and were due to be performed’ was in France, where the defendant had its registered office.

De Bloos appealed the decision in front of the Appeals Court in Mons, Belgium.

Upon examination of Belgian statute and case law, the Appeals Court found that both legal doctrine and case law were divided as to the nature of the claim for compensation whether it was: a. A normal obligation under the distributorship contract b. Something which was ancillary to the main obligation or; c. A new and independent obligation Furthermore, the Appeals Court could not establish whether De Bloos was subject to the direction or control of Bouyer or whether it had the power to negotiate in the name of the grantor and legally bind it. This was important in order to establish whether De Bloos was a ‘branch, agency or establishment’ of Bouyer, thus granting the

1

A former Belgian colony in Africa, now known as the Democratic Republic of Congo

6

C-14/76 De Bloos v Bouyer

special jurisdiction in terms of Article 5(5)2.

Consequently, the Court of Appeal decided to stay proceedings and referred the following questions to the Court of Justice of the European Union (CJEU): 1. Whether the term ‘obligation’ in Article 5(1) of the Convention applies without distinction to each of the obligations in an action brought by the grantee of a concession against the grantor.

2. Whether Article 5(5) of the Convention relating to a ‘branch agency’ or other establishment’ is applicable to a grantee of an exclusive sales concession which is neither subject to the direction and control of the grantor, nor is it empowered to negotiate in the name of the grantor and bind it.

Judgement This case presented the issue of multiple obligations: the breach of the contract and the compensation for damages. Determining the nature of these obligations, whether principal, ancillary or independent, was crucial to this case, as there was the distinct (and undesirable) possibility to have different Courts having different jurisdictions on each of the obligations within the same contract, according to the PIL rules of the Court seised with the proceedings.

In addition, as to whether Article 5(1) is applicable to one or more obligations within the same action, the Court also had to interpret whether the terms ‘branch, agency or other establishment’ in Article 5(5), also applies in this scenario where the grantee does not appear to be under the direction and control of the grantor and it is not authorised to negotiate in its name, nor bind it.

2

Now Article 7(5) of Brussels I (recast) Regulation

7

C-14/76 De Bloos v Bouyer

These interpretations were important because if any one of the two would apply to the present case, the plaintiff is permitted to derogate from the general principle of the Convention that proceedings are to be conducted in the domicile of the defendant.

The Court held that the Convention was intended to determine the international jurisdiction of the Courts of the Contracting States and introduce expeditious procedures to secure the enforcement of judgments which implies the need to avoid a situation with a number of Courts having jurisdiction in respect to one contract.

Consequently, it follows that for the purposes of Article 5(1), the obligation to be taken into account ‘refers to the obligation forming the basis of the legal proceedings’3 i.e. the national Court determines the place of performance of the obligation in terms of the principal obligation of the contract.

As to the second question, the Court held that one of the essential characteristics of a branch or agency is the fact that it is subject to the direction and control of the parent. Consequently, it is impossible to extend such concepts to the grantee of an exclusive concession like the kind in question.

3

C-14/76 para. 15

8

C-21/76

Handelskwekerij G. J. Bier BV vs Mines de potasse d’Alsace SA 30 November, 1976

9

C-21/76 Handelskwekerij Bier v Mines de Potasse d’Alsace

Facts Plaintiff G.J. Bier is a horticultural undertaking based in Niewerkerk, the Netherlands. In the process of its business, it derives most of its watering and irrigation supply from the river Rhine. However, the high salinity of the river waters is harmful to the seed beds and Bier incurs considerable costs in taking measures to limit the salinity of the river waters.

Bier, together with the Rheinwater Foundation4 brought an action before the Court of First Instance in Rotterdam, the Netherlands, against the company Mines de Potasse d’Alsace which is based in Mulhouse, France. The plaintiffs allege that the mining company discharges more than 10,000 tonnes of chlorides every 24 hours into the Rhine and that this discharge is greatly augmenting the salt content of the Rhine. The plaintiffs asked the Court to hold Mines de Potasse D’Alsace responsible for the discharge of residuary salts and to make good for damages incurred by them.

The defendants argued that neither the Court of First Instance in Rotterdam nor, more generally, the Courts of The Netherlands have jurisdiction in the matter. In May 1975, the Rotterdam Court held that it had no jurisdiction because the event that caused the damage could only be the discharge of the residuary salts into the Rhine in France.

Bier and Rheinwater appealed against the judgment with the Court of Appeal in The Hague which stayed the judgment and referred the following question to the Court of Justice of the European Union (CJEU) for a preliminary ruling on the interpretation of what is meant by ‘the place where the harmful event occurred’ in Article 5(3) of the Brussels Convention. In particular, it asked whether the meaning is ‘the place where the damage occurred (or became apparent) or rather ‘the place where the event having the damage as its sequel occurred’ i.e. the place where the act was or was not performed.

4 10

An NGO based in Amsterdam that promotes the water quality of the river Rhine

C-21/76 Handelskwekerij Bier v Mines de Potasse d’Alsace

Judgement The general principle of the Convention with respect to jurisdiction is that proceedings are to be brought before the Court of domicile to the defendant.

Article 5 outlines the situations where a derogation from this general principle is possible, one of these being in instances of tort, delict or quasi-delict outlined in Article 5(3) (Now Article 7(2) in Brussels I recast) of the Convention. The difficulty presented to the Court in this case was the interpretation of the words ‘the place where the harmful event occurred’ as the place where the impugned act took place was in one jurisdiction (France) while the damage manifested itself in another jurisdiction (The Netherlands).

The Court acknowledged that the wording of Article 5(3) leaves open the question whether, in determining to choose as a connecting factor, the place of the event giving rise to the damage or the place where the damage occurred or to accept that the plaintiff has an option between one and the other of these two connecting factors.5 The Court pointed out that liability in tort can only arise provided that a causal connection can be established between the damage and the event in which that damage originates.

The Court further held that:

it does not appear appropriate to opt for one of the two connecting factors mentioned to the exclusion of the other, since each of them can, depending on the circumstances, be particularly helpful from the point of view of the evidence and the conduct of the proceedings’6

5 6

C-21/76 para. 14 Ibid. para. 17

11

C-21/76 Handelskwekerij Bier v Mines de Potasse d’Alsace

and that the wording of the article covers a wide diversity of kinds of liability that would make the exclusion of one option in favour of another undesirable.

Thus, the Court held that the meaning of the expression ‘place where the harmful event occurred’ in Article 5(3) of the Convention must be established in such a way as to acknowledge that the plaintiff has an option to commence proceedings either at the place where the damage occurred or the place of the event giving rise to it.

The result would be that the defendant may be sued, at the option of the plaintiff, either in the Courts of the place where the damage occurred or in the Courts of the place where the event giving rise to the damage took place.

12

C-24/76

Estasis Salotti di Colzani Aimo e Gianmario Colzani s.n.c. vs Rüwa Polstereimaschinen GmbH 14 December, 1976

13

C-24/76 Estasis Salotti v Ruewa

Facts The plaintiff, being a German undertaking, brought an action against an Italian undertaking established in the latter country for failing to perform a contract agreed to between the two parties.

This concerned a written contract, concerning a delivery, signed in Milan bearing the German undertaking’s letterhead, the reverse of which contained such undertaking’s general conditions of sale.

Such conditions included a clause which established jurisdiction to the Courts of Cologne, should any dispute between the parties in question arise.

Whilst the contract itself did not make specific reference to these conditions, previous offers made by the German undertaking were referred to, which did refer to such conditions.

On the 9th April 1974, the Landgericht held that it had no jurisdiction to hear the matter, holding that the contract’s jurisdiction clause had not been validly agreed to between the parties when taking Italian law into consideration. This judgment was revered on the 18th November 1974 by the Oberlandesgeticht Koln, which stated that the dispute in question was to be regulated under German law, thereby contradicting the Landgericht, which had stated that Italian law was relevant in this regard.

The defendant appealed this point, citing Article 17 of the Brussels Convention as the basis upon which the dispute must be resolved, which stated: If the parties, one or more of whom is domiciled in a Contracting State, have, by agreement in writing or by an oral agreement confirmed in writing, agreed that a Court or the Courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that Court or those Courts shall have exclusive jurisdiction.

14

C-24/76 Estasis Salotti v Ruewa

Such provision was to be interpreted taking into account the conferral of jurisdiction by consent in this particular case, keeping in mind that such articles requirements were to be interpreted strictly.

This is because the formal requirement of this provision is that a consensus between the two parties in a given case is actually reached.

Two questions were referred by the Bundesgerichtshof to the Court, these being: 1. Did a jurisdiction clause included in the general conditions of sale on the back of a contract (signed by both parties) fulfil the requirement laid down in the first paragraph of Article 17?

2. Would the aforementioned requirement be fulfilled if the parties made reference, in the contract’s text, to an offer which expressly referred to such general conditions, including a jurisdiction clause?

Judgement With regard to the first question, it was stated that this in itself did not satisfy the requirements laid down in Article 17, since this does not prove that that the other party has actually consented to the jurisdiction clause. Had an express reference to the general conditions been provided in the contract’s text, Article 17 would have been satisfied.

Regarding the second question, it was once again etablished that the conditions laid down in the first paragraph of Article 17 would only be satisfied if express reference is made to the general conditions of sale.

Such express reference would need to be checked by a party exercising a reasonable degree of care, and confirmation that the 15

C-24/76 Estasis Salotti v Ruewa

conditions have been communicated to the other party would have to be ascertained. The requirement laid down in Article 17 would not be required should implied or indirect references to earlier correspondence be made.

16

C-29/76

LTU Lufttransportunternehmen GmbH & Co. KG vs Eurocontrol 14 October, 1976

17

C-29/76 LTU v Eurocontrol

Facts The main action concerns route charges imposed by the European Organisation for the Safety of Air Navigation (hereinafter referred to as ‘Eurocontrol’) on owners of aircraft for the use of air safety services.

In September 1972 Eurocontrol brought an action against the Firma Lufttransportunternehmen GmbH & Co. KG (hereinafter referred to as ‘LTU’) before the Tribunal de Commerce of Brussels, in respect of charges amounting to $42,756.01, and in doing so referred to a clause contained in its ‘Conditions for the payment of charges by users’ conferring jurisdiction to the Belgian Courts.

In these proceedings LTU contested the jurisdiction ratione loci and ratione materiae of the Court before which the matter was brought and maintained, in particular, that the charges claimed were governed by public law.

In its judgment, the Tribunal de Commerce of Brussels dismissed these arguments. It declared that it had material jurisdiction on the ground that the payment of the charges in dispute arose out of an activity of the defendant which was deemed to be commercial and it ordered LTU to pay the sum, plus interest. This judgment was served on LTU at the request of the Procur € du Roi of Brussels on 24 June 1974 and a certificate of service was drawn up by the competent official of the Amtsgericht Düsseldorf on 26 June 1974. In a judgment of 16 December 1974 the Cour d’Appel of Brussels dismissed the appeal brought by LTU as inadmissible on the ground that it had failed to observe the prescribed time-limit. The appeal in cassation against this judgment was also unsuccessful.

By an order dated 13 August 1974 the Landgericht Düsseldorf granted the application by Eurocontrol for the authorisation of enforcement and the issue of an order for enforcement under the Convention on jurisdiction and the enforcement of Judgments in Civil and Commercial Matters. LTU appealed against this decision but, before the appeal was heard, the certificate of service issued by the 18

C-29/76 LTU v Eurocontrol

Amtsgericht was annulled by order of 5 February 1975 on the ground that it erroneously referred to the service of a document instituting proceedings.

The Court hearing the appeal by LTU, then annulled the judgment of the Landgericht and dismissed the application for the authorisation of enforcement on the ground that the judgment of the Belgian Court had been served. Eurocontrol then appealed to the Bundesgerichtshof which annulled the decision of the Oberlandesgericht Düsseldorf and referred the case back to that Court for a fresh decision to be taken.

The 19th Civil Chamber of the Oberlandesgericht Düsseldorf stayed the proceedings and, in accordance with Article 2(3) and Article 3 of the Protocol of 3 June 1971 on the Interpretation of the Convention, requested the Court of Justice of the European Communities to give a preliminary ruling on the question ‘whether, in the interpretation of the concept ‘civil and commercial matters’ within the meaning of Article 1(1) of the Convention on jurisdiction and the enforcement of Judgments in Civil and Commercial Matters the law to be applied is the law of the State in which judgment was given (in this instance Belgium) or the law of the State in which the order for enforcement is to be issued.’ Upon hearing the report of the Judge-Rapport € and the views of the Advocate-General the Court decided to open the oral procedure without holding any preparatory inquiry.

The question was whether, for the purposes of interpreting the concept ‘civil and commercial matters’ within the meaning of the first paragraph of Article 1 of the Convention, the law to be applied is the law of the State in which judgment was given or the law of the State in which proceedings for an order for enforcement were issued. The file shows that the question arose within the context of proceedings under Title III, Section 2, of the Convention in which Eurocontrol asked the competent German Courts to authorise the enforcement of an order by the Belgian Courts that LTU pay to it certain sums by way of charges imposed by Eurocontrol for the use of its equipment and services. Under Article 1, the Convention ‘shall apply in civil and 19

C-29/76 LTU v Eurocontrol

commercial matters whatever the nature of the Court or tribunal’.

The second paragraph of Article 1 states that it shall not apply to: 1. the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession; 2. bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings; 3. social security; 4. arbitration.

Apart from providing that the Convention shall apply whatever the nature of the Court or tribunal to which the matter is referred and excluding certain matters from its area of application, Article 1 gives no further details as to the meaning of the concept in question.

Judgement As Article 1 serves to indicate the area of application of the Convention it is necessary, in order to ensure that the rights and obligations which derive from it for the Contracting States and the persons to whom it applies are equal and uniform, that the terms of that provision should not be interpreted as a mere reference to the internal law of one or other of the States concerned.

By providing that the Convention shall apply ‘whatever the nature of the Court or tribunal’ Article 1 shows that the concept ‘civil and commercial matters’ cannot be interpreted solely in the light of the division of jurisdiction between the various types of Courts existing in certain States. The concept in question must therefore be regarded

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C-29/76 LTU v Eurocontrol

as independent and must be interpreted by reference, first, to the objectives and scheme of the Convention and, secondly, to the general principles which stem from the corpus of the national legal systems. If the interpretation of the concept is approached in this way, in particular for the purpose of applying the provisions of Title III of the Convention, certain types of judicial decision must be regarded as excluded from the area of application of the Convention, either by reason of the legal relationships between the parties to the action or of the subject-matter of the action.

Although certain judgments given in actions between a public authority and a person governed by private law may fall within the area of application of the Convention, this is not so where the public authority acts in the exercise of its powers. Such is the case in a dispute which, like that between the parties to the main action, concerns the recovery of charges payable by a person governed by private law to a national or international body governed by public law for the use of equipment and services provided by such body, in particular where such use is obligatory and exclusive.

This applies in particular where the rate of charges, the methods of calculation and the procedures for collection are fixed unilaterally in relation to the users, as is the position in the present case where the body in question unilaterally fixed the place of performance of the obligation at its registered office and selected the national Courts with jurisdiction to adjudicate upon the performance of the obligation.

The answer to be given to the question must therefore be that in the interpretation of the concept ‘civil and commercial matters’ for the purposes of the application of the Convention, reference must not be made to the law of one of the States concerned but, first, to the objectives and scheme of the Convention and, secondly, to the general principles which stem from the corpus of the national legal systems. On the basis of these criteria, a judgment given in an action between a public authority and a person governed by private law, in which a public authority has acted in the exercise of its powers, is 21

C-29/76 LTU v Eurocontrol

excluded from the area of application of the Convention.

The Court in answer to the question, ruled: 1.

In the interpretation of the concept ‘civil and commercial matters’ for the purposes of the application of the Convention of 27 September 1968 on jurisdiction and the enforcement of Judgments in Civil and Commercial Matters, in particular Title III thereof, reference must not be made to the law of one of the States concerned but, first, to the objectives and scheme of the Convention and, secondly, to the general principles which stem from the corpus of the national legal systems; 2.

A judgment given in an action between a public authority and a person governed by private law, in which the public authority has acted in the exercise of its powers, is excluded from the area of application of the Convention.

22

C-73/77

Sanders vs Van der Putte 14 December, 1977

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C-73/77 Sanders v Van der Putte

Facts The plaintiff (Sanders) took over the defendant’s (van der Putte’s) business in Germany, which the latter had rented. Disputes started immediately in relation to the contract which both parties had signed, to the point that the plaintiff outright refused to run the business.

However, the Regional Court (Arrondissementsrechtbank) of Arnhem in the Netherlands ordered Sanders to run the business as per agreement.

Subsequently, the Regional Court of Appeal (Gerechtshof) ruled on the existence of said contract. It also stipulated that Sanders was bound to pay the defendant the lease of said property for different periods, as well as other payments.

In his plea to the Court, Sanders argued that the Regional Court had no jurisdiction in deciding this case, on the basis of Article 16 of the 1968 Brussels Convention. However, this argument was dismissed, as the Court believed that the case’s focus was on the actual running of the business, rather than the actual rights relating to the payment of the lease on immovable property.

Following this sentence, the plaintiff appealed to the Netherlands Supreme Court (Hoge Raad der Nederlanden), arguing that the previous decision infringed upon the aforementioned Article 16. The Supreme Court then stayed proceedings and submitted the following questions to the Court: 1) ‘Must ‘tenancies of immovable property’ within the meaning of Article 16 down to the end of subparagraph (1) of the Convention also include an agreement to rent under a usufructuary lease, a retail business carried on in immovable property rented from a third party by the lessor?’

2) ‘If so, does the exclusive jurisdiction of the Courts of the 24

C-73/77 Sanders v Van der Putte

State where the immovable property is situated also apply to a claim on the basis of such an agreement for: a) Payment of the rent of the retail premises under the usufructuary lease; b) Payment by the tenant under said lease of the head-rent owed by the lessor to the owner of the immovable property; or c) Payment of consideration for the goodwill of the retail business?’

3) ‘Lastly, is the answer to the questions above affected by the defendant’s contestation of the existence of the agreement in the proceedings?’

Judgement In its decision, the Court argued that the concept of ‘matters relating to tenancies of immovable property’, as established by Article 16, does not include an agreement to rent a retail business under a usufructuary lease, which is carried on in immovable property rented from a third person by the lessor. Since the first question was answered in the negative, the second question was not delved upon by the Court.

In relation to Question 3, the Court argued that the existence of a dispute as to the existence of the agreement forming the subject of the action does not affect in any way the aforementioned interpretation of Article 16.

25

C-15/78

Société générale alsacienne de banque SA vs Koestler 24 October, 1978

26

C-15/78 Société générale de banque alsacienne v Koestler

Facts In the judgement, Koestler, a German national residing in France, had advised a French bank to execute particular transactions depending on price differences between transferable securities in the Paris stock exchage. The procedures were not cost-effective however when the bank tried to recuperate from Koestler, who in the meantime transferred his residence to Germany, the bank’s claims were denied by a German Court, as the debts were considered to be non-actionable gambling losses.

Therefore, Germany refused to allow a French bank which provided services to a German citizen, including a stock-exchange transaction which was treated as an illegal wagering contract in Germany but not in France, to recover from that client was not contrary to Article 49 if the same refusal would apply to banks established in Germany.

Judgement In this judgement, the Court went far in finding that there is an interstate case when the person getting services moved his residence in another Member State before the termination of the relations between the involved parties. Therefore, Article 59, is not omitted simply because the two parties are residents of the same country at the time when a contract is concluded.

In the case Société Générale Alsacienne de Banque SA v Walter Koestler the Court unquestionably ensued the view that those articles were concerned only with the abolition of discrimination. The point does not however, appear to have been fully argued in that case.

Particularly, it does not seem that the attention of the Court was drawn to article 65 or to its significance.

The Court seems to have based its conclusions on a consideration

27

C-15/78 Société générale de banque alsacienne v Koestler

of the third paragraph of Article 60, although that paragraph had no application in the case, since no servant of the Société Générale Alsacienne went to Germany in connection with the provision of the banks services to Koestler, and on a consideration of the General Programme adopted by the Council under Article 63. The German government points out that the freedom to provide services encompassed in Articles 59 and 60 of the EEC Convention includes the freedom to engage in financial futures contracts anywhere in the EC free from legal obstacles.

28

C-23/78

Nikolaus Meeth vs Glacetal Sàrl 09 November, 1978

29

C-23/78 Meeth v Glacetal

Facts In August 1972, Glacetal, a limited liability company whose registered office was situated in Vienne-Estressin, France, by virtue of a written contract, undertook to deliver in its own lorries to the undertaking Nikolaus Meeth, established in Piesport/Mosel, Federal Republic of Germany, certain quantities of insulating glass. The contract concluded between the two parties contained the following clauses regarding the law which would apply and the Courts which would have jurisdiction if a dispute arose; a. ‘Unless provision is made to the contrary, the sole law applicable shall be the relevant German law governing transaction between traders.’ b. ‘The place of performance for both parties shall be Piesport.’ c. ‘If Meeth sues Glacetal the French Courts alone shall have jurisdiction. If Glacetal sues Meeth the German Courts alone shall have jurisdiction.’

Glacetal made 16 deliveries in the period from September to December 1972, for which Meeth made four payments in October and December 1972. Since Glacetal was unable to obtain the balance, it instituted proceedings before the Landgericht (Regional Court) to recover the sum due, namely DM 126,501.22. The Landgericht, by a judgment of 13 January 1975, ordered Meeth to pay Glacetal the sum of DM 123,774.90, together with interest at 10% to run from 1 February 1975.

Meeth lodged an appeal with the Oberlandesgericht (Higher Regional Court) which, by a judgment of 17 September 1976, reduced the sum payable by Meeth to Glacetal to DM 49.509.96, together with interest. The Oberlandesgericht ruled that a claim by Meeth of the sum of DM 157,494.03 be set off by way of damages for delayed delivery

30

C-23/78 Meeth v Glacetal

and refusal to deliver was inadmissible; it ruled that the agreement conferring jurisdiction drawn up between the parties prohibited Meeth from bringing such a claim before any Courts except those of France.

When Meeth lodged an appeal on a point of law against that ruling with the Bundesgerichtshof, requesting a ruling that its claim for a setoff was admissible, that Court, by an order of its 8th Civil Senate of 1 February 1978, decided to stay the proceedings, pursuant to Article 3(1) of the Protocol of 3 June 1971 on the Interpretation by the Court of Justice of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, until the Court of Justice gave a preliminary ruling on the following questions: 1. ‘Does the first paragraph of Article 17 of the Convention permit an agreement under which the two parties to a contract for sale, who are domiciled in different States, can be sued only in the Courts of their respective States?’

2. ‘Where an agreement permitted by the first paragraph of Article 17 of the Convention contains the clause mentioned in Question 1, does it automatically rule out any set-off which one of the parties to the contract wishes to propose in pursuance of a claim arising under the said agreement in answer to the claim made by the other party in the Court having jurisdiction to hear the latter claim?’

Judgement In answer to the questions referred to it by the Bundesgerichtshof by an order of 1 February 1978, the Court ruled that the first paragraph of Article 17 of the Convention cannot be interpreted as prohibiting an agreement under which the two parties to a contract for sale, who are domiciled in different States, can be sued only in the Courts of their

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C-23/78 Meeth v Glacetal

respective States.

In addition, the Court held that where there is a clause conferring jurisdiction such as that described in the reply to the first question, the first paragraph of Article 17 of the Convention cannot be interpreted as prohibiting the Court before which a dispute has been brought in pursuance of such a clause from taking into account a set-off connected with the legal relationship in dispute.

32

C-143/78 C-120/79

Jacques de Cavel vs Louise de Cavel 27 October, 1979 06 March, 1980

33

C-143/78 / C-120/79 De Cavel

Facts In the French-German divorce case de Cavel vs de Cavel, a couple owned a flat in Frankfurt and another in Cannes. The French divorce Court had issued protective measures for which the husband had applied, namely an interim order for the placing of seals on the furniture and effects in the Frankfurt flat, and the freezing of two bank accounts in Frankfurt.

The question was whether this order was entitled to recognition in Germany.

Judgement Jacques De Cavel vs Louise de Cavel C-143/78 In this decision the Court ruled that the judicial decision on the provisional measure that are ordered in the course of a divorce proceeding do not fall under the scope of application of the 1968 Brussels Convention, because it is not the legal nature of such measure themselves that determines whether or not they fall within the scope of the Convention but rather the nature of the claims being secured by them.

The European Court of Justice ruled that those measures did not fall within the scope of the Brussels Convention, as there was a close connection with the divorce proceedings and, with proprietary legal relations resulting from the matrimonial relationship or its dissolution.

This is because ‘rights in property arising out of a matrimonial relationship’ are outside the scope of the Convention, only property disputes between the spouses are connected.

In the de Cavel case, a French Court granted a divorce to the parties and awarded the spouse an interim compensatory monthly payment.

The European Court of Justice had to decide whether the Convention 34

C-143/78 / C-120/79 De Cavel

was applicable to the ‘prestation compensatoire’. The Court’s answer to the question was in the affirmative.

In the words of the European Court of Justice, ancillary claims come within the scope of the Convention ‘according to the subject matter with which they are concerned and not according to the subject matter included in the principal claim.

Louise de Cavel vs Jacques de Cavel Case C-120/79 In the case of Louise de Cavel v Jacques de Cavel decided in 1980, the French Court held that the Brussels Convention would apply to the enforcement of the interim compensatory order made by the French Courts.

It arrived to this conclusion as interim orders were in the nature of maintenance and were aimed to provide financial support to the spouse. The European Court of Justice held that German Court had to implement the French ruling as the matter fell within the scope of Article 2. The fact that the maintenance judgement was given in the divorce proceedings was immaterial.

The maintenance proceedings were ancillary to the divorce proceedings and couldn’t be regarded within the scope even though the principle claim was outside the scope.

During the proceedings, reference was made to Article 42 of the Brussels I Regulation which grants elements of the ruling that are enforceable to be severed from enforceable parts. It was held that there is no provision of the regulation that connects the treatment of ancillary claims to the treatment of principal claims. These ancillary maintenance claims were clearly severable from the leading proceedings for divorce and the outcome of the main proceedings appeared to have no bearing on the maintenance award.

35

C-25/79

Sanicentral GmbH vs René Collin 13 November, 1979

36

C-25/79 Sanicentral SA v Collin

Facts René Collin, a French worker residing at Still, was engaged by Sanicentral GmbH, under a written contract dated 27 October 1971, to work in the Federal Republic of Germany, independently of any establishment. The contract was broken on 8 December 1971, and on 27 November 1973, Collin brought an action against his former employer before the Tribunal d’Instance, claiming payment of supplementary wages and various allowances.

The company submitted that territorially the Court had no jurisdiction, arguing that Collin’s contract of employment included a clause conferring on the local German Court jurisdiction over any disputes which might arise between the parties. The Tribunal d’Instance found for the company on the ground that Article 14 of the Civil Code and Article R 517-1 of the Labour Code were applicable in this case.

The company brought an appeal before the Court of Appeal because, on the one hand, the first paragraph of Article 17 of the Brussels Convention recognised the validity of a clause conferring jurisdiction, and, on the other hand, as the summons to attend the Tribunal d’Instance was prior to the decree of 12 September 1974, it could not, by virtue of the rule of the non-retroactivity of laws, be governed by that decree.

The Court of Appeal rejected the first submission on the ground that the Brussels Convention, signed on 27 September 1968, came into force in France only on 1 January 1973, that is to say, after the conclusion of Collin’s contract of employment and that thus, the provisions of the Convention ‘cannot govern a contract of employment entered into prior to its entry into force’. It also rejected the second submission on the ground that ‘it is established case-law that procedural laws apply to actions pending and that the position is the same with regard to laws on jurisdiction’.

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C-25/79 Sanicentral SA v Collin

The company then appealed to the Social Chamber and asked: ‘Whether, in application of Article 54 of the Brussels Convention, Article 17 of that Convention must be interpreted to mean that, when proceedings have been commenced after 1 February 1973, clauses conferring jurisdiction inserted into a contract of employment concluded before 1 February 1973 which would have been regarded as void by the internal legislation in force at that time must henceforward be deemed to be valid, regardless of the date of the agreements between the parties and of the date of the performance of the work in question.’

It was observed that the Brussels Convention of 27 September 1968 was applicable in its entirety to all legal proceedings instituted after it entered into force, that is to say, on 1 February 1973. After that date, a defendant domiciled in a Contracting State may be summoned before the Courts of another State only if the Convention expressly so provides.

Consequently, contractual clauses conferring jurisdiction determine jurisdiction exclusively, subject only to the exceptions expressly set out in Article 17 itself. Since there is no exception concerning actions relating to contracts of employment, such clauses, even when they are prohibited by a procedural provision under national law, are fully valid in actions concerning international legal relationships falling within the sphere of application of the Convention.

Judgement The Court rightly accepts that Employment law comes within the substantive field of application of the Convention, and that litigation arising out of a contract of employment concluded after 1 February 1973 is subject to the Convention, and particularly to Article 17 thereof relating to prorogation of jurisdiction.

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C-25/79 Sanicentral SA v Collin

The Court expressed concern as to the meaning of Article 54 of the Convention, which provides that ‘the provisions of this Convention shall apply only to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after its entry into force’, and asks whether the clause in the contract of employment conferring jurisdiction, which could have been regarded under French legislation prior to 1 February 1973 as being void, recovers its validity at the date of the entry into force of the Convention.

By its nature, a clause in writing conferring jurisdiction and occurring in a contract of employment is a choice of jurisdiction; such a choice has no legal effect, for so long as no judicial proceedings have been commenced and only becomes of consequence at the date when judicial proceedings are set in motion. The judicial proceedings were instituted on 27 November 1973, and the Convention thus applied in pursuance of Article 54 thereof. Indeed, the effect of that article is that the only requirement for the rules of the Convention to be applicable to litigation relating to legal relationships created before the date of the coming into force of the Convention is that the judicial proceedings should have been instituted subsequently to that date.

In other words, Articles 17 and 54 of the Convention must be interpreted to mean that, in judicial proceedings instituted after the coming into force of the Convention, clauses conferring jurisdiction included in contracts of employment concluded prior to that date must be considered valid even in cases in which they would have been regarded as void under the national law in force at the time when the contract was entered into.

39

C-56/79

Siegfried Zelger vs Sebastiano Salinitri 17 January, 1980

40

C-56/79 Zelger v Salinitri

Facts Siegfried Zeiger, the plaintiff in the main action, is a merchant in Munich, Federal Republic of Germany, and Sebastiano Salitnitri, the defendant in the main action, is a merchant in Mascali, Sicily, Italy.

After business dealings over a number of years a lawsuit arose over payment alleged to be outstanding on a loan dating back to 1975 and 1976; the plaintiff commenced proceedings before the Regional Court, for payment of the alleged debt by the defendant, claiming that the parties had made an express oral agreement that Munich was to be the place of performance for the repayment.

The Regional Court dismissed the claim on the ground that it did not have international jurisdiction, and the plaintiffs appeal to the Regional Court of Appeal, was also unsuccessful. That Court stated that mere oral agreement on the place of performance does not suffice to found international jurisdiction, and the capacity of such an agreement to found jurisdiction depends upon observance of the form laid down in Article 17 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters; the plaintiff lodged an appeal against that judgment in the Third Civil Chamber, in which he pursued his claim.

The Civil Chamber made an order on 15 March 1979 requesting a preliminary ruling from the Court of Justice under Article 3 of the Protocol of 3 June 1971 on the Interpretation of the Convention of 27 September 1968 and Article 2 of the German Law of 7 August 1972 on whether an informal agreement which is effective under national law between full-scale merchants concerning the place of performance of the obligation which is at issue in the proceedings suffice to found jurisdiction in that place under Article 5(1) of the Convention, or whether the capacity of such an agreement to found jurisdiction dependent upon observance of the form laid down in Article 17 of the Convention.

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C-56/79 Zelger v Salinitri

Judgement The Court held that if the parties to the contract are permitted by the law applicable to the contract, subject to any conditions imposed by that law, to specify the place of performance of an obligation without satisfying any special condition of form, an agreement on the place of performance of the obligation is sufficient to found jurisdiction in that place within the meaning of Article 5(1) of the Convention.

If the place of performance of a contractual obligation has been specified by the parties in a clause which is valid according to the national law applicable to the contract, the Court for that place has jurisdiction to take cognizance of disputes relating to that obligation under Article 5(1) of the Convention of Brussels of 27 September 1968, irrespective of whether the formal conditions provided for under Article 17 have been observed.

42

C-125/79

Bernard Denilauler vs SNC Couchet Frères 21 May, 1980

43

C-125/79 Denilauler v Couchet

Facts S.n.c. Couchet Frères, whose registered office was in France, transported goods for the German Denilauler. Having not received payment of the relevant invoices, S.n.c. Couchet Frères sued the other party before the Tribunal de Grande Instance, Montbrison.

This tribunal, having rejected a claim for set-off of 65,000 French Francs by the debtor, ordered Denilauler to pay the sums claimed, namely the principal sum of 120,000 French Francs. In the course of the proceedings, Couchet was authorized to freeze Denilauler’s bank assets, as security for the sum owed plus an extra 10,000 for interest and expenses. That order was enforceable and made ex parte.

Couchet requested that the Court declares the order in question enforceable in Germany, whilst simultaneously an order be made, enabling it to attach the said bank assets. Denilauler lodged an appeal against this order, seeking as a principal claim to set it aside. As a subsidiary claim, he requested that the enforcement be allowed only on 55,000 French Francs, the difference between the 120,00 he owed and the 65,000 due to him.

Judgement The Court stated that judicial decisions which authorise provisional or protective measures, which are delivered without the party against which they are directed, having been summoned to appear and which are intended to be enforced without prior service, do not come within the system of recognition and enforcement provided for by Title III of the Convention.

44

C-814/79

Netherlands State vs Reinhold Rüffer 16 December, 1980

45

C-814/79 Netherlands v Rüffer

Facts The defendant, Ruffer, was domiciled in Germany. He owned a ship which sank in the Bright of Watum, a waterway at the mouth of the River Ems. Both Germany and the Netherlands claim that said area is part of their territory. Considering that the wreck could cause danger to various other ships or vessels, the Dutch government took the responsibility and disposed of the sunken ship. Afterwards, in proceedings brought before the Dutch Court, they claimed the cost of this manoeuvre from the defendant.

A claim by a Dutch public authority to recover the costs regarding the obligatory removal of a sunken vessel in a public waterway, directed by the State, was believed not to be a civil and commercial matter. It was immaterial that, as a matter of Dutch law, this was categorised as a tort. The removal of the wreck was exercised pursuant to a public power.

Judgement The question raised before the European Court of Justice was whether the proceedings came within the scope of the Brussels Convention, which was the relevant instrument at the time. Despite the fact that the claim was brought before the civil Court, it concerned a public authority acting according to its public authority powers; these public powers were managed in performance, both as an international obligation and also under the Dutch law. Various other domestic laws considered the administration of waterwings as an exercise of public authority. Jurisdiction in the Dutch Court could not therefore be recognised by reference to the Brussels Convention.

The CJEU ruled that the Brussels Convection did not apply rationale materiae and therefore did not affect jurisdiction in this case, as the claim did not arise in a civil or commercial matter. The understanding 46

C-814/79 Netherlands v Rüffer

of the Dutch law was not decisive for when one assessed the laws of the numerous contracting states, their overall view was that such a claim was a matter of public, not private law.

According to the Netherlands national law, the individual accountable for a waterway has the right to reclaim the cost of the removal of wreck from the owner of the wrecked ship. This act is established by the ordinary private law of tort. Thus, according to the national law of the Netherlands, the raising of wrecks and the recovery of costs incurred during the operation is treated to be a public matter.

For such reason, the Advocate General argued that the claim before the Dutch Court should have been considered as public in nature and consequently out of the scope of the convention.

47

C-150/80

Elefanten Schuh GmbH vs Pierre Jacqmain 24 June, 1981

48

C-150/80 Elefanten Schuh GmbH v Jacqmain

Facts The defendant was employed by the plaintiff, or rather one of its subsidiaries, a German undertaking, with its registered office in Germany. Difficulties arose With regard to Jacqmain’s contract, amongst other things. This led to the company dismissing Jacqmain without notice on urgent grounds.

The defendant brought an action seeking damages from the parent company and its subsidiary for breach of employment contract.

Judgement The Court stipulated that Article 18 of the Convention also applies where the parties have by agreement chosen the Court that will have jurisdiction within the meaning of Article 17 of that Convention.

Besides this, Article 18 must be interpreted as meaning that the rule on jurisdiction which that provision lays down does not apply where the defendant challenges the Court’s jurisdiction, and, also makes submissions on the substance of the action, so long as, if the challenge to jurisdiction is not preliminary to any defence as to the substance, it does not occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the Court seised.

The Court went further on to state that Article 22 of the Convention applies only in those circumstances where actions that are related are brought before Courts of at least two Contracting States. Finally, it was made clear that Article 17 has to be interpreted as meaning that the Contracting State’s legislation may not allow the validity of an agreement conferring jurisdiction to be called in question only on the ground that the language used is not that prescribed by that legislation.

49

C-27/81

Établissements Rohr Société anonyme vs Dina Ossberger 22 October, 1981

50

C-27/81 Rohr v Ossberger

Facts Dina Ossberger, legally known as Firma Ossberger Turbinenfabrik, was a German factory which supplied water turbines to a French company, Établissements Rohr Société anonyme (known also as Rohr), which in turn resold said water turbines in the French market.

The German company had sued the French company in proceedings instituted in front of the Ansbach Landgericht (Regional Court) for the settlement of unpaid accounts, and while Rohr did not object in substance to the financial claim brought forward by Ossberger, it argued that said Court did not have the jurisdictional ratione loci to determine the case. The Regional Court rejected Rohr’s claim, stating that the contractual clause of jurisdiction was valid under Article 17 of the 1968 Brussels Convention, and ordered the defendant to pay the sums due.

An appeal to the Regional Court’s decision was lodged by Rohr to the Oberlandesgericht (High Regional Court) in Nuremberg, the appeal once again basing itself entirely on the question of jurisdiction, and not of substance. This appeal was once again rejected, along with the similar appeal lodged by Rohr in front of the Budesgerichhof (Federal Court of Justice), the difference being that the latter was dismissed on prescriptive grounds.

In the meantime, however, Ossberger had already requested the Tribunal de Grande Instance (Regional Court) of Pontoise to declare enforceable the decision of the Ansbach French Regional Court. When this plea was acceded to, the French Company appealed the French Regional Court’s decision before the Court of Appeal in Versailles, stating that due to Article 18 of the Brussels Convention, they could not lodge a defence on the substantive matters of their case, because otherwise their right to raise the objection on jurisdictional grounds would be lost.

Notwithstanding this, the German Courts gave a ruling on both

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C-27/81 Rohr v Ossberger

substantive and jurisdictional grounds, therefore constituting an infringement of the rights of the defence. In their counter suit, Ossberger argued that there was no legal preclusion for Rohr to submit their substantive defence to the case, but rather, it was a voluntary decision on their behalf not to do so.

The Versailles Court of Appeal then requested the European Court of Justice to clarify whether Article 18 of the Convention prohibits the simultaneous submission of a defence on the substance of the case, as well as raising the plea of jurisdiction.

Judgement In its decision, the European Court of Justice made reference to a previous case, Elefanten Schuh GmbH v Jacqmain (C-150/80, 29 June 1961), in which it admitted to certain differences existing between the different linguistic versions of Article 18 of the Brussels Convention. However, the Court still argued that the definition which allowed a defendant to ‘contest the jurisdiction of the Court, as well as the substance of the claim… is more in keeping with the objectives and spirit of the Convention.’

The Court argued that this case ‘disclosed no factor of such a kind as to affect these findings’, and therefore re-affirmed the aforementioned decision, stating: ‘Article 18 of the Convention must be interpreted as meaning that it allows the defendant not only to contest the jurisdiction, but to submit at the same time in the alternative a defence on the substance of the action without, however, losing his right to raise an objection of lack of jurisdiction.’

52

C-38/81

Effer SpA vs Hans-Joachim Kantner 04 March, 1982

53

C-38/81 Effer Spa v Kantner

Facts Effer SpA is an Italian company that manufactured cranes, which were then distributed in Germany through a German company Hydraulikkran (Hykra). Effer developed a new machine, and it needed to establish whether the sale of the machine in Germany was contrary to existing patent rights. Hykra commissioned Mr Kantner, who is a patent agent, to carry out investigations for that purpose.

The dispute between the parties concerns the question whether Hykra, which had since become insolvent, commissioned Mr Kantner in the name of Effer or in its own name.

In order to obtain payment of his fees, the amount of which is not in dispute, Kantner brought an action before a German Court in December 1974. Effer denied the existence of a contractual relationship between it and Kantner. Owing to the alleged absence of a contract, Effer argued that the German Courts had no jurisdiction. The German Courts found in favour of Mr Kantner, both at first instance and on appeal.

Effer appealed on a point of law to the German Federal Court which decided to stay the proceedings and apply the preliminary reference procedure.

Judgement The German Federal Court referred the following question to the Court of Justice of the European Union (CJEU) for a preliminary ruling: May the plaintiff invoke the jurisdiction of the Courts of the place of performance in accordance with Article 5(1)7 of the Convention8 even when the existence of the contract on

7 8 54

Article 7(1) of Brussels I recast The Convention of 27 September 1968 on jurisdiction and the enforcement of

C-38/81 Effer Spa v Kantner

which the claim is based is in dispute between the parties?

Written submissions by the Advocate General Rieschl, The Commission of European Communities9, and the respondent Kantner argued that the question must be answered in the affirmative.

The United Kingdom, though not wholly accepting the argument, considers that a dispute as to the existence of the contract does not prevent the application of Article 5(1) of the Convention from being applied, provided that the action is prima facie of a contractual nature and a bona fide action brought by the plaintiff.

Article 5(1) – now Article 7(1) in Brussels I recast reads:

A person domiciled in a Member State may be sued in another Member State: (1)(a) in matters relating to a contract, in the Courts for the place of performance of the obligation in question.

Apart from the dispute as to whether this Article applies if the existence of a contract itself is disputed, the Court established that the Article does not resolve the question unequivocally due to a lack of uniformity between the German version on the one hand and the French and the Italian version on the other.

Due to this lack of uniformity, the Court delved into the context of the Article and the purpose of the Convention.

One essential aim of the Convention is to:

provide a collection of rules which are designed inter alia to avoid the occurrence, in civil and commercial matters, of concurrent litigation in two or more Member States and which, in the interest of legal certainty and for the benefit of the parties, confer the jurisdiction upon the

judgments in civil and commercial matters (Known as Brussels I)

9

Now the European Commission

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C-38/81 Effer Spa v Kantner

national Court territorially best qualified to determine a dispute.’10 The Court held that in cases provided for in Article 7(1) of the Convention, the national Court’s jurisdiction ‘includes the power to consider the existent parts of the contract itself’11.

The Court further held that if that were not the case, there was a danger that the Article would be ‘deprived of its legal effect since it would be accepted that, in order to defeat the rule contained in that provision it is sufficient for one of the parties to claim the contract does not exist’12 By analogy, the Court held that this interpretation is in line with the judgment Sanders v Van der Putte13 on matters relating to tenancies of immovable property. In that case, the Court held that such jurisdiction applies even if there is a dispute as to the existence of a lease.

Consequently, the Court held that the plaintiff may invoke the jurisdiction of the Courts of the place of performance of the contract in accordance with Article 5(1) (now 7(1) in Brussels I recast) of the Convention even when the existence of the contract on which the claim is based is in dispute between the parties.

10 11 12 13 56

C-38/81 para. 6 Ibid. para. 7 Ibid.

C-73/77 Sanders v Van der Putte (decided on 14/12/1977)

C-228/81

Pendy Plastic Products BV vs Pluspunkt Handelsgesellschaft mbH 15 July, 1982

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C-228/81 Pendy Plastic Products BV v Pluspunkt Handelsgesellschaft

Facts The plaintiff was: Pendy Plastic Products BV – registered office in the Netherlands. The defendant was: Pluspunkt Handelsgesellschaft mbH – registered office in Germany.

This case concerned the enforcement of a foreign judgment and the interpretation of article 27(2) of the Convention, which states that: [A judgment shall not be recognised:] [W]here it was given in default of appearance, if the defendant was not duly served with the document which instituted the proceedings or with an equivalent document in sufficient time to enable him to arrange for this defence;

Judgement Article 27(2) should be construed with Article 46(2) of the Convention: [A party seeking recognition or applying for enforcement of a judgment shall produce:] [I]n the case of a judgment given in default, the original or a certified true copy of the document which establishes that the party in default was served with the document instituting the proceedings or with an equivalent document.

The Court said that enforcement of a judgment depends not only on whether the judgment itself qualifies to be enforced by the Courts, but also on whether all documents were circulated between and serviced to the parties according to the provisions of the Convention so that both parties got an even chance to prepare their respective defences.

58

C-34/82

Martin Peters Bauunternehmung GmbH vs Zuid Nederlandse Aannemers Vereniging 22 March, 1983

59

C-34/82 Peters v Zuid Nederlandse Aannemers vereniging

Facts The plaintiff was: Martin Peters Bauunternehmung GmbH – a limited liability company incorporated and with a registered office in Germany.

The defendant was: Zuid Nederlandse Aannemers Vereniging – an association with a registered office in the Netherlands.

The dispute concerned the recovery of sums payable by the plaintiff by virtue of an internal rule adopted by the organs of the defendant association and binding on its members. A request for a preliminary ruling was made on the interpretation of Article 5(1) of the Convention, which states that: A person domiciled in a Contracting State may, in another Contracting State, be sued: 1) in matters relating to a contract, in the Courts for the place of the performance of the obligation in question.

Judgement Matters relating to a contract can help in defining the scope of the special jurisdiction rules in the Convention available to the plaintiff.

The scope of the Convention should be left wider than just the national law of a given Contracting State.

Article 5 of the Convention allows the plaintiff to choose a special jurisdiction, provided that there is a connecting factor between the contract and possible dispute and the jurisdiction chosen. Thus, all difficulties relating to the performance of the contractual obligation/s are to be brought before the same Court, i.e. the Courts of the place of performance of the contract.

60

C-288/82

Ferdinand M.J.J. Duijnstee vs Lodewijk Goderbauer 28 February, 1984

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C-288/82 Duijnstee

Facts While in employment in the Netherlands, Mr Goderbauer made an invention, for which he was granted a patent in that country, along with others in Europe and outside. Eventually, the company employing Mr Goderbauer was being winded-up, and the liquidator, Mr Duijnstee, claimed that the company was entitled to the Netherlands patent, and requested that Mr Goderbauer should be ordered to transfer to the insolvent company all the patents which he had obtained and all the applications for patents which he had made in other countries.

Goderbauer, in a writ, requested the same Court to declare that he had a lien over them as well as against the Liquidator. Duijnstee claimed this was to be dismissed and pleaded a counterclaim. Both were dismissed, and this led to Duijnstee to appeal, on the ground that there was an error of law.

Judgement The Court stated that Article 19 of the Convention requires the national Court to independently declare that it has no jurisdiction whenever it finds that another Contracting State’s Court has exclusive jurisdiction under Article 16 of the Convention. This applies also in an appeal in cassation where the national rules of procedure limit the Court’s reviewal to the grounds raised by the parties. It went on to state that the term contained in Article 16(4), ‘proceedings concerned with the registration or validity of patents’, must be regarded as an independent concept intended to have uniform application in all the Contracting States.

Finally, it was made clear that the term ‘proceedings concerned with the registration or validity of patents’ does not incorporate a dispute between an employee for whose invention a patent has been applied for or obtained, and his employer, where the dispute relates to their respective rights in that patent arising out of the contract of employment.

62

C-71/83

Partenreederei ms. Tilly Russ and Ernest Russ vs NV Haven- & Vervoerbedrijf Nova and NV Goeminne Hout 19 June, 1984

63

C-71/83 Tilly Russ v Nova

Facts The plaintiffs were German shipowners: • Partenreederei ms Tilly Russ, and • Ernest Russ.

The defendants were Belgian companies: • NV Haven & Vervoerbedrijf Nova, and • NV Goeminne Hout.

The plaintiffs were commissioned with carrying a quantity of wood across the Atlantic to the defendants in Belgium, whereupon it was discovered that some of the cargo was missing and some of the remaining cargo was damaged. The bills of lading contained a jurisdiction clause that disputes arising under any of them were to be settled before German Courts.

Judgement Article 17 of the Convention states parties have to expressly consent to a jurisdiction clause, otherwise said clause is invalid. However, if there is a continuing trading relationship, and the contract was not a one-off affair, then such a clause may still be valid. In particular, paragraph 1 of article 17 states the following: If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a Court or the Courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that Court or those Courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either:

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For this to apply, at least one of the parties must be domiciled in a Contracting State, a matter for the national Court to decide.

The form in which the choice of jurisdiction was made, i.e. written or verbal, must be determined. A bill of lading amounts to a written form, and the signature of such a bill fulfils the requirement of consent under the Convention. If the bill of lading was a written expression of a previous oral agreement, the Convention requirement is also fulfilled.

If there was neither a written nor an oral agreement, then the fulfilment of the requirement in the Convention depends on whether the trading relationship is a continuing one or not. The bill of lading also may not confer excess rights upon third parties.

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C-129/83

Siegfried Zelger v Sebastiano Salinitri 07 June, 1984

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C-129/83 Zelger v Salinitri

Facts The two parties in the main action are merchants, of whom one has his place of business in Munich in the Federal Republic of Germany and the other in Mascali in Sicily.

The plaintiff in the main action brought proceedings against the defendant for repayment of an amount outstanding on a loan dating back to 1975 and 1976. He claims that the parties had by express oral agreement designated Munich as the place of performance of the obligation to repay the loan. The defendant in the main action disputed the loan obligation and the agreement on the place of performance.

The document initiating the proceedings which is at issue in this case was lodged at the registry of the Munich Regional Court, on the 5 of August 1976 and served on the defendant on 13 January 1977.

Additionally, the plaintiff brought further proceedings involving the same cause of action before the Civil District Court in Catania, Italy, by a similar document which was lodged with that Court on 22 or 23 September 1976 and served on the defendant on 23 September 1976.

The Regional Court at first dismissed the proceedings brought by the plaintiff in the main action on the ground that it lacked international jurisdiction since an informal agreement made by the parties on the place of performance of contractual obligations was not capable of conferring jurisdiction under Article 5(1) of the Brussels Convention.

The Munich Higher Regional Court also dismissed the action on the ground that it lacked international jurisdiction. Subsequently the Federal Supreme Court referred to the Court of Justice for a preliminary ruling the question whether an informal agreement between merchants on the place of performance fulfilled the requirements of Article 5(1) of the Convention.

The Court of Justice initially ruled that:

If the place of performance of a contractual obligation 67

C-129/83 Zelger v Salinitri

has been specified by the parties in a clause which is valid according to the national law applicable to the contract, the Court for that place has jurisdiction to take cognizance of disputes relating to that obligation under Article 5(1) of the Convention of Brussels of 27 September 1968, irrespective of whether the formal conditions provided for under Article 17 have been observed.

The Regional Court dismissed the action as inadmissible on the ground that it lacked international jurisdiction. Although the parties had agreed that Munich should be the place of performance of the contractual obligation, the lack of jurisdiction stemmed from the fact that the same cause of action had already given rise to the bringing of proceedings before a Court in Catania, which was the Court for the place where the defendant was domiciled and which had jurisdiction by virtue of Article 2 of the Convention, and from the fact that the proceedings were still pending before that Court.

In the opinion of the Regional Court, the Court in Catania had jurisdiction under Article 21 of the Convention which provides:

Where proceedings involving the same cause of action and between the same parties are brought in the Courts of different Contracting States, any Court other than the Court first seised shall of its own motion decline jurisdiction in favour of that Court.

The plaintiff appealed to the Higher Regional Court, contending that the decisive time was not the moment at which the document initiating the proceedings was served but the moment at which the Court was seised of the proceedings.

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Judgement It was held that since the object of the Convention is not to unify those formalities, which are closely linked to the organization of judicial procedure in the various States. Once the purposes of Article 21 are met they must be appraised and resolved, in the case of each Court, according to the rules of its own national law. That method allows each Court to establish with a sufficient degree of certainty, by reference to its own national law, as regards itself, and by reference to the national law of any other Court which ‘has been seised, as regards that Court, the order or priority in time of several actions brought within the conditions laid down by the Convention.

The answer to the question raised by the Munich Higher Regional Court is therefore that Article 21 of the Convention must be interpreted as meaning that the Court ‘first seised’ is the one before which the requirements for proceedings to become definitively pending are first fulfilled, and such requirements are to be determined in accordance with the national law of each of the Courts concerned.

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C-241/83

Erich Rösler vs Horst Rottwinkel 15 January, 1985

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C-241/83 Rösler v Rottwinkel

Facts The defendant had rented a flat in Italy to Rösler for almost a month.

The written agreement catering only for four persons stipulated that visitors were not allowed overnight, and that the water and electricity bill had to be calculated according to the quantities consumed as were the charges for gas and the cleaning at the end of the letting.

Furthermore, it was agreed that the agreement was governed by the place of performance (ie., Germany); the same applied to the Court’s jurisdiction.

Initially, Rottwinkel sued for damages and for payment of outstanding incidental charges, whereby he claimed that throughout the holiday, the defendant (initially, Rösler), had accommodated more than four persons in the holiday home which had caused the cesspool to constantly overflow and creating an intolerable smell; hence, a nuisance.

The damages were based on the loss of holiday enjoyment, founding his claim on a breach of the lease, and sought reimbursement of the costs of travelling to the holiday resort. He also claimed, under the terms of the lease, payment of incidental charges, electricity, water and cleaning. Although rejected by the Higher Regional Court, the lower Regional Court said that the action was considered inadmissible as according to Article 16(1) of the Convention, the Regional Courts of the Contracting State in which the property was situated (i.e. Italy) had exclusive jurisdiction.

Furthermore, upon quashing the Regional Court’s decision, the High Regional Court submitted various questions to the Court of Justice.

The first question related to whether Article 16(1) of the Convention is applicable if a lease concluded between persons resident in the Federal Republic of Germany is for the short letting only of a holiday home located in Italy and the parties to the lease have agreed that German law applies. Subsequently, the Court submitted that, if Article 16(1) is indeed applicable, does it apply to actions for damages for breach of the lease, particularly for compensation for loss of holiday

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enjoyment and for the recovery of incidental charges payable under the lease?

Judgement In regard to the first question, the Court considered that Article 16(1) of the Convention applies to all lettings of immovable property, even for a short term and even where they relate only to the use and occupation of a holiday home. This is so because Article 16(1) seeks to ensure a rational allocation of jurisdiction by opting for a solution whereby the Court having jurisdiction is determined on the basis of its proximity to the property, since that Court is in a better position to obtain first-hand knowledge of the facts relating to the creation of tenancies and to the performance of the terms thereof. Article 16(1) applies to all tenancies of immovable property, irrespective of their special characteristic.

Finally, the Court said, in reply to the second question, disputes concerning the obligations of the landlord or of the tenant under the terms of the tenancy fall within that exclusive jurisdiction. On the other hand, disputes which are only indirectly related to the use of the property let, such as those concerning the loss of holiday enjoyment and travel expenses, do not all within the exclusive jurisdiction conferred by that article. Therefore, any dispute concerning the existence of tenancies, the interpretation of the terms thereof and any obligations of the tenant/landlord fall within the exclusive jurisdiction conferred by Article 16(1) on the state in which the property is situated.

Disputes which are only indirectly related to the use of the property let do not fall, however, within the exclusive jurisdiction conferred by Article 16(1).

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C-49/84

Leon Emile Gaston Carlos Debaecker and Berthe Plouvier vs Cornelis Gerrit Bouwman 11 June, 1985

73

C-49/84 Debaecker v Bouwman

Facts The couple Debaecker let commercial premises situated in Antwerp to Bouwman, a Dutch national, for a period of nine years starting October 1980. In September of 1981, Bouwman left the premises with no prior notice and without leaving any forwarding address. At the end of the same month, he was summoned to appear in front of the Vrederechter in October. In a letter received by the plaintiffs’ lawyer, the defendant terminated the tenancy, returning the premises’ keys and stating his new address - a post office box number in Essen, Belgium. The plaintiffs’ lawyer made no attempt to inform the defendant that he had been summoned to appear before the Vrederechter in Antwerp via the same address he was provided with. This led to the defendant not showing up, thus being ordered, by judgment in default of appearance, to pay the plaintiff damages of 1,072,900 Belgian Francs.

Judgement The Court stated that the requirement found in Article 27(2), that service of the document which institutes the proceedings should be effected in sufficient time, is applicable also in the case where service is effected within a period prescribed by the Court of the State in which the judgment is given or where the defendant resides, within the jurisdiction of that Court or in the same country as that Court.

With regard to whether service was effected in sufficient time, it was stipulated that the Court in which enforcement is sought may at times take note of any exceptional circumstances which arise after service was duly effected.With this in mind, the Court went on to state that since the plaintiff was notified of the defendant’s new address after service was effected, along with the fact that the defendant was responsible for failing to serve the document to him, are matters which the Court in which enforcement is sought may take into account in assessing whether service was effected in sufficient time.

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C-221/84

F. Berghoefer GmbH & Co. KG v ASA SA 11 July, 1985

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C-221/84 Berghoefer ASA

Facts Berghoefer is a German Company which acted as an agent for the defendant, a French association, for about 20 years, until the defendant terminated the agreement. Berghoefer subsequently sought compensation, as well as an indemnity in respect of the restriction imposed on its right to compete, against ASA. Although in the agency contract signed between both parties in 1964, both parties had agreed that the French Commercial Tribunal would have jurisdiction over any dispute, Berghoefer claimed that it had orally agreed with the defendant years later that this initial jurisdictional clause was to be modified in order to confer jurisdiction on the Courts sitting in the German city of Mönchengladbach.

In return, the plaintiff would bear the costs of translation arising from their correspondence. According to the plaintiff, Berghoefer had sent ASA a letter confirming this change, and that the defendant had expressed no disagreement with the contents.

However, the defendant denied the existence of such an agreement, and the French company denied that it had ever received the letter which was supposed to confirm such a change of jurisdiction.

The Regional Court (Landgericht) of Mönchengladbach subsequently declared that it had jurisdiction to settle the dispute, since it considered that there was sufficient proof behind the oral agreement to confer jurisdiction. On appeal, however, the Higher Regional Court (Oberlandesgericht) in Dusseldorf decided that, even if the plaintiff’s version of the facts was proven correct, they would not be sufficient to conclude that the Courts in Mönchengladbach had jurisdiction, as they did not meet the requirements of Article 17 of the Brussels Convention.

The oral agreement was to be deemed valid only if it was confirmed in writing by the party against whom it was to be raised in the event

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of a dispute.

The plaintiff then brought an appeal against the decision of the Higher Regional Court to the German Federal Court of Justice (Bundesgerichtsof), arguing: a) that according to Article 17, a jurisdiction agreement could also be validly confirmed by the party for whose benefit it had been concluded; b) and secondly, the defendant was acting in bad faith, as the French company was relying on the alleged formal defect of the agreement, notwithstanding the fact that it had previously availed itself on the provision favourable to it as agreed by the parties, without contesting the actual agreement.

In turn, the Federal Court stayed the proceedings and referred the following two questions to the European Court of Justice: 1) ‘Are the requirements of the first paragraph of Article 17 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgements in Civil and Commercial matters relating to the formal validity of an oral jurisdiction agreement, satisfied where the agreement has been confirmed in writing by the party for whose benefit it was concluded?’

2) ‘If question 1 is answered in the negative: Is the party against whom the jurisdiction agreement is raised, stopped from pleading its formal invalidity where that party did not contradict the written confirmation of the agreement and has enjoyed the consideration given for it, and where moreover the parties, both commercial firms have been doing business with each other continuously for a prolonged period?’

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Judgement In its decision, the Court answered in the affirmative to the first question, and therefore argued that the second question did not have any purpose.

In its deliberation, the Court referred to settled case law, making reference to the provisions of Article 17 of the Convention, in that: ‘If the parties, one or more of whom is domiciled in a contracting state, have, by agreement in writing or by an oral agreement evidenced in writing, agreed that a Court or the Courts of a contracting state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that Court or those Courts shall have exclusive jurisdiction.’

The Court argued that requirements of Article 17 must be strictly construed, meaning that: ‘the purpose of Article 17 is to ensure that the parties have actually consented to such a clause, and that their consent is clearly and precisely demonstrated.’

The Court also argued that, if said jurisdiction was conferred by express oral agreement, and if confirmation of that oral agreement was received by the other party, without raising an objection in a reasonable time period, this falls within the literal interpretation of Article 17, as well as its purpose, that is ‘to ensure that the parties have actually consented to the clause. It would therefore be a breach of good faith for a party, who did not raise any objection, subsequently to contest the application of the oral agreement.’

With regard to the second question, the Courts argued that ‘in this case, it is not necessary to decide the question of whether, and to what extent, objections raised by the other party to the written confirmation of an oral agreement could be taken in consideration.’

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C-266/85

Hassan Shenavai vs Klaus Kreischer 15 January, 1987

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C-266/85 Shenavai v Kreischer

Facts Mr Shenavai, an architect residing in Germany, brought an action against Mr Kreischer, domiciled in Netherlands, for the payment of fees which the plaintiff thought were due to him, on accounts of plans that he drew up for the plaintiff on the basis of an oral commission of a construction Project in Germany. Mr Kreischer contested that such a contract was never concluded, therefore no debt existed, and he also argued that the place of performance of the obligation to pay the debt was the Netherlands, not Germany.

The Court of Ordinary Jurisdiction (Amtsgericht) in Rockenhausen held that it did not have territorial jurisdiction, arguing that the place of performance for the alleged obligation was the country where the client was domiciled. Mr Shenavai appealed to the Regional Court (Landgericht) of Kaiserslautern, which in turn suspending proceedings, and submitted the following question to the Court: ‘For the purposes of Article 5(1) of the 1968 Brussels Convention, is the place of performance, in the specific case of a claim for fees by an architect engaged solely in planning work, to be determined by reference to the contractual obligation which forms the actual basis of the legal proceedings (in this case a debt payable under German law at the place where the defendant is domiciled), or by reference to the obligation typical of the contract and characterizing the contractual relationship as a whole (that is to say, the place where the architect has his practice and/ or the site of the planned building)?’

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C-266/85 Shenavai v Kreischer

Judgement The Court argued that in cases such as the one being disputed here, neither party is weaker than the other. ‘The Convention leaves the possibility open for the national Court, when considering an architect’s contract, as well as other contracts, to distinguish between two places of performance according to the respective obligations of the parties’.

The CJEU concluded that in this case, the case of action for the payment of fees brought by an architect responsible solely for the design, the term ‘obligation’ refers to the contractual obligation which is the subject of the action, that is to say the obligation on the client to pay the fees. ‘The place of performance of that obligation is to be determined according to the national law applicable to the rules of conflict of laws of the Court before which the matter is brought’.

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C-313/85

SpA Iveco Fiat vs Van Hool NV 11 November, 1986

82

C-313/85 Iveco Fiat v Van Hool

Facts By written agreement of 28 December 1956, Iveco Fiat granted Van Hool an exclusive concession within the territory of the Benelux States to construct Fiat chassis for coaches and buses, to assemble Fiat mechanical units in coaches, buses and industrial vehicles, and to sell Fiat spare parts for those three kinds of vehicle.

On 1 January 1958, Iveco Fiat and Van Hool concluded another agreement granting Van Hool exclusive rights to sell Fiat industrial vehicles within the territory of the Benelux States. That agreement was taken over as from 30 December 1961 by Catrabel, a newly created company. Article 9 of the 1956 agreement stipulated that the latter was to be valid from 1 January 1957 until 31 December 1957 and that its renewal was to be subject to written confirmation by Fiat. Article 16 of the agreement contains a similar clause. The 1956 agreement was subsequently renewed in writing from year to year until 31 December 1961.

Notwithstanding the fact that it was not expressly renewed after 1961, the parties continued to maintain business relations for 20 years.

As a result of certain disagreements between the two companies in 1981, Iveco Fiat broke off business relations with Van Hool as from 1 January 1982. Article 10 of the 1956 agreement contains a clause on the choice of Court according to which only the Turin district Court is to have jurisdiction, under Italian law, in the event of a dispute. A similar clause is set out in Article 18 of the 1958 agreement.

In proceedings instituted before the Tribunal de Commerce Malines

by Van Hool, Iveco Fiat objected that that Court lacked jurisdiction on the ground that the jurisdiction clause was also applicable to contractual relations between the parties after the expiry of the original agreement concluded in 1956. By decision of 6 July 1983 the Court declared that it had jurisdiction on the ground that the conditions governing the validity of jurisdiction agreements, laid down by Article 17(1) of the Convention (1968) on Jurisdiction and the Enforcement of 83

C-313/85 Iveco Fiat v Van Hool

Judgments in Civil and Commercial Matters had not been satisfied.

That decision was upheld by judgment of 15 February 1984 of the Appeal Court of Antwerp.

Iveco Fiat lodged an appeal against that judgment with the Belgian Court of Cassation, which, by order of 4 October 1985, decided to stay the proceedings until the Court of Justice had given a preliminary ruling on the following question: Are the requirements of Article 17 of the Convention satisfied by a written agreement which contains a jurisdiction clause but whose expiry date has passed where that agreement has continued to serve as the legal basis for the contractual relations between the parties, although the condition stipulating that the agreement could be renewed only in writing was not fulfilled?

Judgement The Court, in answer to the question, ruled that Article 17 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters must be interpreted as meaning that where a written agreement containing a jurisdiction clause and stipulating that an agreement can be renewed only in writing has expired but has continued to serve as the legal basis for the contractual relations between the parties, the jurisdiction clause satisfies the formal requirements in Article 17.

This is so if, under the law applicable, the parties could validly renew the original agreement otherwise than in writing, or if, conversely, one of the parties has confirmed in writing either the jurisdiction clause or the set of terms which has been tacitly renewed and of which the jurisdiction clause forms part, without any objection from the other party to whom such confirmation has been notified.

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C-144/86

Gubisch Maschinenfabrik KG vs Giulio Palumbo 08 December, 1986

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C-144/86 Gubisch Maschinenfabrik v Palumbo

Facts Mr Palumbo, an Italian resident, brought an action against Gubisch Maschinenfabrik KG (‘Gubisch’), a German limited partnership, in the tribunale di Roma for a declaration that the contract was void on the ground that the order had been repealed prior to reaching Gubisch for acceptance. Due to the absence of consent, Mr Palumbo proclaimed that the contract should be set aside or else discharged since Gubisch did not abide by the time-limit for delivery.

With Article 21 of the Brussels Convention, Gubisch declared that the Italian Court did not have jurisdiction since it had previously brought proceedings against Mr Palumbo before the German Court (the Flensburg Landgericht) to enforce the payment obligation of the contract for the machinery he purchased. Following the rejection by the tribunale di Roma of a lis pendens plea, Gubisch appealed to the Corte Suprema di Cassazione (the Supreme Court of Cassation) in Rome, which referred the following question to the Court for a preliminary ruling: ‘Does a case where, in relation to the same contract, one party applies to a Court in a Contracting State for a declaration that the contract is inoperative (or in any event for its discharge) whilst the other institutes proceedings before the Courts of another Contracting State for its enforcement fall within the scope of the concept of lis pendens pursuant to Article 21 of the Brussels Convention of 27 September 1968?’

Judgement It was decided that in order to establish whether a situation of lis pendens occurs, the terms used in Article 21 of the Brussels Convention had to be construed autonomously. For the Court, the purpose of Article 27(3) of the Convention is extremely crucial, being that ‘of 86

C-144/86 Gubisch Maschinenfabrik v Palumbo

avoiding irreconcilable judgments between the same parties’. The Court also emphasised how, since the concept of lis alibi pendens is not identical in all Contracting States, one cannot arrive at a common concept through combining a variety of relevant provisions as found in national law.

Furthermore, the application of Article 21 occurs where ‘two actions are between the same parties and involve the same cause of action and the same subject-matter’. The Court concluded that ‘[t]he question whether the contract is binding [...] lies at the heart of the two actions’. If it is the action for rescission or discharge of the contract which is then brought, it may also be considered as a defense against the first action, where the format of proceedings before a Court in some other Contracting State are independent.

Moreover, the Court held that the two actions indeed have the same subject-matter as it could not be limited so as to mean two claims which are completely the same. Therefore, the final answer to the question is that the concept of lis pendens, in accordance with Article 21 of the Brussels Convention of 27 September 1968, does cover a case where one party institutes proceedings before a Court in a Contracting State for the rescission or discharge of an international sales contract, whilst before a Court in some other Contracting State, an action by another party enforcing the same contract is pending.

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C-145/86

Horst Ludwig Martin Hoffmann vs Adelheid Krieg 04 February, 1988

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C-145/86 Hoffmann v Krieg

Facts The parties were German nationals who married in Germany in 1950. In 1978, the husband moved out of the family home and settled in the Netherlands. On application by the wife, who continued to live in Germany, the husband was ordered by judgment of the German (Local Court) on the 21 August 1979 to pay maintenance to his wife every month under Par. 1361 of the Bürgerliches Gesetzbuch (German Civil Code).

On application by the husband, a divorce was granted through the Netherlands Court by applying German law. On 19 August 1980, that judgment was entered in the Civil Register in The Hague whereupon in the Netherlands the marriage was dissolved. A decree of divorce does not come within the scope of the 1968 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.

In Germany, under Par. 7 of the Family Law Amendment Law, recognition of that judgment requires a decision of the competent Regional Administration of Justice and then has retroactive effect.

In 1981, on application by the wife, an order for the enforcement of the judgment of the Amtsgericht, Heidelberg (Germany) in accordance with Article 34 of the Convention was granted. That order for enforcement was notified to the husband whom did not appeal against it in the Netherlands but in September 1982 brought an action before the Amtsgericht, Heidelberg in Germany, for a declaration that the above-mentioned maintenance order was no longer enforceable as from 19 August 1980, the date on which the decree of divorce became absolute in the Netherlands.

In 1983, the Amtsgericht, Heidelberg dismissed the husband’s action on the ground that the decree of divorce had not at that date been recognised in Germany. The wife detained an attachment of the husband’s earnings paid by his Netherlands employer. The husband applied to the Arrondissementsrechtbank, Almelo in the Netherlands for the discharge or suspension of attachment of earnings order.

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He succeeded at first instance but his application was dismissed on appeal. He appealed against that judgment before the Supreme Court of the Netherlands (Hoge Raad). The Hoge Raad entertained doubts as to the effects of the Netherlands decree of divorce on the German maintenance order, which presupposed the continuing validity of the marriage.

The Hoge Raad referred the following questions to the Court for a preliminary ruling: (1) Does the obligation imposed on the Contracting States to recognise a judgment given in another Contracting State (Article 26 of the Brussels Convention) mean that such a judgment must be given the same effect in the other Contracting States as it has under the law of the State in which it was given and does this mean that it is therefore enforceable in the same cases as in that State?

(2) If Question 1 is answered in the affirmative: Must Articles 26 and 31 of the Brussels Convention, be interpreted as meaning that the obligation to recognise a judgment, because the judgment remains enforceable under the law of the State in which it was given, it is also enforceable in the same cases in the other Contracting State?

(3) If Question 2 is answered in the affirmative: In a case such as this, is it possible to plead that the German maintenance order is irreconcilable with the subsequent Netherlands decree of divorce or to plead public policy ?

(4) Does the Brussels Convention require acceptance of the rule that, if the party against whom enforcement is sought of a judgment given in another Contracting State fails to plead, in the appeal, matters of which he was aware before the end of the period referred to in Article 36(1) of the Brussels Convention and which preclude (further)

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enforcement of that judgment, he may no longer plead those matters in subsequent execution proceedings in which he is appealing ?

(5) If Question 4 is answered in the affirmative: Does the Brussels Convention require it to be assumed that the Court of the State in which an enforcement order is issued must apply of its own motion the rule referred to in the fourth question in subsequent execution proceedings, even if its own law makes no provision for the application of such a rule?

Judgement The Court, in answer to the questions referred to it by the Hoge Raad, ruled: (1) A foreign judgment which has been recognised by virtue of Article 26 of the Convention must in principle have the same effects in the State in which enforcement is sought as it does in the State in which the judgment was given; (2) A foreign judgment whose enforcement has been ordered in a Contracting State pursuant to Article 31 of the Convention and which remains enforceable in the State in which it was given must not continue to be enforced in the State where enforcement is sought when, under the law of the latter State, it ceases to be enforceable; (3) A foreign judgment ordering a person to make maintenance payments to his spouse by virtue of his conjugal obligations to support her is irreconcilable within the meaning of Article 27(3) of the Convention with a national judgment pronouncing the divorce of the spouses;

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(4) Article 36 of the Convention must be interpreted as meaning that a party who has not appealed against the enforcement order, at the stage of the execution of the judgment, from relying on a valid ground which he could have pleaded in such an appeal against the enforcement order, and that that rule must be applied of their own motion by the Courts of the State in which enforcement is sought. However, that rule does not apply when it has the result of obliging the national Court to make the effects of a national judgment which lies outside the scope of the Convention.

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C-218/86

SAR Schotte GmbH vs Parfums Rothschild SARL 09 December, 1987

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Facts The law applicable is Article 5(5) of the Convention, which states: A person domiciled in a Contracting State may, in another Contracting State, be sued as regards a dispute arising out of the operations of a branch, agency or other establishment, in the Courts for the place in which the branch, agency or other establishment is situated.

In 1981/1982, the German undertaking Schotte GmbH conducted negotiations with Rothschild GmbH, Düsseldorf. The negotiations resulted in the conclusion of an agreement concerning the production and delivery of atomiser pumps by Schotte GmbH for Parfums Rothschild SARL, Paris, a French undertaking which is a wholly owned subsidiary of Rothschild GmbH. In 1983, upon receiving invoices from Schotte GmbH, Rothschild complained that the atomisers did not satisfy the customers’ requirements.

The matter was not settled by exchange of letter and therefore, Schotte GmbH claimed payment from Rothschild GmbH, which denied that it owed the money, and Schotte GmbH brought proceedings in front of the Regional Court in Düsseldorf. Schotte GmbH claimed that Rothschild GmbH was in reality an ‘establishment’ of Rothschild SARL within the meaning of Article 5(5) of the Brussels Convention.

Rothschild SARL objected to the jurisdiction of the German Courts, while it contended that Rothschild GmbH was not an agency or establishment of Rothschild SARL, but rather that the latter was a wholly-owned subsidiary of Rothschild GmbH, and the contracts at issue were concluded exclusively with Rothschild SARL. The Landgericht Düsseldorf considered that the requirements of Article 5(5) of the Convention were not satisfied, and it therefore had no jurisdiction to hear the action. Schotte GmbH appealed.

The following preliminary question was submitted to the Courts of

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Justice: Does the jurisdiction conferred by Article 5(5) of the Convention in regard to a branch, agency or other establishment extend to the case where a legal entity under French law whose registered office is in Paris, maintains no dependent establishment in another Contracting State (in this case, the Federal Republic of Germany) but where there is in that other Contracting State an independent legal entity under German law which has the same name and identical management, negotiates and conducts business in the name of the French legal entity and is used by the latter as an extension of itself?’

Judgement In the light of judgment delivered by the Courts of Justice when interpreting Art.5(5) of the Convention, the Court was inclined to answer that question in the affirmative. In its view, the activities of the directors of Rothschild SARL at the premises of and in the name of Rothschild GmbH could be regarded as the activities of an extension of Rothschild SARL which, although it might not clearly appear to be organised as such, did in fact operate as such an extension.

The Court of Appeal also held that a legal entity which did not wish to be sued in another Contracting State would be able to circumvent jurisdiction under Article 5(5) by setting up its foreign branch in the legal form of an independent undertaking. Therefore, Rothschild GmbH should be regarded as an ‘establishment’ of Parfums Rothschild SARL within the meaning of that provision. As regards the concept of operations, the Court of Appeal cited the case of Somafer v SaarFerng (C-33/78), wherein the Court stated that the term ‘operations’ covers actions relating to undertakings entered into at the place of business in the name of the parent body and to be performed in the 95

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Contracting State in which the place of business is established.

In the Somafer v Saar-Ferng Case, the Court held that the concept of a branch, agency or other establishment implies a place of business which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties so that the latter, although knowing that there will, if necessary, be a legal link with the parent body, the head office of which is abroad, do not have to deal directly with such parent body, but may transact business at the place of business constituting the extension.

The question referred concerns a case in which two companies bear the same name and are under common management, and in which one of those undertakings, although not a dependent branch or agency of the other, nevertheless enters into transactions on behalf of the other, and thus acts as its extension in business relations.

It should be added that in the present case, Rothschild GmbH not only took part in the negotiations and in the conclusion of the contract but was also responsible, during the performance of the contract, for ensuring that the deliveries contracted for were made and that invoices were paid. Moreover, the correspondence addressed to Schotte seemed to indicate that it was acting as a place of business of Parfums Rothschild SARL. In such a case, third parties doing business with the establishment acting as an extension of another company must be able to rely on the appearance thus created and regarded that establishment as an establishment of the other company even if, from the point of view of company law, the two companies are independent of each other.

The close connection between the dispute and the Court called upon to hear it must be assessed not only on the basis of the legal relations between legal entities established in different Contracting States, but also by reference to the way in which these two undertakings

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behave in their business relations and present themselves vis-à-vis third parties in their commercial dealings.

Article 5(5) of the Convention must be interpreted as applying to a case in which a legal entity established in a Contracting State maintains no dependent branch, agency or other establishment in another Contracting State, but nevertheless pursues its activities there through an independent company with the same name and identical management which negotiates and conducts business in its name and which it uses as an extension of itself.

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C-9/87

SPRL Arcado vs SA Haviland 08 March, 1988

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Facts The Court dealt with the concept of ‘matters relating to a contract’ in Article 5(1) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, which is to be regarded as an independent concept which, for the purpose of the application of the convention, must be interpreted by reference principally to the system and objectives of the Convention in order to ensure that it is fully effective.

The question raised, was in the context of proceedings that concerned the performance of an independent commercial agency agreement. SA Haviland terminated the agreement, which led to the plaintiff, to institute proceedings, seeking compensation for the wrongful termination of the agreement.

SA Haviland objected, insisting that the Court had no jurisdiction ratione loci, as the action for compensation was based on a quasidelict committed at the place from which the termination of the agreement was notified to the other party.

The Court, at national level, held in favour of the plaintiff, who later appealed the decision, seeking an increase in compensation, and the payment of statutory interest. The Court of Appeal thus referred the case to the Court of Justice.

Judgement Article 5(1) of the Convention provides as follows:

A person domiciled in a contracting State may, in another contracting State, be sued: (1)in matters relating to a contract, in the Courts of the place of performance of the obligation in question…

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Thus, a claim for payment due under an independent commercial agreement would constitute a contract within the meaning of Article 5(1) off the Brussels Convention.

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C-189/87

Athanasios Kalfelis vs Bankhaus Schröder, Münchmeyer, Hengst and Co. and others 27 September, 1988

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Facts Between March 1980 and July 1981, Mr Kafelis concluded with the bank in Luxembourg, through an intermediary established in Frankfurt, a number of spot and futures stock-exchange transactions in silver bullion and for that purpose paid DM 344,868.52 to the bank in Luxembourg. The futures resulted in a loss.

Mr. Kalfelis sued the defendants holding them jointly and severally liable for the debt, basing such claim on contractual liability for beach of obligation provide him with information on tort pursuant to National Law, claiming that the defendants caused him to suffer loss as a result of their conduct contra bonos mores. He also alleged unjust enrichment, and so claimed damages of DM 463,019.08 together with interest.

The defendants challenged the jurisdiction of the Court at every stage, and so the German Courts stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

(1) (a) Must Article 6 (1) of the EEC Convention be interpreted as meaning that there must be a connection between the actions against the various defendants? (b) If Question (a) must be answered in the affirmative, does the necessary connection between the actions against the various defendants exist if the actions are essentially the same in fact and law (einfache Streitgenossenschaft), or must a connection be assumed to exist only if it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings (for example, in cases of ‘notwendige Streitgenossenschaft’ (compulsory joinder))?

(2) (a) Must the term ‘tort’ in Article 5(3) of the EEC Convention be construed independently of the Convention

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or must it be construed according to the law applicable in the individual case (lex causae), which is determined by the private international law of the Court applied to? (b) Does Article 5(3) of the EEC Convention confer, in respect of an action based on claims in tort and contract and for unjust enrichment, accessory jurisdiction on account of factual connection even in respect of the claims not based on tort?

Judgement The first question concerns essentially, whether for Article 6(1) of the Convention to apply, a connection must exist between he claims made by the same plaintiff against several defendants, and the nature of that connection.

Article 2 of the Convention lays down the general rule that persons domiciled in a Contracting State are to be sued in the Courts of that state. The Court made reference to the ‘special jurisdictions’ laid down in Title II, Section 2 of the Convention, by virtue of which a legal person domiciled in a contracting state may be sued in another contracting state. One of said special jurisdictions is provided for in Article 6(1), which allows for a defendant to be sued ‘where he is one of a number of defendants, in the Courts for the place where any one of them is domiciled’.

In order to avoid situations wherein the plaintiff would be able to make use of such a special jurisdiction for the purpose of excluding the jurisdiction of the Courts of the State where one of the defendants is domiciled, there must be a connection between the claims made against each of the defendants. The nature of such a connection must be determined independently.

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C-220/88

Dumez France SA and Tracoba SARL vs Hessische Landesbank and others 11 January, 1990

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Facts Two French companies, Sceper and Tracoba, whose rights were held by Dumez France and Oth Infrastructure respectively, signed an agreement on the 24th December 1971 with a German promoter, Mr. Hoffmann, who was the limited partner in the German firm Immosecur, for the construction of buildings on a piece of land which belonged to the Federal Republic of Germany. In order to facilitate the performance of the contract, the French companies signed a joint venture on agreement on the 3rd February 1972 and subsequently transferred their rights and obligations under the contract to two German subsidiaries, which were set up as an Arbeitsgemeinschaft.

The project was to be financed by a number of mortgage loans advanced to Hofmann by a number of German banks (the defendants).

During construction certain problems arose with the financing scheme, the loans were suspended and construction was stopped dead in its tracks.

The plaintiffs therefore considered that they had suffered a substantial loss for which the banks were responsible and commenced proceedings against them before the French Commercial Court for damages on the basis of quasi-delictual liability. This Court upheld the German banks’ objection of lack of jurisdiction. The French Cour d’Appel upheld the first Court’s decision. The Cour de Cessastion however, considered that the case raised a valid question as to the interpretation of Community Law, accordingly referring the following question to the Court:

Is the rule on jurisdiction which allows the plaintiff, under Article 5(3) of the Brussels Convention, to choose between the Court for the place of the event giving rise to damage and the Court for the place where that damage occurs to be extended to cases in which the damage alleged is merely the consequence of the harm suffered by persons who were the immediate victims of damage occurring at 105

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a different place, which would enable the indirect victim to bring proceedings before the Court of the State in which he is domiciled?

Judgement The Court made reference to the case of Mines de potasse d’Alsace, the Court in this case concluded that the expression ‘place where the harmful event occurred’ which appears in Article 5(3) of the Convention must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to the damage, with the result that the defendant may be sued in either the Courts where the damage occurred, or the Courts where the events which gave rise to that damage occurred.

In the Dumez case however, the facts gave rise to a situation wherein the damage allegedly suffered through cancelled of the loans by the German banks, originated and produced its direct consequences in the same Member State. Therefore the harm that the plaintiffs were claiming was merely the indirect consequence of the financial losses initially suffered by their subsidiaries following the cancellation of the loans and subsequent suspension of the works.

The Convention establishes a general rule that the Court of the of the State of the defendant’s domicile would have jurisdiction (Title II Article 2), the Convention’s reluctance to attribute jurisdiction to the plaintiff’s domicile is reflected in Article 3.

The exception to this general rule is that which is pivotal to the plaintiff’s argument, article 5(3) of the Convention. As illustrated in the Mines de potasse d’Alsace case, such special jurisdiction may only be granted in cases where there exists a:

particularly close connecting factor between the dispute and Courts other than those of the State of the

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defendant’s domicile, which justifies the attribution of jurisdiction to those Courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings.

The Court stressed the importance of aiming towards achieving the proper objectives of the Convention, to promote the recognition and enforcement of judgements in States other than those in which they were delivered. Furthermore, it would be counter productive to have a situation where there are multiple Courts of competent jurisdiction as this would increase the risk of irreconcilable decisions.

The Court concluded that the rule on jurisdiction in Article 5(3) of the Convention:

cannot be interpreted as permitting a plaintiff pleading damage which he claims to be the consequence of the harm suffered by other persons who were direct victims of the harmful act to bring proceedings against the perpetrator of that act in the Courts of the place in which he himself ascertained the damage to his assets.

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C-305/88

Isabelle Lancray SA vs Peters und Sickert KG 03 July, 1990

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Facts Isabelle Lancray SA is a public limited liability company governed

by French law and having its registered office at Neuilly-sur-Seine which had business relations with Peters und Sickert KG, a limited partnership governed by German law having its registered office at Essen. Those relations were based on a contract of 2 November 1983 in respect of which the parties agreed to apply French law and to give jurisdiction to the Tribunal de Commerce (Commercial Court).

On 18 July 1986, the creditor obtained an interim order from the Amtsgericht (Local Court) Essen prohibiting the debtor from selling or delivering to third parties any products of the make ‘Isabelle Lancray’ in its stock. The creditor brought an action before the Tribunal de Commerce, Nanterre, in which it asked that Court to confirm the tenor of the interim order. By a letter, the Public Prosecutor’s Office in Nanterre sent to the President of the Landgericht (Regional Court) Essen the summons, drawn up in French, to appear before the French Court, together with a form entitled ‘Description of the essential particulars of the Writ’, printed in French and English and partly completed in French, and requested that they be served. By a certificate of service dated 19 August 1986, the Amtsgericht Essen stated that service had been effected by delivery of the documents to a secretary in the debtor’s offices. No German translation was appended to the documents.

A summons dated 19 September 1986, drawn up in French, to appear at a hearing before the Tribunal de commerce, Nanterre, on 16 December 1986 was sent to the debtor by registered mail. By judgment of 16 October 1986, the Landgericht Essen quashed the interim order of 18 July 1986 and dismissed the creditor’s application for an interim order. By a letter of 11 November 1986, the debtor informed the Tribunal de Commerce of this fact and claimed that the documents had not been duly served on the debtor because they were not accompanied by a certified translation of the summons into German. The French Court returned that letter, suggesting that the 109

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sender submit, if it wished, a document in French.

The debtor did not appear at the hearing on 16 December 1986 and, in a judgment in default of appearance after due service the Tribunal de Commerce, Nanterre, upheld the application. That judgment was served on the debtor by delivery to its managing partner on 9 March 1987. Upon application by the creditor, the Landgericht Essen decided that the judgment of the Tribunal de Commerce, Nanterre, of 15 January 1987 was to be recognised in the Federal Republic of Germany.

The debtor then claimed that under Article 27(2) of the Brussels Convention (1968) on jurisdiction and the enforcement of judgments in civil and commercial matters the creditor’s application should not have been allowed. The Oberlandesgericht (Higher Regional Court) allowed its appeal and dismissed the creditor’s application.

In a Rechtsbeschwerde (appeal on a point of law) to the Bundesgerichtshof in accordance with Article 37(2) of the Convention, the creditor claimed that the order should be set aside and the debtor’s appeal dismissed. Article 27(2) of the Convention, according to the national Court, provides that a judgment may not be recognised, where it was given in default of appearance, if the defendant was not duly served with the document which instituted the proceedings in sufficient time to enable him to arrange for his defence.

In its legal analysis of the case, the Bundesgerichtshof considers that the summons was served on the debtor in sufficient time to enable it to arrange for its defence, because the debtor had a period of three months in which to acquaint itself with the content of the documents served in French by having them translated. The Court considers, however, that the document instituting the proceedings was not served in due form. In that connection, it points out, first, that the summons was served not on the addressee but by delivery to a secretary in the addressee’s offices, that is to say by way of substituted service in accordance with Paragraph 183(1) of the Code of Civil Procedure.

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It then points out that Article 5 of the Hague Convention (1965) on the service abroad of judicial and extrajudicial documents in civil or commercial matters provides that, except in Article 5(1)(b), the document may always be served by delivery to an addressee who accepts it voluntarily. But in the present case, service was effected not by delivery to the addressee who accepted it voluntarily but by way of substituted service. That would have been acceptable as formal service only if the document served had been drawn up in, or translated into German.

Nor, finally, was service effected in due form under the Agreement of 6 May 1961 between the Government of the Federal Republic of Germany and the Government of the French Republic on the further simplification of legal transactions and relations pursuant to the Hague Convention relating to Civil Procedure of 1954. Under Article 3(1) of the Agreement of 1961, service could have been effected by delivery of the document to the addressee, provided that the addressee accepted it voluntarily. But service was effected by way of substituted service and accordingly a translation should have been attached.

The Court also observed that the defective service could not be cured under Paragraph 187 of the Code of Civil Procedure, stating that although defective service consisting in the absence of a translation may be cured if the addressee has a command of the foreign language, it cannot if, as in the present case, he does not have a command of that language.

The Court considered that the dispute raised a question relating to the interpretation of the Convention, and decided to refer the following questions: (1) Is recognition of a judgment given in default of appearance to be refused in accordance with Article 27(2) of the Brussels Convention where the document instituting the proceedings was not served on the defendant in due form, even though it was served in sufficient time to enable him 111

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to arrange for his defence?

(2) In the event that a judgment given in default of appearance is not recognised because, although the defendant was served in sufficient time to enable him to arrange for his defence, the service was not duly effected, does Article 27(2) of the Brussels Convention preclude recognition of the judgment even where the laws of the State in which recognition is sought permit the defective service to be cured?

Judgement The Court, in answer to the questions referred to it, ruled: (1) Article 27(2) of the Convention (1968) on jurisdiction and the enforcement of judgments in civil and commercial matters is to be interpreted as meaning that a judgment given in default of appearance may not be recognised where the document instituting the proceedings was not served on the defendant in due form, even though it was served in sufficient time to enable him to arrange for his defence.

(2) Article 27(2) of the Convention is to be interpreted as meaning that questions concerning the curing of defective service are governed by the law of the State in which judgment was given, including any relevant international agreements.

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Kongress Agentur Hagen GmbH vs Zeehaghe BV 15 May, 1990

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Facts In 1984, Kongress Agentur Hagen GmbH (hereinafter referred to as ‘Hagen’), an undertaking whose registered office is in Düsseldorf, concluded a contract with Zeehaghe BV, whose registered office is in The Hague, for the reservation of a large number of hotel rooms in The Hague. Hagen acted in its own name but at the request and on behalf of a third party, Garant Schuhgilde e.G. (hereinafter referred to as ‘Schuhgilde’), whose registered office is also in Düsseldorf.

The reservation was cancelled and Zeehaghe summoned Hagen by writ of 12 February 1985 to appear before the Arrondissementsrechtbank (District Court), The Hague, claiming damages and interest for Hagen’s failure to perform its obligations arising under the contract. By way of objection Hagen claimed that the Arrondissementsrechtbank should declare that it had no jurisdiction or, in the alternative, that Schuhgilde, as its principal, should be summoned to appear before the Arrondissementsrechtbank to answer a claim for indemnity.

Zeehaghe contested the application for leave to join Schuhgilde as a third party on the ground that the proceedings between it and Hagen would be complicated and would become protracted if leave were granted.

By judgment of 27 November 1985, the Arrondissementsrechtbank declared that it had jurisdiction to entertain the application under Article 5(1) of the Convention (1968) on jurisdiction and the enforcement of judgments in civil and commercial matters and refused to grant leave for an action on a warranty or guarantee to be brought, on the ground that the defence put forward by Zeehaghe was well founded.

Hagen appealed against that decision to the Gerechtshof (Regional Court of Appeal), The Hague, on the ground that Article 6(2) of the Convention required the Court seised of the original proceedings to grant leave to bring an action on a warranty or guarantee ‘unless these were instituted solely with the object of removing (the third party) from the jurisdiction of the Court which would be competent in 114

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his case’, an exception provided for in Article 6(2) itself.

By judgment of 9 January 1987, the Gerechtshof rejected that argument and upheld the decision of the Arrondissementsrechtbank, on the ground that Article 6 merely permitted a Court to grant leave to bring an action on a warranty or guarantee but did not impose on it any obligation to do so. Hagen lodged an appeal on a point of law.

In its defence to the appeal, Zeehaghe contended that an action on a warranty or guarantee might be brought only if the jurisdiction of the Court seised of the main proceedings was based on the ordinary rule of jurisdiction contained in Article 2 of the Convention, which conferred jurisdiction on the Courts of the State in which the defendant was domiciled.

It therefore denied that the Arrondissementsrechtbank had jurisdiction to grant the application made by Hagen pursuant to the special rule of jurisdiction contained in Article 6(2), since the original proceedings were also based on a special rule of jurisdiction, namely Article 5(1).

After hearing the Advocate General and taking the view that the dispute raised a question relating to the interpretation of the Convention, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided, by judgment of 9 December 1988 pursuant to the protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention, to stay the proceedings and refer to the Court the following questions for a preliminary ruling: A. If a defendant domiciled in a Contracting State is sued on the basis of Article 5(1) of the Brussels Convention in another Contracting State, may the Court in the latter State derive from Article 6(2) of the Brussels Convention jurisdiction to entertain an action on a warranty or guarantee brought by the defendant against a person domiciled in a Contracting State other than that of the Court?

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B. Must Article 6(2) of the Brussels Convention be interpreted as meaning that the Court is bound to grant leave for the action on a warranty or guarantee to be brought unless the exception provided for in that provision applies?

C. If question B is answered in the negative, may the Court apply the procedural rules of its national law in assessing whether the request for leave to bring the action on a warranty or guarantee should be granted or do the provisions of the Brussels Convention mean that the Court must consider the request in the light of criteria other than those laid down in its national procedural law and, if so, what are those criteria?

Judgement The Court, in answer to the questions referred to it by the Hoge Raad der Nederlanden, ruled: 1. Where a defendant domiciled in a Contracting State is sued in a Court of another Contracting State pursuant to Article 5(1) of the Brussels Convention, that Court also has jurisdiction by virtue of Article 6(2) to entertain an action on a warranty or guarantee brought against a person domiciled in a Contracting State other than that of the Court seised of the original proceedings.

2. Article 6(2) must be interpreted as meaning that it does not require the national Court to accede to the request for leave to bring an action on a warranty or guarantee and that the national Court may apply the procedural rules of its national law in order to determine whether that action is admissible, provided that the effectiveness of the Convention in that regard is not impaired and, in particular,

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that leave to bring the action on the warranty or guarantee is not refused on the ground that the third party resides or is domiciled in a Contracting State other than that of the Court seised of the original proceedings.

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C-190/89

Marc Rich & Co. AG vs Società Italiana Impianti PA 25 July, 1991

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Facts Marc Rich and Co. AG, whose registered office is in Zug, Switzerland, and Società Italiana Impianti PA (hereinafter referred to as ‘Impianti’), whose registered office is in Genoa, Italy. It appears from the documents forwarded to the Court that, by telex message of 23 January 1987, Marc Rich made an offer to purchase a quantity of Iranian crude oil on fob terms from Impianti.

On 25 January 1987, Impianti accepted the offer subject to certain further conditions. On 26 January, Marc Rich confirmed acceptance of those further conditions and on 28 January sent a further telex message setting out the terms of the contract and including the following clause: Law and arbitration Construction, validity and performance of this contract shall be construed in accordance with English law. Should any dispute arise between buyer and seller the matter in dispute shall be referred to three persons in London. One to be appointed by each of the parties hereto and the third by the two sochosen, their decision or that of any two of them shall be final and binding on both parties.

The vessel which Marc Rich then nominated completed loading by 6 February. On the same day Marc Rich complained that the cargo was seriously contaminated, causing it to incur a loss in excess of USD 7 000 000. On 18 February 1988, Impianti summoned Marc Rich to appear before the Tribunale (Regional Court), Genoa, Italy, in an action for a declaration that it was not liable to Marc Rich.

The summons was served on Marc Rich on 29 February 1988, and on 4 October 1988 the latter, relying on the existence of the arbitration clause, lodged submissions to the effect that the Italian Court had no jurisdiction.

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C-190/89 Rich v Società Italiana Impianti

Also on 29 February 1988, Marc Rich commenced arbitration proceedings in London, in which Impianti refused to take part. Marc Rich commenced proceedings before the High Court of Justice, London, for the appointment of an arbitrator pursuant to Section 10(3) of the Arbitration Act 1950. By decision of 19 May 1988, the High Court had granted leave to serve an originating summons on Impianti in Italy. Impianti requested that the order granting leave be set aside, contending that the real dispute between the parties was linked to the question whether or not the contract in question contained an arbitration clause. It considered that such a dispute fell within the scope of the Convention and should therefore be adjudicated on in Italy. Marc Rich, on the other hand, took the view that the dispute fell outside the scope of the Convention by virtue of Article 1 thereof.

On 5 November 1988, the High Court held that the Convention did not apply, that the putative proper law of the contract between the parties was English and that it was a proper case to give leave to serve out of the jurisdiction.

On appeal, the Court of Appeal decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling: 1.

Does the exception in Article 1(4) of the Convention extend: (a) to any litigation or judgments; and, if so, (b) to litigation or judgments where the initial existence of an arbitration agreement is in issue?

2.

If the present dispute falls within the Convention and not within the exception to the Convention, whether the buyers can nevertheless establish jurisdiction in England pursuant to: (a) Article 5(1) of the Convention; and/or (b) Article 17 of the Convention.

3.

If the buyers are otherwise able to establish jurisdiction in England than under paragraph 2 above,

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whether: (a) the Court must decline jurisdiction or should stay its proceedings under Article 21 of the Convention; or, alternatively, (b) whether the Court should stay its proceedings under Article 22 of the Convention, on the grounds that the Italian Court was first seised.

Judgement The Court, in reply to the questions hereby ruled: Article 1(4) of the Convention must be interpreted as meaning that the exclusion provided for therein extends to litigation pending before a national Court concerning the appointment of an arbitrator, even if the existence or validity of an arbitration agreement is a preliminary issue in that litigation.

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C-214/89

Powell Duffryn plc vs Wolfgang Petereit 10 March, 1992

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C-214/89 Powell Duffryn v Petereit

Facts Powell Duffryn PLC, a company governed by English law, subscribed for registered shares in IBH-Holding AG, a company governed by German law, when the latter company’s share capital was increased in September 1979. On 28 July 1980, Powell Duffryn attended IBH-Holding’s general meeting of shareholders, during which the shareholders - including Powell Duffryn - approved of an amendment to IBH-Holding’s statutes. One of the newly inserted provisions read; ‘By subscribing for or acquiring shares or share certificates the shareholder submits to the jurisdiction of the Court ordinarily competent to entertain suits concerning the company, in respect of all disputes with the company or its organs’.

In 1981 and 1982, Powell Duffryn, once again subscribed for shares in subsequent share increases of IBH-Holding and received dividends on its shares.

IBH-Holding was declared insolvent in 1983 and Mr Petereit was appointed as a trustee in bankruptcy. Acting as such, Mr Petereit commenced an action against Powell Duffryn before the Landgericht Mainz, claiming payment of money sums due in respect of the increases in IBH-Holding’s capital, and also claiming repayment of dividends which had been paid to Powell Duffryn in error.

Powell Duffryn contested Landgericht’s jurisdiction under the Brussels Convention. The exceptio was rejected by the Landgericht, whereupon Powell Duffryn appealed to the Oberlandesgericht Koblenz. The latter Court decided to address the Court of Justice for a preliminary ruling on the interpretation of Article 17 of the Brussels Convention.

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Judgement The Court ruled that a clause contained in the statutes of a company limited by shares and adopted in accordance with the provisions of the applicable national law, and those statutes themselves conferring jurisdiction on a Court of a Contracting State to settle disputes between that company and its shareholders, constitutes an agreement conferring jurisdiction within the meaning of Article 17 of the Brussels Convention.

It also held that, irrespective of how shares are acquired, the formal requirements laid down in Article 17 must be considered to be complied with in regard to any shareholder if the clause conferring jurisdiction is contained in the statutes of the company and those statutes are lodged in a place to which the shareholder may have access or are contained in a public register.

Moreover, it stated that the requirement that a dispute arose in connection with a particular legal relationship within the meaning of Article 17 can be satisfied if the clause conferring jurisdiction contained in the statutes of a company may be interpreted as referring to the disputes between the company and its shareholders as such.

Finally, it held that it is for the national Court to interpret the clause conferring jurisdiction invoked before it in order to determine which disputes fall within its scope.

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C-351/89

Overseas Union Insurance Ltd and Deutsche Ruck Uk Reinsurance Ltd and Pine Top Insurance Company Ltd vs New Hampshire Insurance Company 27 June, 1991

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C-351/89 Overseas Union Insurance Ltd and Others v New Hampshire Insurance Company

Facts The plaintiffs were: • Overseas Union Insurance Limited – incorporated in Singapore and registered in England as an overseas company, • Deutsche Ruck UK Reinsurance Limited – incorporated and registered in England, and • Pine Top Insurance Company Limited – also incorporated and registered in England.

The defendant was New Hampshire Insurance Company – incorporated in New Hampshire, United States and registered as an overseas company in England and as a foreign company in France.

The matter related to the plaintiffs’ obligations on account of insurance contracts concluded with the defendant, who had: • Issued an insurance policy covering certain repair or replacement costs of electrical appliances sold against a 5-year warranty by a French company, and • The defendant then reinsured a proportion of its risk with the plaintiffs who, after a number of queries with the defendant, ceased performance of their obligations on the grounds of non-disclosure, misrepresentation, and breach of duty on the part of the defendant The defendant sued the plaintiffs before a French Commercial Court for monies due, but the plaintiffs challenged the latter’s jurisdiction and sued the defendant before a British Commercial Court while the French Court postponed proceedings until the issue of jurisdiction could be determined according to article 21 of the Convention.

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Article 21 states that:

Where proceedings involving the same cause of action and between the same parties are brought in the Courts of different Contracting States, any Court other than the Court first seised shall of its own motion decline jurisdiction in favour of that Court.

A Court which would be required to decline jurisdiction may stay its proceedings if the jurisdiction of the other Court is contested.

Judgement As to the question on whether Article 21 applies irrespective of the parties’ domicile: • The wording of the provision makes no reference to domicile and does not distinguish between the various jurisdictions provided for in the Convention and it does not provide for a Court of a contracting state exercising its jurisdiction over a third-country domiciliary defendant.

Therefore, it applies when a Court’s jurisdiction is determined by the Convention and when it is determined by national legislation; • In Dumez France and Tracoba v Hessische Landebank and Others (C-220/88) and Gubisch Maschinenfabrik v Palumbo (C-144/86) the Court held that the Convention’s aim was to promote the recognition and enforcement of judgments while preventing non-recognition of a judgment because of its irreconcilability with another Court’s judgement in parallel proceedings; and • However, although Article 21 is aimed at preventing the risk of irreconcilability, it cannot prevent such situations from 127

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arising nevertheless, and the Convention still provides for this possibility. Therefore, Article 21 must be interpreted broadly to cover all lis pendens situations irrespective of domicile and to apply irrespective of the domicile of the parties to the two sets of proceedings.

As regards the question of whether the second Court, if it does not decline jurisdiction, should wait for the first Court to exercise its jurisdiction: •

If the first Court’s jurisdiction is contested but the second Court does not have exclusive jurisdiction, the second Court is exempted from its obligation to decline jurisdiction under Article 21 and may stay proceedings;

•

The second Court has no better chance than the first Court in determining whether the first Court has jurisdiction under the Convention or under its own national legislation; and

•

The Convention exhaustively lists the cases in which Courts in one contracting state may review the jurisdiction of Courts in another. These can relate only to special and exclusive jurisdiction rules of a mandatory or public policy nature.

An alternative solution would be for the second Court, which should normally decline jurisdiction, to stay the proceedings if the first Court’s jurisdiction is contested. However, it cannot examine the first Court’s jurisdiction. Therefore, if the first Court’s jurisdiction is contested, the second Court does not decline jurisdiction, the latter may stay the proceedings but may not examine the first Court’s own jurisdiction.

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C-261/90

Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler vs Dresdner Bank AG 26 March, 1992

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C-261/90 Reichert and Kockler v Dresdner Ban

Facts German residents Mr and Mrs Reichert had donated an immovable property in France to their son, Mario Reichert. The donation was also executed in France by means of a notarial instrument. However, Dresdner Bank (hereinafter, ‘the Bank’) instituted an Actio Pauliana against Mr. and Mrs. Reichert; claiming that the donation in question was made to the detriment of the Bank — a fraudulent transfer. The Bank explained that the transfer was fraudulent because Mr and Mrs Reichert had deceptively attempted to act as creditors of Mario Reichert.

Inevitably, the first question which became of concern during the appeal made by the Reicherts was whether an action provided for by national law where a creditor challenges a donation of immovable property by means of the Actio Pauliana fell within the scope of Article 16(1) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (hereinafter, ‘the Convention’), which concerns the Exclusive Jurisdiction of the Courts1.

The Cour d’Appel d’Aix-en-Provence referred this to the CJEU and, by means of a judgement on the 10th January 19902, the Court decided that it does not fall within the scope of Article 16(1) of the Convention.

However, the National Court raised further questions regarding the application of the Actio Pauliana in relation to Articles 5(3)3, Article 244 and Article 16(5)5 of the said Convention.

1 Art. 16: The following Courts shall have exclusive jurisdiction, regardless of domicile: (1). in proceedings which have as their object rights in rem in, or tenancies of, immovable property, the Courts of the Contracting State in which the property is situated.

2 Reichert and Others vs. Dresdner Bank (Case C-115/88) [1990] ECR I-27 3 Art. 5: A person domiciled in a Contracting State may, in another Contracting State, be sued: (3). in matters relating to tort, delict or quasi-delict, in the Courts for the place where the harmful event occurred.

4 Application may be made to the Courts of a Contracting State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Convention, the Courts of another Contracting State have jurisdiction as to the substance of the matter.

5 Art. 16 The following Courts shall have exclusive jurisdiction, regardless of domicile: (5). in proceedings concerned with the enforcement of judgments, the Courts of the Contracting State in which the judgment has been or is to be enforced.

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Judgement The Court first noted that the Articles in question were all exceptions to the general rule in Article 2 of the Convention6. However, it still maintained that the Actio Pauliana does not fall within the scope of Article 5(3). The Court, citing Kalfelis vs. Schröder7, pointed out that the concept of ‘matters relating to tort, delict or quasi-delict’ must be regarded as an independent concept, and thus should not be interpreted as a simple reference to the national laws of the concerned States. Furthermore, the same concept covers all actions in regard to establishing a defendant’s liability which does not concern contracts.

The Actio Pauliana seeks to render ineffective the dispositions which the debtor has made, rather than obliging the debtor to make good the damage caused — hence why it is considered to fall within the ambit of contract.

The Court had also stated that the Actio Pauliana does not fall within the scope of Article 16(5) of the Convention In its reasoning, it established that the purpose of the action is not to obtain a decision of the Court with regard to a difficulty in enforcing a judgement, but to obtain a judgement varying the legal situation of the debtor’s assets.

To this, the Court added that Article 16 must not be given a wider interpretation that required by its objective.

In regard to Article 24 of the Convention concerning provisional and protective measures, the Court noted that the Actio Pauliana seeks to vary the legal situation of an asset, rather than seeking to preserve a factual or legal situation. Seeking to vary the legal situation of an asset, therefore, constitutes neither a provisional nor a protective measure within the scope of Article 24 of the Convention. This was also confirmed, as the Court noted, in De Cavel vs. De Cavel.8 6 Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the Courts of that State. Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

7 Kalfelis vs. Schröder (Case C-189/87) [1988] ECR 5565 8 De Cavel vs. De Cavel (Case C-143/78) [1979] ECR 1055

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C-280/90

Elisabeth Hacker vs Euro-Relais GmbH 26 Februrary, 1992

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C-280/90 Hacker v Euro-Relais

Facts The plaintiff was domiciled in Germany, and the defendant ‘Euro-Relais GmbH’ was a travel organising business, with its head office in Germany, which used to advertise via brochures. EuroRelais undertook the responsibility of procuring a holiday home in the Netherlands for the plaintiff and six other people, in return for remuneration. The defendant also undertook to arrange the booking of the ferry crossing, for extra payment. The cost of the crossing itself was to be paid separately by Hacker to the ferry company.

Hacker considered the holiday home’s size as being smaller than that indicated in the Euro-Relais brochure, so much so that in fact she felt compelled to first rent an additional room, and later on to cut her holiday short. She commenced proceedings in Cologne’s local Court against Euro-Relais, claiming a reduction in the price paid, damages for having to rent an additional room and damages for loss of holiday enjoyment.

Judgement The Court’s question centred around Article 16(1) of the Brussels Convention, which deals with the exclusive jurisdiction ‘in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property’. It was determined that this article was to be interpreted as not applying to a contract which is concluded in a Contracting State whereby a business organising travel with its seat in that State takes responsibility to obtain for a client domiciled in the same State the use of a holiday accommodation for several weeks not owned by it in another Contracting State, and to book the travel arrangements.

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C-26/91

Jakob Handte & Co. GmbH vs Traitements Mécano-chimiques des Surfaces SA 17 June, 1992

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C-26/91 Handte v TMCS

Facts The plaintiff’s registered office was in Germany (Handte Germany), and the defendant’s registered office in France.

In 1984 the defendant bought two metal-polishing machines from a Swiss limited liability company, to which the defendant has a suction system attached which was manufactured by Handte Germany, but installed by Handte France, whose registered office is in France.

In 1987 the defendant instituted proceedings against the Swiss company, Handte France and Handte Germany in the French Regional Courts, seeking compensation for damages, as the equipment manufactured and sold did not comply with the rules on hygiene and safety at work, and was therefore unsuitable for its intended purpose.

That Court ruled that it did not have jurisdiction ratione loci over the case against the Swiss company, but did have jurisdiction to hear the case in relation to the claims made against Handte Germany and France under Article 5(1) of the Brussels Convention.

The French Court of Appeal in 1989 dismissed Handte Germany’s appeal, and stated that the Convention and the lower Court was right in finding that it did have jurisdiction under Article 5(1) of the Convention, as the Court for the place of performance of the obligation. Handte Germany appealed this decision, on the grounds that Article 5(1) was not applicable where there was a chain of contracts, and so appealed on a point of law. The French Cour de Cassation referred to the Court of Justice for a preliminary ruling on the following question;

Does Article 5(1) of the Convention, which provides for special jurisdiction in matters relating to a contract, apply to an action between a sub-buyer of goods and the manufacturer, who is not the seller, relating to defects in those goods or to their unsuitability for their intended purpose?

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C-26/91 Handte v TMCS

Judgement The Court firstly pointed out that it had consistently held that the phrase ‘matters relating to a contract’ found in Article 5(1) of the Convention has to be interpreted independently, and in line with the objectives and geenral scheme of the Convention, in order to ensure that it is applied uniformly in all Contracting States. Therefore the phrase should not be taken as to refer to the legal relationship in question before the national Court is classified by the relevant national law.

The Court then proceeded to highlight the fact that the preamble to the Convention includes the objective to ‘strengthen in the Community the legal protection of persons therein established’. The Convention, according to the Court, achieves such objectives by means of the jurisdictional rules laid down in Sections 2 to 6 of Title II of the Convention, whereby a defendant domiciled in one Contracting State may be sued before the Court of another Contracting State, should the rules of special jurisdiction so apply, as opposed to the general rule laid out in Article 2 that the Courts of the Contracting State in which the defendant is domiciled are to have jurisdiction.

As regards to the interpretation of the phrase ‘matters relating to contract’ laid down in Article 5(1), the Court stated that it is not to be understood as covering a situation in which there is an obligation freely assumed by one party towards another.

Furthermore, the Court observed that in situations where the sub-buyer of goods purchased from an immediate seller brings an action against the manufacturer for damages on the grounds that the goods are not in conformity, no contractual relationship between the sub-buyer and the manufacturer exists because the manufacturer had not undertaken any contractual obligation towards the subbuyer. Furthermore, the Court commented that in a great majority of Contracting Sates, the liability of a manufacturer towards a sub-buyer for defects in the goods old is not regarded as being of a contractual 136

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nature.

The Court therefore concluded that:

that Article 5(1) of the Convention is to be understood as meaning that it does not apply to an action between a sub-buyer of goods and the manufacturer, who is not the seller, relating to defects in those goods or to their unsuitability for their intended purpose.

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C-89/91

Shearson Lehmann Hutton Inc. vs TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH 19 January, 1993

138

C-89/91 Shearson Lehman Hutton v TVB

Facts Through this preliminary ruling, four questions were posed on the interpretation of the first and second paragraphs of Article 13 of the Brussels I Convention.

TVB brought an action before the German Courts against Hutton Inc., in reliance on a right assigned to it. The assignor, a German judge, had instructed the brokers (Hutton Inc.) to carry out currency, security and commodity future transactions under an agency contract. To that end, the assignor paid considerable sums over 1986 and 1987, but lost nearly all of his investments in those transactions.

Hutton Inc. had offered its services through press advertisements in the Federal Republic of Germany. The business relationships with the assignor were arranged through E. F. Hutton & Co. GmbH, whose registered office is in Germany. Hutton GmbH had acted, at least in an intermediary capacity, in connection with all the orders to buy and sell given by the assignor. The shares in Hutton GmbH belonged to E. F. Hutton International Inc., a wholly-owned subsidiary of Hutton Inc. whose registered office was in New York.

TVB claimed from Hutton Inc. the return of the sums lost by the assignor. It based its claims on unjustified enrichment and on the right to damages for breach of contractual and pre-contractual obligations and for tortious conduct, on the ground that Hutton Inc. had not sufficiently informed the assignor of the risks involved in futures transactions.

The case was brought before the Landgericht München (Regional Court, Munich), which declined jurisdiction to hear TVB’s claim. Taking the view that the dispute raised issues relating to interpretation of the Convention, the Bundesgerichtshof decided to stay the proceedings until the Court had given a preliminary ruling on the questions which were imposed.

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C-89/91 Shearson Lehman Hutton v TVB

What was first to be noted was that the questions put forward by the national Court all related to the interpretation of the first two paragraphs of Article 13 of the Convention, which were to be found under Section 4, entitled ‘Jurisdiction over Consumer Contracts’. It was to be determined whether the relevant conditions enabling that provision to be applied were satified, seeing as questions of this kind must be regarded as entailing matters relating to public policy.

It was clearly noted that the action for the recovery of debts against Hutton Inc. was not brought by a private individual, but by the assignee of that individual’s rights, being a company.

Reference was made to Article 2 of the Convention, which laid down the general principle that jurisdiction is to rest with the national Courts of the Contracting State in which the defendant is domiciled.

The question arose as to whether plaintiffs in proceedings such as this may be regarded as being consumers, resulting in special ruled needing to be followed With regard to consumer contracts.

Judgement Article 13 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is to be interpreted as meaning that a plaintiff who is acting in pursuance of his trade or professional activity and who is not, therefore, himself a consumer party to one of the contracts listed in the first paragraph of that provision, may not enjoy the benefit of the rules of special jurisdiction laid down by the Convention concerning consumer contracts.

Thus, the Court of Justice clarified the field of application ratione personae of Art. 13 of the Brussels I Convention. The Court held that the special rules of jurisdiction on consumer contracts (Section IV of the Brussels Convention) are not applicable to a plaintiff who acts in

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pursuance of his trade or profession, and therefore is not a consumer party to one of the consumer contracts mentioned in Art. 13, par. 1.

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C-172/91

Volker Sonntag vs Hans Waidmann, Elisabeth Waidmann and Stefan Waidmann 21 April, 1993

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C-172/91 Sonntag v Waidmann

Facts The CJEU had to decide on a damage claim brought by the parents of a pupil against a German state-school teacher for having caused the death of their son on a school trip to Italy. The teacher, who was supposed to have been supervising the pupils, had breached this duty and, as a result, caused the death of the claimants’ son.

In this case, the CJEU held that the claim was a ‘civil matter‘ even though the teacher was acting in the capacity of a civil servant and even though the case was covered by a scheme of social insurance under public law, that, according to German law, excluded a direct damage claim against a teacher.

Although the teacher had been employed in a publicly funded school and could be argued to be acting in some sense on behalf of the State, the right to compensation for criminally culpable conduct is generally recognised as being a civil law right. In addition, the teacher’s exercise of the powers were only those existing under the rules applicable to relations between private individuals, which would be the same whether the school was state-funded or a private school.

Judgement In this case law, the European Court of Justice addresses the issue of a government body which acts as a plaintiff and it introduces the concept of a public authority ‘acting in the exercise of its public powers.’

When a government body is the plaintiff, the Court has said, we do not speak of a civil matter if the institution of the proceedings by this government body is an act in the exercise of its public powers. In this case a school teacher tried to argue that a case against him for negligence following the death of a pupil under his care on a school

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trip did not fall within the meaning of ‘civil or commercial matter’ because he was the holder of a public office and his supervision of pupils was, as such, governed by administrative law.

The CJEU has ruled that certain actions between a public authority and a person governed by private law may come within the scope of the Brussels Convention. What is key is that the public authority must not be acting in the exercise of its public powers. In Sonntag, the CJEU held that a teacher-pupil relationship was essentially private in nature, since in most Member States the acts of a school teacher are not manifestations of public authority power.

The duty owed to pupils is the same whether the teacher is employed by the State or by a private school. The case did, therefore, fall within the term civil and commercial matters.

A claim for compensation for loss to an individual resulting from a criminal offence, even though made in the context of criminal proceedings, is civil in nature unless the person against whom it is made is to be regarded as a public authority which acted in the exercise of its powers.

That is not the case where the activity called in question is the supervision by a state-school teacher of his pupils during a school trip.

It follows that ‘civil matters‘ within the meaning of the first sentence of the first paragraph of Article 1 of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters covers a claim for damages brought before a criminal Court against a state-school teacher who, during a school trip, occasioned loss to a pupil as a result of a culpable and unlawful breach of his duties of supervision, even where there is coverage by a scheme of social insurance under public law.

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C-125/92

Mulox IBC Ltd vs Hendrick Geels 13 July, 1993

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C-125/92 Mulox IBC v Geels

Facts Mr Geels, a Dutchman who resided in Aix-les-Bains, France, was recruited by an English company established in London, Mulox IBC Limited (‘Mulox’), as an international marketing director starting from 1 November 1988. Using one of the rooms in his home as an office and base of operations, initially, Mr Geels sold Mulox products in Germany, Belgium, the Netherlands and Scandinavia where eventually, in September 1989, France was included as an area of responsibility.

However, it was only in January 1990 that Mr Geels canvassed customers in France.

Mulox was not satisfied with the way how he carried out his work and therefore as a consequence on 4 May 1990, Mulox decided to terminate the employment contract. Following this, on 7 May 1990, Mr Geels wrote to Mulox acknowledging the termination of his contract and requesting compensating in lieu of notice representing 12 months’ salary including damages where eventually he sued his former employer before the Conseil des Prud’ hommes, Aix-les-Bains.

This Court held that it had jurisdiction under Article 5(1) of the Brussels Convention and through application of French law, Mulox was made to pay in order to compensate Mr Geels. Mulox then appealed to the Cour d’Appel, Chambéry, stating that the French Courts lacked jurisdiction because the place of the performance of the contract of employment was not limited to France and that the defendant was established in London. With this, the Cour d’Appel referred the following question to the Court of Justice: ‘Does the application of the jurisdiction rule under Article 5(1) of the Brussels Convention of 27 September 1968 require the obligation characterizing the employment contract to have been performed wholly and solely in the territory of the State of the Court seised of the dispute, or is it sufficient for its operation that part of the obligation— possibly the principal part—has been performed in the territory of that State?’

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C-125/92 Mulox IBC v Geels

Judgement The Court ruled that Article 5(1) of the Brussels Convention should be construed as meaning that in a contract of employment whereby the employee should carry out his work in more than one Contracting State, the place of performance of the relevant obligation is the place where the employee mainly performs his work with his employer.

The Court arrived at this conclusion by bringing to mind traditional case law on contracts in general as set up by Tessili v Dunlop. It held that for employment contracts, the rule set up in Case 133/81 Ivenel v Schwab [1982] ECR 1891, paragraph 20, Case 266/85 Shenavai v Kreischer [1987] ECR 239, paragraph 11, and Case 32/88 Six Constructions v Humbert [1989] ECR 341, paragraph 10, was always the obligation which characterises such contracts, that is, for the employee to perform the work stipulated.

Furthermore, in relation to the contract of employment, the Court stated that the place of performance of the relevant obligation should be determined not by the law applicable in accordance with the rules of conflicts of the Court seised, but preferably, by uniform criteria which the Court must set up on the basis of the economy and objectives of the Convention. These objectives should give enough protection to the employee in order to avoid a multiplication of Courts having jurisdiction, in order to prevent the risk of irreconcilable judgments and make easier the recognition and implementation of decisions in other Contracting States.

When the contract consists of various obligations, just like in the current case, it is the main obligation which must be relied on so as to confer jurisdiction (Shenavai, paragraph 19). The same contract could not confer competing jurisdiction. Moreover, in cases where the work is carried out by the employee for the employer in more than one Contracting State, the place of performance of the obligation is to be considered as that place where the employee principally carried out the relevant obligations towards the employer.

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C-129/92

Owens Bank Ltd vs Fulvio Bracco and Bracco Industria Chimica SpA 20 January, 1994

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C-129/92 Owens Bank v Bracco

Facts The plaintiff was: Owens Bank Ltd – a company domiciled in Saint Vincent and the Grenadines.

The defendants were: 1. Bracco Industria Chimica SpA – a company domiciled in Italy, and 2. Fulvio Bracco – its chaiman and managing director, also domiciled in Italy.

The matter related to a cash loan that the plaintiff granted to the defendants by means of a contract containing a clause that all disputes in their contractual relationship fell within the jurisdiction of Saint Vincent; • The plaintiff obtained a judgment which ordered the defendants to repay the loan. However, the defendants denied that there was a loan and that documents submitted by the bank were forgeries and that bank officials had given false testimonies; • The plaintiff asked an Italian Court to enforce the Saint Vincent judgment, which the defendants claimed had been obtained by fraud; • The plaintiff also asked an English Court to declare that the Saint Vincent judgment was also enforceable in England, and the defendants reiterated that it had been obtained by fraud. However, the defendants asked the English Court to decline jurisdiction or else stay proceedings until the Italian enforcement proceedings were concluded, under Articles 21 and 22 of the Convention; and • The issue of whether the plaintiff had obtained the Saint 149

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Vincent judgment by fraud had to be examined in both the English and Italian proceedings, but the English proceedings were stayed.

Judgement As to the questions of whether the Convention applies to proceedings in Contracting States regarding the recognition and enforcement of judgments in Non-Contracting States, and whether Articles 21, 22, and 23 apply, one needs to describe the nature of the procedure before the national Court because there are a number of ways in which a foreign judgment may be recognised and enforced under English law.

• A judgment allegedly obtained by fraud is challengeable before another Court which may then order the issue to be determined following a trial inter partes; • The defendants’ view that the proceedings fall under the Convention because they involve civil and commercial matters was not accepted because the Convention rules on recognition and enforcement apply only to judgments from contracting states; • The Convention was aimed at providing legal certainty by establishing certain jurisdictional rules, including that a person is to be sued before the Courts of the country he is domiciled in, with certain exceptions. It does not provide for the recognition and enforcement of civil and commercial judgments from non-contracting states; • The defendants’ interpretation that the JUDGEMENT of whether a judgment was obtained by fraud is independent of the enforcement proceedings, and should be recognised in other contracting states, to prevent parallel

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proceedings and irreconcilably conflicting judgments in the interest of the proper administration of justice, was not accepted because: o The purpose of such a Judgment is to check for any ground for refusing recognition and enforcement of that judgment, and o Under Articles 27, 28, and 34 of the Convention, such ground is to be found in the proceedings in which recognition and enforcement of those judgments are sought, even for judgments given in non-contracting states; • The rules of procedure for recognition and enforcement of judgments from non-contracting states, differ between contracting states; and • According to Marc Rich & Co. AG v Società Italiana Impianti PA (C-190/89), if a dispute falls outside the Convention’s scope because of its subject-matter, the existence of a preliminary issue cannot justify the application of the Convention and according to Overseas Union Insurance and Others v New Hampshire Insurance Company (C351/89), Articles 21, 22, and 23 apply even if the Court deliberating jurisdiction derives such jurisdiction from the applicable national law.

Therefore, Articles 21, 22, and 23 of the Convention do not apply to proceedings in contracting states concerning the recognition and enforcement of judgments given in civil and commercial matters in non-contracting states.

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C-288/92

Custom Made Commercial Ltd vs Stawa Metallbau GmbH 29 June, 1994

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C-288/92 Custom Made Commercial v Stawa Metallbau

Judgement Stawa Metallbau GmbH (the defendant) had its seat in Bielefeld, Germany, whilst Custom Made Commercial Ltd (the plaintiff) had its seat in London. The proceedings concerned payment by the plaintiff to a part of the price agreed to in a contract between the parties, involving the manufacturing and supply of doors and windows by the defendant.

The supply of such goods was agreed to through a verbal undertaking, and the contract stated that payment was to be made in British sterling. Confirmation of the contract’s conclusion was given by the defendant through a letter dated 9th May 1988, written in English, in which the general business conditions were included, written in German. Paragraph 8 of such conditions stipulated that any dispute between the parties was to be heard in the Courts of Bielefeld, to which no objection was raised by the plaintiff.

When only partial payment was received from the plaintiff, the defendant instituted proceedings before the Landgericht for recovery of the balance, and such Court ordered the plaintiff to pay a sum of money plus interest to the defendant. The plaintiff appealed such decision, claiming that the German Courts lacked jurisdiction.

This appeal was turned down by the Oberlandesgericht on the 8th March 1991, stating that the German Courts did indeed enjoy jurisdiction on the basis of Article 5(1) of the Brussels Convention, which stated that the buyer must provide the seller with payment in the seller’s place of business or, in lieu of such place, at his habitual residence.

The plaintiff appealed the Oberlandesgericht’s judgment before the Bundesgerichtshof, which stayed the proceedings until the Court had ruled upon the following questions: 1. (a) Is the place of performance under Article 5(1) of the

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Brussels Convention... to be determined pursuant to the substantive law applicable to the obligation in issue under the conflicts rules of the Court hearing the case where the case concerns a claim for payment of the price brought by the supplier against the customer under a contract for manufacture and supply, according to the conflicts rules of the Court hearing the case that the contract is governed by uniform sales law and under that law the place of performance of the obligation to pay the price is the place of establishment of the plaintiff supplier? (b) In the event that the Court of Justice replies in the negative to Question 1(a): How is the place of performance under Article 5(1) of the Convention to be determined in such a case?

2. In the event that according to the answers of Questions 1(a) and (b) the German Courts cannot derive jurisdiction from Article 5(1) of the Convention: (a) Can a jurisdiction agreement validly be made under the third hypothesis in the second sentence of Article 17, first paragraph, of the Convention (in the 1978 version) where after the oral conclusion of a contract the supplier confirms the conclusion of the contract in writing and that written confirmation is accompanied for the first time by general business conditions containing a jurisdiction clause, the customer does not dispute the jurisdiction clause, there is no trade practice at the place where the customer is established to the effect that the absence of a response to such a document is to be regarded as assent to the jurisdiction clause, the customer is not aware of any such trade practice and it is the first time that the parties have done business with each other?

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(b) In the event that the Court of Justice replies in the affirmative to Question 2(a): Is it also true where the general business conditions containing the jurisdiction clause are in a language which the customer does not understand and is not that in which the contract was negotiated and concluded and where the written confirmation of the contract, written in the language in which the contract was negotiated and concluded, refers generally to the attached general business conditions but not specifically to the jurisdiction clause?

3. In the event that the Court of Justice replies in the affirmative to Questions 2(a) and (b): In relation to a jurisdiction clause in general business conditions which meets the requirements laid down in Article 17 of the Convention for a valid jurisdiction agreement, does Article 17 preclude further examination, under the national substantive law which is applicable in accordance with the conflicts rules of the Court hearing the case, of the question whether the jurisdiction clause is validly incorporated in the contract?

Judgement The Court determined that Article 5(1) of the Convention was to be understood as meaning that in such cases, ‘the place of performance of the obligation to pay must be determined pursuant to the substantive law applicable to the obligation in issue under the conflicts rules of the Court seised...’. It was also stated that, as was specified in Article 2, a Court’s jurisdiction is based on the domicile of the defendant.

However, Article 5 confers jurisidction on other Courts, and such choice is the applicant’s discretion, as was established in Tessili v.

Dunlop (C-12/76). However, the impossibility of suing a defendant before any Court having a connection to the dispute was noted, with 155

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reference made to the exhaustive criteria listed down in Article 5 in this regard.

Reference was also made to the case of Shenevai v. Kreischer (C-266/85), in which it was established that in matters relating to contracts, the defendant may be sued in the place of performance of the obligation in question (as stated in Article 5(1)), since such place usually constitutes the closest connecting factor between the Court and the dispute. Using any criteria other than the place of performance would not be acceptable under the Convention since it would risk foresight as to which Court has jurisdiction in a given case. Therefore, in contractual disputes, a defendant may be sued in the Courts of the place of performance of the obligation, even if such Court does not have the closest connection with the dispute.

When it came to defining the term ‘obligation’, the Court cited De Bloos v. Bouyer (C-14/76), and stated that an obligation is that which concerns the contractual right upon which the plaintiff’s claim is based. The Court also confirmed that such obligation is that which should form the basis of such legal proceedings.

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C-294/92

George Lawrence Webb vs Lawrence Desmond Webb 17 May, 1994

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C-294/92 Webb v Webb

Facts An English national concluded an agreement for the purchase of immovable property in France. The flat was bought in the name of his son, Lawrence Webb, who was also an English national. Both used the holiday flat, with the father, George Webb, bearing the bulk of the outgoings.

George Webb brought an action against his son, Lawrence Webb in England for a declaration that the son held the property as a trustee and for an order that Lawrence Webb should execute such documents as should be required to vest legal ownership of the property in his father, George Webb. Lawrence Webb challenged the jurisdiction of the English Courts and contended that since the action related to a right in rem in immovable property, the French Courts had exclusive jurisdiction. The UK High Court referred the question of interpretation of Article 16(1) Brussels Convention to the CJEU for a preliminary ruling.

Judgement The CJEU held that it is not sufficient, for Article 16(1) to apply, that a right in rem in immovable property be involved in the action or that the action have a link with immovable property: the action must be based on a right in rem and not on a right in personam. The aim of the proceedings before the national Court is to obtain a declaration that the son holds the flat for the exclusive benefit of the father and that in that capacity, he is under a duty to execute the documents necessary to convey ownership of the flat to the father.

The father does not claim that he already enjoys rights directly relating to the property which are enforceable against the whole world but seeks only to assert rights as against the son. Consequently, his action is not an action in rem within the meaning of Article 16(1) 158

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Brussels Convention, but an action in personam.

The immovable nature of the property held in trust and its location are irrelevant to the issues to be determined in the main proceedings, thus an action for a declaration that a person holds immovable property as trustee and for an order requiring that person to execute such documents as should be required to vest the legal ownership in the plaintiff does not constitute an action in rem within the meaning of Article 16(1) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.

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C-406/92

The owners of the cargo lately laden on board the ship Tatry vs the owners of the ship Maciej Rataj ‘

‘

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06 December, 1994

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C-406/92 Tatry v Maciej Rataj

Facts In September 1988 a cargo of soya bean oil belonging to a number of owners was carried in bulk aboard the vessel Tatry. The vessel belonged to a Polish shipping company. The voyage was from Brazil to Rotterdam for part of the cargo and to Hamburg for the rest. The cargo owners complained to the shipowners that in the course of the voyage the cargo was contaminated with diesel or other hydrocarbons.

There were three groups of cargo owners. The first group comprised the owners of cargo carried to Rotterdam under separate bills of lading. The second group was a company which owned a additional part of the cargo also carried to Rotterdam under a separate bill of lading. The third group consisted in four owns of cargo carried to Hamburg under four separate bills of lading.

On 18 November 1988, the owners of the vessel brought an action before the District Court in Rotterdam against the first and third group.

The owners of the vessel, initiated proceedings in the Netherlands in order to limit their liability in respect of the entire cargo. The cargo owners also brought forward actions against the vessel owners, seeking damages for their alleged loss.

The Admiralty Court accepted that the proceedings commenced in the Netherlands were related actions. It decided, however, that it was not appropriate to decline jurisdiction or stay proceedings in the two cases pending before it. The owners of the vessel appealed.

Judgement The Court held that Article 57 of the Brussels Convention on jurisdiction and the enforcement of judgments holds that, where a Contracting State is also a contracting party to another convention on a specific matter containing rules on jurisdiction, that specialised

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convention precludes the application of the provisions of the Brussels Convention only in cases governed by the specialised convention and not in those to which it does not apply. Where a specialised convention contains certain rules of jurisdiction but no provision as to a pending legal action or related actions, Articles 21 and 22 of the Brussels Convention may apply accordingly.

Furthermore, Article 21 of the Convention, requires, as a condition of the obligation of the second Court seised to decline jurisdiction, that the parties to the two actions be identical, that cannot depend on the procedural position of each of them in the two actions. Where some but not all of the parties to the second action are the same as the parties to the action commenced earlier in another Contracting State, that article requires the second Court seised to decline jurisdiction only to the extent to which the parties to the proceedings before it are also parties to the action previously commenced; it does not prevent the proceedings from continuing between the other parties.

For the purposes of Article 21 of the Convention, the ‘cause of action’ comprises the facts and the rule of law relied on as the basis of the action, whilst the ‘object of the action’ refers to the end the action has in view. An action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object within the meaning of that article as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.

A subsequent action does not cease to have the same cause of action and the same object and to be between the same parties as a previous action where the latter, brought by the owner of a ship before a Court of a Contracting State, is an action in personam for a declaration that that owner is not liable for the alleged damage to cargo transported by his ship, whereas the subsequent action has been brought by the owner of the cargo before a Court of another Contracting State by way of an action in rem concerning an arrested ship, and has subsequently continued both in rem and in personam, or 162

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solely in personam, according to the distinctions drawn by the national law of that other Contracting State.

The concept of ‘related actions’ defined in the third paragraph of Article 22 of the Convention, which must be given an independent interpretation, must be interpreted broadly and, without it being necessary to consider the concept of irreconcilable judgments in Article 27(3) of the Convention, must cover all cases where there is a risk of conflicting decisions, even if the judgments can be separately enforced and their legal consequences are not mutually exclusive.

It is accordingly sufficient, in order to establish the necessary relationship between an action brought in a Contracting State by one group of cargo owners against a shipowner seeking damages for harm caused to part of the cargo carried in bulk under separate but identical contracts, and, between an action in damages brought in another Contracting State against the same shipowner by the owners of another part of the cargo shipped under the same conditions and under contracts which are separate from but identical to those between the first group and the shipowner, that separate trial and judgment would involve the risk of conflicting decisions, without necessarily involving the risk of giving rise to mutually exclusive legal consequences.

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C-68/93

Fiona Shevill, Ixora Trading Inc., Chequepoint SARL and Chequepoint International Ltd vs Presse Alliance SA 07 March, 1995

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Facts The plaintiffs include Fiona Shevill (a UK national), Ixora Trading Inc (a company operating bureaux de change in England under the name of Chequepoint), Chequepoint SARL (a company incorporated under French law with an office in Paris and operated bureaux de change in France), and Chequepoint International Ltd (a holding company incorporated under Belgian law with a registered office in Brussels and controls Chequepoint SARL and Ixora Trading Inc) while the defendant is a company incorporated under French law with a registered office in Paris. This was a case about which Court will have jurisdiction to hear an action for damages caused by a defamatory newspaper article which alleged that they formed part of a drug trafficking network and engaged in money laundering. It is to be noted that the publication of the defendant called ‘France-Soir’ only mainly circulated within French borders and that it had published an apology to the plaintiffs as well.

The defendant argued that under Article 2 of the Convention, the applicable Court of law was the French Court, and the UK Court lacked jurisdiction under Article 5(3) of the Convention since the ‘place where the harmful event occurred’ was within French territory, since it was a French publication, which only a small percentage of it made it outside of the French territory. The House of Lords decided to put forward the following questions to the CJEU:

1. In a case of libel by a newspaper article, do the words ‘the place where the harmful event occurred’ in Article 5(3) of the Convention mean: (a) the place where the newspaper was printed and put into circulation; or (b) the place or places where the newspaper was read by particular individuals; or (c) the place or places where the plaintiff has a significant reputation?

If and so far as the answer to the first question is (b), is ‚the harmful event‘ dependent upon there being a

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reader or readers who knew (or knew of) the plaintiff and understood those words to refer to him?

3. If and insofar as harm is suffered in more than one country (because copies of the newspaper were distributed in at least one Member State other than the Member State where it was printed and put into circulation), does a separate harmful event or harmful events take place in each Member State where the newspaper was distributed, in respect of which such Member State has separate jurisdiction under Article 5(3), and if so, how harmful must the event be, or what proportion of the total harm must it represent?

4. Does the phrase ‘harmful event’ include an event actionable under national law without proof of damage, where there is no evidence of actual damage or harm?

5. In deciding under Article 5(3) whether (or where) a ‘harmful event’ has occurred is the local Court expected to answer the question otherwise than by reference to its own rules and, if so, by reference to which other rules or substantive law, procedure or evidence?

6. If, in a defamation case, the local Court concludes that there has been an actionable publication (or communication) of material, as a result of which at least some damage to reputation would be presumed, is it relevant to the acceptance of jurisdiction that other Member States might come to a different conclusion in respect of similar material published within their respective jurisdictions?

7. In deciding whether it has jurisdiction under Article 5(3) of the Convention, what standard of proof should a Court require of the plaintiff that the conditions of Article 5(3) are satisfied: (a) generally; and (b) in relation to matters which (if the Court takes jurisdiction) will not be re-examined at the trial of the action?’

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Judgement In answering the first, second, third and sixth question conjointly, the Court analysed the concept of ‘the place where the harmful event occurred’. By referring to previous case law on the subject, the Court concluded that the victim of a libel by a newspaper article which is distributed over various Contracting States has the possibility to initiate proceeding against the publisher, either before the Courts of the Contracting State of the location where the publisher of the publication is established, or before all the Courts where the publication was spread and distributed, and where the victim may claim to have in fact suffered his personal loss and injury.

The fourth, fifth and seventh questions were also answered together, since they all talk about whether the Court with jurisdiction to grant damage, as under Article 5(3) of the Convention, it’s subject to different rules than its national law in determining whether the article was indeed able to cause such an injury and harm to one’s personality.

The Convention has always sought to ensure that national procedural rules retain their effectiveness, and that the Convention is only there to ensure that the appropriate Court has jurisdiction.

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C-318/93

Wolfgang Brenner and Peter Noller vs Dean Witter Reynolds Inc 15 September, 1994

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C-318/93 Brenner and Noller v Dean Witter Reynolds

Facts Mr Brenner and Mr Noller (the plaintiffs) were both German domicilliaries, operating as a self-employed master joiner and textile technician respectively. The defendant was Dean Witter Reynolds Inc., a broker firm established in New York City.

The plaintiffs engaged the defendant to implement commodity futures transactions, with a considerable amount of money being to the defendant. Whilst a German company, Dean Witter Reynolds GmbH, advertised in Germany on behalf of the defendant, the contracts between the parties were mediated by ‘MWB’, another company based in Germany, independent of the defendant.

The plaintiffs claimed damages caused by the defendant’s breach of its pre-contractual and contractual obligations whilst also bringing a claim of tortious damage and unjustified enrichment. The Landgericht (Regional Court) claimed a lack of jurisdiction in the matter. The plaintiffs appealed before the Bundergerichtshof, which held that Articles 13 and 14 were relevant in establishing the German Courts’ international jurisdiction. Article 13 was first considered, in that: In proceedings concerning a contract concluded by a person for a purpose which can be regarded as being outside his trade or profession, hereinafter called ‘the consumer’, jurisdiction shall be determined by this Section without prejudice to the provisions of Articles 4 and 5(5), if it is: 1. a contract for the sale of goods on instalment credit terms; or 2. a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or 3. any other contract for the supply of goods or a contract for the supply of services, and (a) in the State of the consumer’s domicile the conclusion of the 169

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contract was preceded by a specific invitation addressed to him or by advertising; and (b) the consumer took in that State the steps necessary for the conclusion of the contract.

Where a consumer enters into a contract with a party who is not domiciled in a Contracting State but has a branch, agency or other establishment in one of the Contracting States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

This Section shall not apply to contracts of transport.

The first paragraph of Article 14 was also considered, in that: A consumer may bring proceedings against the other party to a contract either in the Courts of the Contracting State in which that party is domiciled or in the Courts of the Contracting State in which he is himself domiciled.

In light of the above, the following questions were posed to the Court: 1. Is it a condition for the recognition of the international jurisdiction of the State in which the consumer is domiciled under the second alternative in the first paragraph of Article 14 of the Brussels Convention that the other party to the contract is domiciled in a Contracting State to the Brussels Convention or is deemed under the second paragraph of Article 13 of the Brussels Convention to be so domiciled?

2. Does subparagraph 3 of the first paragraph of Article 13 of the Brussels Convention cover contracts on a commission basis for the purpose of carrying out commodity futures transactions?

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3. Is subparagraph 3(a) of the first paragraph of Article 13 of the Brussels Convention applicable whenever the party with whom the consumer enters into a contract has advertised in the State in which the consumer is domiciled prior to conclusion of the contract, or does that provision require there to be a connection between the advertisement and the conclusion of the contract?

4(a). Does the term ‘proceedings concerning a contract’ in the first paragraph of Article 13 of the Brussels Convention cover, in addition to the pursuit of claims for damages for breach of contractual obligations, also the pursuit of claims based on breach of precontractual obligations (culpa in contrahendo) and unjust enrichment in connection with reversal of contractual performance? (b). In the case of proceedings in which damages are claimed for the breach of contractual and precontractual obligations, claims are put forward on the basis of unjust enrichment and damages are sought for tortious acts, does the first paragraph of Article 13 of the Brussels Convention create, by virtue of the factual connection, ancillary jurisdiction which extends also to the non-contractual claim?

Judgement The Court noted that, subject to cases of exclusive jurisdiction, the question of jurisdiction in situations where the defendant is not domiciled in a Contracting State (such as this case) is governed by the law of the Contracting State in which proceedings are brought, in accordance with Article 4 of the Brussels Convention. It was also stated that the only exception to this rule lay in Article 13, the second paragraph of which is applicable in cases where a contract is entered into where one enters into a contract with a party having a branch, 171

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agency or other establishment in a Contracting State, and the dispute in question concerns the operations of such subsidiary.

On this note, no such branch, agency or other establishment acted as an intermediary between the parties in question, meaning that the exception found in Article 4 was not applicable in this case. Therefore, in answer to the first question, jurisdiction lies with the Courts of the State in which the consumer is domiciled if the other party is either domiciled in a Contracting State in accordance with Article 14 of the Brussels Convention, or else deemed to be so domiciled under Article 13 of the same Convention. As a result of this answer, the remaining questions posed to the Court did not need to be answered.

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C-341/93

Danværn Production A/S vs Schuhfabriken Otterbeck GmbH & Co 13 July, 1995

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C-341/93 Danværn Production v Schuhfabriken Otterbeck

Facts The plaintiff was appointed as the defendant’s exclusive agent in Denmark for sales of its range of safety shoes. In March 1990, the defendant terminated this contract with immediate effect, claiming that the plaintiff acted in bad faith by dismissing a certain employee.

In September of the same year, the defendants brought proceedings against the plaintiffs, seeking payment of 223,173.39 Danish Krone, plus interest, for the delivery of products in the first two months of the same year. Danværn stated that it had its own claims against Otterbeck, including a claim for loss and damage resulting from the wrongful termination of the agency contract. It submitted that Otterbeck’s claim should be dismissed, and that a separate judgment should be entered against Otterbeck, ordering it to pay 737,018.34 Danish Krone.

Judgement Two questions were answered in this case. Firstly, whether Article 6(3) covers counterclaims for set-offs. It was stated that this Convention article applies only to claims by defendants which seek the pronouncement of a separate judgment or decree. However, it does not apply to the situation where a defendant, as a pure defence, raises a claim which he allegedly has against the plaintiff. It was made clear that the defences which may be raised, as well as the conditions under which they may be raised, are governed only by national law.The second question was whether the expression in the aforementioned article ‘... arising from the same contract or facts on which the original claim was based ...’ was to be treated as more restrictive than the expression found in the third paragraph in Article 22 of the Convention, which states ‘actions (which) are ... related’. This question was to be answered only if Article 6(3) of the Convention applies to the situation where a defendant raises as a defence a claim which he allegedly has against the plaintiff. Keeping in mind the first question, there was no need to answer the second question.

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C-346/93

Kleinwort Benson Ltd vs City of Glasgow District Council 28 March, 1995

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C-346/93 Kleinwort Benson v City of Glasgow District Council

Facts Kleinwort Benson Ltd, a bank established in England, entered into seven interest-rate swap contracts with the City of Glasgow District Council, under which Kleinwort Benson paid the District Council £807,230.31 between 9 March 1983 and 10 September 1987.

On 24 January 1991, the House of Lords held that interest-rate swap agreements to which a local authority was a party were void ab initio due to the local authority’s lack of capacity. Consequently, Kleinwort Benson commenced proceedings on the basis of unjustified enrichment against the District Council for restitution of the sums of money paid by it. The District Council then issued a claim challenging the jurisdiction of the English High Court on the action for restitution and argued that the Scottish Courts alone had jurisdiction over the claim based on the defendant’s domicile.

Article 5(1) and (3) of Schedule 4 to the Civil Jurisdiction and Judgments Act 1982 (modelled on the 1968 Convention on jurisdiction and the enforcement of judgments in civil and commercial matters) respectively confer special jurisdiction in matters relating to a contract on the Courts for the place of performance of the obligation in question and, in matters relating to tort, delict or quasi-delict, on the Courts for the place where the harmful event occurred or, in the case of a threatened wrong, is likely to occur. Indeed, Kleinwort Benson argued that the District Council was being sued either ‘in matters relating to a contract’ or ‘in matters relating to tort, delict or quasi-delict’, thus the English High Court had jurisdiction.

In 1992, the High Court ruled that it did not have jurisdiction. This led to Kleinwort Benson appealing this decision before the Court of Appeal, which stayed proceedings and referred to the Court for a preliminary ruling on the interpretation of Article 5(1) and (3) of the aforementioned Convention.

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Judgement It was stated that the 1982 Act only takes the Convention as a model, and although certain provisions of the 1982 Act are taken almost word for word from the Convention, others depart from the wording of the corresponding Convention provision. This is particularly true in reference to Article 5(3).

The 1982 Act does not require the Courts of the Contracting State to decide disputes before them by applying absolutely and unconditionally the interpretation of the Convention provided to them by the Court.

Indeed, in terms of the 1982 Act, when national Courts apply provisions modelled on those of the Convention, they are required only to have regard to the Court’s case-law concerning the interpretation of the corresponding provisions of the Convention. In a case such as that in the main proceedings, where the Convention is not applicable, the Court of the Contracting State in question is therefore free to decide whether the interpretation given by the Court is equally valid for the purposes of the application of the national law based on the Convention.

If the Court were to declare that it had jurisdiction to give a ruling in regard to this question, the national Court would not be bound by the Court’s interpretation of the provisions of the Convention, since this was not applicable to the dispute. However, it cannot be accepted that the replies given by the Court to the Courts of the Contracting States are to be purely advisory and without binding effect. That would result in the alteration of the function of the Court, as envisaged in the Protocol of the 3rd June 1971.

On the above grounds, the Court did not have jurisdiction to give a preliminary ruling on the question submitted by the Court of Appeal.

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C-364/93

Antonio Marinari vs Lloyds Bank plc and Zubaidi Trading Company 19 September, 1995

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C-364/93 Marinari v Lloyd’s Bank

Facts This refers to a question raised in the course of proceedings between Mr Marinari, who is domiciled in Italy, and Lloyds Bank, whose registered office is in London.

In April 1987, Mr Marinari lodged with a Manchester branch of Lloyds Bank a bundle of promissory notes with a face value of US $752,500,000, issued by the Negros Oriental province of the Republic of the Philippines in favour of Zubaidi Trading Company of Beirut.

The bank staff, after opening the envelope, refused to return the promissory notes and advised the police of their existence, stating them to be of dubious origin, which led to Mr Marinari’s arrest and sequestration of the promissory notes.

Having been released by the English authorities, Mr Marinari sued Lloyds Bank in the Tribunale di Pisa, seeking compensation for the damage caused by the conduct of its staff. The documents forwarded by the national Court show that Mr Marinari is claiming not only payment of the face value of the promissory notes but also compensation for the damage he claims to have suffered as a result of his arrest, breach of several contracts and damage to his reputation.

Lloyds Bank objected that the Italian Court lacked jurisdiction on the ground that the damage constituting the basis of jurisdiction ratione loci had occurred in England. Mr Marinari, supported by Zubaidi Trading Company, applied to the Corte Suprema di Cassazione for a prior ruling on the question of jurisdiction. In its order for reference, the Corte Suprema di Cassazione raised the issue of the jurisdiction of the Italian Courts in relation to Article 5(3) of the Convention, as interpreted by the Court of Justice.

It observed that, in Case 21/76 Bier v Mines de Potasse d’Alsace [1976] ECR 1735, the Court considered that the term ‘place where the harmful event occurred’ was to be understood as intended to cover both the place where the damage occurred and the place of the event

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giving rise to it, and that Mr Marinari contends that the expression ‘damage occurred’ relates not only to the physical result but also to damage in the legal sense, such as a decrease in a person’s assets.

It also noted that in Case C-220/88 Dumez France and Tracoba v Hessische Landesbank [1990] ECR 1-49, the Court held that account should not be taken, for the purpose of determining jurisdiction under Article 5(3) of the Convention, of indirect financial damage. The national Court, in those circumstances, questions whether that also applies where the harmful effects alleged by the plaintiff are direct, not indirect.

In those circumstances, it decided to stay the proceedings pending a preliminary ruling on the following question: In applying the jurisdiction rule laid down in Article 5(3) of the Brussels Convention of 27 September 1968, as interpreted in the judgment of the Court of Justice of the European Communities of 30 November 1976 in Case 21/76 Handelskwekeńj G. J. Bier BV v Mines de Potasse d’Alsace SA [1976] ECR 1735, is the expression ‘place where the harmful event occurred’ to be taken to mean only the place in which physical harm was caused to persons or things, or also the place in which the damage to the plaintiff’s assets occurred?

Judgement By way of derogation from the general principle laid down in the first paragraph of Article 2 of the Convention that the Courts of the State where the defendant is domiciled are to have jurisdiction, Article 5 provides: ‘A person domiciled in a Contracting State may, in another Contracting State, be sued: (3). in matters relating to tort, delict or quasi-delict, in the Courts for the place where the harmful event occurred;’.

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As the Court has held on several occasions (in Mines de Potasse d’Alsace, Dumez France and Tracoba and Case C-68/93 Shevill and Others v Presse Alliance [1995] ECR 1-415, paragraph 19), that rule of special jurisdiction, the choice of which is a matter for the plaintiff, is based on the existence of a particularly close connecting factor between the dispute and Courts other than those of the State of the defendant’s domicile which justifies the attribution of jurisdiction to those Courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings.

In Mines de Potasse d’Alsace and Shevill, the Court held that where the place of the happening of the event which may give rise to liability in tort, delict or quasi-delict and the place where that event results in damage are not identical, the expression ‘place where the harmful event occurred’ in Article 5(3) of the Convention must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the plaintiff, in the Courts for either of those places.

In those two judgments, the Court considered that the place of the event giving rise to the damage no less than the place where the damage occurred could constitute a significant connecting factor from the point of view of jurisdiction. It added that to decide in favour only of the place of the event giving rise to the damage would, in an appreciable number of cases, cause confusion between the heads of jurisdiction laid down by Articles 2 and 5(3) of the Convention, so that the latter provision would, to that extent, lose its effectiveness.

The choice thus available to the plaintiff cannot be extended beyond the particular circumstances which justify it. Such extension would negate the general principle laid down in the first paragraph of Article 2 of the Convention that the Courts of the Contracting State where the defendant is domiciled are to have jurisdiction. It would lead, in cases other than those expressly provided for, to recognition of the jurisdiction of the Courts of the plaintiff’s domicile, a solution 181

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which the Convention does not favour since, in the second paragraph of Article 3, it excludes application of national provisions which make such jurisdiction available for proceedings against defendants domiciled in the territory of a Contracting State.

Whilst it has thus been recognised that the term ‘place where the harmful event occurred’ within the meaning of Article 5(3) of the Convention may cover both the place where the damage occurred and the place of the event giving rise to it, that term cannot be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually arising elsewhere. Consequently, that term cannot be construed as including the place where, as in the present case, the victim claims to have suffered financial damage following upon initial damage arising and suffered by him in another Contracting State.

The German Government submitted, however, that, in interpreting Article 5(3) of the Convention, the Court should take account of the applicable national law on non-contractual civil liability. Thus, where, under that law, an actual adverse effect on goods or rights is a precondition for liability (as, for instance, under paragraph 823(1) of the Bürgerliches Gesetzbuch — the German Civil Code), the ‘place where the harmful event occurred’ means both the place of that adverse effect and the place of the event giving rise to it.

On the other hand, it considers that where national law does not make redress conditional upon an actual adverse effect upon property or a right (as, for instance, under Article 1382 of the French Civil Code and Article 2043 of the Italian Civil Code), the victim may choose between the place of the event giving rise to the damage and the place where he suffered financial damage.

The German Government also considered that that interpretation would not be such as to lead to a multiplication of Courts enjoying jurisdiction. Nor would it lead systematically to the result that the 182

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Court for the place where the financial damage was suffered would be the same as the Court of the plaintiff’s domicile. Moreover, it would not enable the victim, by moving his assets, to determine the competent Court, since account would be taken of the location of his assets when the obligation of reparation arose.

Finally, that interpretation has the advantage of not according to preference to the laws of certain States at the expense of others. It must, however, be noted that the Convention did not intend to link the rules on territorial jurisdiction with national provisions concerning the conditions under which non-contractual civil liability is incurred.

Those conditions do not necessarily have any bearing on the solutions adopted by the Member States regarding the territorial jurisdiction of their Courts, such jurisdiction being founded on other considerations.

There is no basis for interpreting Article 5(3) of the Convention by reference to the applicable ruled on non-contractual civil liability, as proposed by the German Government. That interpretation is also incompatible with the objective of the Convention, which is to provide for a clear and certain attribution of jurisdiction. The delimitation of jurisdiction would then depend on uncertain factors such as the place where the victim’s assets suffered subsequent damage and the applicable ruled on civil liability.

Finally, as regards the argument as to the relevance of the location of the assets when the obligation to redress the damage arose, the proposed interpretation might confer jurisdiction on a Court which had no connection at all with the subject-matter of the dispute, whereas it is that connection which justifies the special jurisdiction provided for in Article 5(3) of the Convention. Indeed, the expenses and losses of profit incurred as a result of the initial harmful event might be incurred elsewhere so that, as far as the efficiency of proof is concerned, that Court would be entirely inappropriate.

The Court, in answer to the question, ruled that the term ‘place where the harmful event occurred’ in Article 5(3) of the Convention of 183

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27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters does not, on a proper interpretation, cover the place where the victim claims to have suffered financial damage following upon initial damage arising and suffered by him in another Contracting State.

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C-439/93

Lloyd’s Register of Shipping vs Société Campenon Bernard 06 April, 1995

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Facts Campenon Bernard was constructing a motorway in Kuwait and contacted the French branch of Lloyd’s Register to test the concrete reinforcing steel used for said construction. Lloyd’s Register had to ensure the concrete’s conformity with the US’ technical standard listed in the tender specifications and issue a certificate of compliance.

Campenon Bernard placed the order with the French branch of Lloyd’s Register via a letter, which specified that inspection would take place in Spain and would be carried out by the Spanish branch of Lloyd’s Register. It also stated that payment would be effected in pesetas, to which the French branch accepted.

Although the Spanish branch of Lloyd’s Register issued certificates of compliance, the Kuwait Ministry of Public Works refused to accept that the concrete reinforcing steel on the ground complied with the US’ technical standard.

Campenon Bernard paid the invoice issued by the Spanish branch of Lloyd’s Register due to pressure by the French branch. Despite paying, Campenon Bernard still retained its rights and brought a claim for damages against Lloyd’s Register, in front of the Tribunal de Commerce, for their alleged incorrect statement of compliance of the concrete.

Lloyd’s Register pleaded that the French Courts lacked jurisdiction. This plea was rejected at First Instance. On appeal, the plea was examined under Article 5(1) and 5(5) of the Convention of 27 September 1968, in that: ‘A person domiciled in a Contracting State may, in another Contracting State, be sued: 1. in matters relating to a contract, in the Courts for the place of performance of the obligation in question;

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5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the Courts for the place in which the branch, agency or other establishment is situated.’

The Cour d’Appel pointed out that Campenon Bernard had had dealings solely with the French branch, since it had negotiated and concluded the contract and subsequently demanded payment. It was not significant that the undertakings entered into had been performed in Spain. Thus, the Court held that the French Courts had jurisdiction.

Lloyd’s Register applied for review on the ground of infringement of Article 5(5). In its view, a dispute arises out of the operations of a branch, agency or other establishment within the meaning of that provision only insofar as the undertakings entered into by that place of business are to be performed in the Contracting State where it is established.

The French Cour de Cassation asked the CJEU for a preliminary ruling on the interpretation of Article 5(5).

Judgement The Court examined that the actual wording of Article 5(5) of the Convention does not imply that undertakings negotiated by a branch should be performed in the Contracting State in which it is established in order for them to form part of its operations.

It also held that the view expressed by Lloyd’s Register would render Article 5(5) almost wholly redundant since it would duplicate Article 5(1).

Furthermore, the Court interpreted a branch, agency or other ancillary establishment within the meaning of Article 5(5) as an entity capable of being the principal, or even exclusive, interlocutor for third 187

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parties in the negotiation of contracts.

Following the above considerations, the Court ruled that the expression ‘dispute arising out of the operations of a branch, agency or other establishment’ in Article 5(5) of the Convention does not presuppose that the undertakings in question entered into by the branch in the name of its parent body are to be performed in the Contracting State in which the branch is established.

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C-474/93

Hengst Import BV vs Anna Maria Campese 13 July, 1995

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C-474/93 Hengst Import v Campese

Facts The defendant, domiciled in Italy, applied to the President of the Trani District Court in Italy in March of 1989 for a decreto ingiuntivo (order for payment), requiring Hengst, whose registered office was in the Netherlands, to pay her the sum of 11,214,875 Italian Lira, with statutory interest and costs.

The order for payment was served, which according to the Italian Code of Civil Procedure, generally is to be done within a period of 20 days. This period of 20 days lapsed without Hengst opposing it, leading the President of the tribunal to declare the order enforceable. Hengst opposed the order, and opened proceedings.

Judgement To answer the question put before it, the Court stated that the decreto ingiuntivo within the meaning of Book IV of the Italian Code of Civil Procedure (Articles 633 to 656), along with the application instituting the proceedings, must be considered as ‘the document which instituted proceedings or ... an equivalent document’ within the meaning of Article 27(2) of the Brussels Convention of 27 September 1968, as amended by the Convention of 9 October 1978 on the accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland. This article highlights those situations in which a judgement is not recognised.

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C-78/95

Bernardus Hendrikman and Maria Feyen vs Magenta Druck & Verlag GmbH 10 October, 1996

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C-78/95 Hendrikman and Feyen v Magenta Druck & Verlag

Facts Mr and Mrs Hendrikman - the plaintiffs - were both resident in the Netherlands, and they were also the sole shareholders in Hendrikman BV, subsequently dissolved.

Negotiations took place with two individuals, with the intention of having these same individuals handle the company’s marketing in Germany. Stationery, business cards and a stamp, were all printed from Magenta Druck & Verlag GmbH, a company incorporated in Germany. The invoice for that order, received by the marketing individuals, was never paid.

This led to the German company bringing an action against the Hendrikmans before the Düsseldorf local Court, in June 1989. It appears that service of the writ was effected at one of the individuals’ address, and that in October of the same year, one of the two individuals, instructed local lawyers to arrange for a defence. According to the Hendrikmans, they had no knowledge of either the writ or the response to it.

Judgement The discussion in this case concerned Article 27 of the Brussels Convention of 1968, specifically sub-article 2. This article deals with those instances in which a judgement is not recognised, and it was discussed as amended by the Convention relating to the accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland.

The Court stipulated that Article 27(2) applies to judgments which are given against a defendant who was not duly served with, or notified of, the document instituting proceedings in sufficient time, and who was not validly represented during those proceedings, albeit the judgments given were not given in default of appearance because someone purporting to represent the defendant appeared before the Court first seized.

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C-106/95

MainschiffahrtsGenossenschaft eG (MSG) vs Les Gravières Rhénanes SARL 20 February, 1997

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Facts The plaintiff was: Mainschiffahrts-Genossenschaft eG (MSG) – based in Germany. The defendant was: Les Gravières Rhénanes SARL – based in France.

The dispute concerned damage to an inland-waterway vessel which the plaintiff leased to the defendant by an oral time charter.

Judgement In an oral contract such as this, the parties might have only spoke about the place of performance rather than agreed on a jurisdiction clause. To the Court, the place of performance is relevant not because the obligation was to be performed there, but because the parties were placing themselves in the jurisdiction of that place’s national Courts. This is valid under Article 5(1) of the Convention, which states that: A person domiciled in a Contracting State may, in another Contracting State, be sued: 1) in matters relating to a contract, in the Courts for the place of the performance of the obligation in question.

This shows that the general rule set by the Convention is that jurisdiction is conferred upon the Courts of the place of performance chosen by the parties. However, parties to a contract may derogate from this general rule, but not to the extent that they agree on a jurisdiction with which there is no connecting factor whatsoever to the contract.

Therefore, the Convention must be interpreted as meaning that an agreement on the place of performance is not to determine the place where the person liable is to perform his obligation, but solely to establish that the Courts of that place have jurisdiction.

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C-220/95

Antonius van den Boogaard vs Paula Laumen 27 February, 1997

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C-220/95 Van den Boogaard v Laumen

Facts The case concerned Mr Van den Boogaard and Miss Laumen, who were married in the Netherlands in 1957 under the regime of community of property. In 1980, they entered into a marriage contract, again in the Netherlands, which altered their matrimonial regime into one of separation of goods. In 1982, they moved to London.

By judgment of 25 July 1990, the High Court dissolved the marriage and also dealt with an application made by Miss Laumen for fullancillary relief. Since the wife sought a ‘clean break’ between herself and her husband, the English Court awarded her a capital sum so that periodic payments of maintenance would be unnecessary.

It also held that the Netherlands separation of goods agreement was of no relevance for the purposes of its decision in the case.

In its decision the High Court set the total amount which Miss Laumen should be awarded in order to provide for herself at £875,000.

Part of that amount, £535,000, was covered by her own funds, by the sale of moveable property, by the transfer of a painting and, finally, by the transfer of immovable property. For the rest, the English Court ordered Mr Van den Boogaard to pay Miss Laumen a lump sum of £340,000, to which was added £15,000 to meet the costs of earlier proceedings.

By application lodged on 14 April 1992 Miss Laumen sought enforcement of the English judgment, relying on the Hague Convention of 2 October 1973 on the Recognition and Enforcement of Decisions relating to Maintenance Obligations (‘the Hague Convention’). On 19 July 1993 Mr Van den Boogaard appealed against the grant of leave to enforce.

The Court in Amsterdam, which had jurisdiction to hear and determine that appeal, was uncertain whether the High Court’s judgment of 25 July 1990 was to be classified as a ‘judgment given

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in matters relating to maintenance’, in which case leave to enforce would be properly granted, or whether it was to be classified as a ‘judgment given in a matter relating to rights in property arising out of a matrimonial relationship’, in which case the Hague Convention could provide no basis for enforcement.

The Amsterdam Court considered that the High Court’s judgment had such consequences for the parties’ relations as regards property rights that it could not be regarded as a ‘decision in respect of maintenance obligations’ within the meaning of Article 1 of the Hague Convention.

It therefore considered that enforcement was not to be granted on the basis of that Convention. It then went on to consider whether the Brussels Convention could provide a basis for granting leave for enforcement.

Article 1 of the Brussels Convention holds that:

This Convention shall apply in civil and commercial matters whatever the nature of the Court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

The Convention shall not apply to: 1. the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and successions; ...’

Judgement A decision rendered in divorce proceedings ordering payment of a lump sum and transfer of ownership in certain property by one party to his or her former spouse must be regarded as relating 197

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to maintenance and therefore as falling within the scope of the Convention of 27 September 1968, if its purpose is to ensure the former spouse’s maintenance. The fact that in its decision the Court of origin disregarded a marriage contract is of no account in this regard.

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C-269/95

Francesco Benincasa v Dentalkit Srl 03 JULY, 1997

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C-269/95 Benincasa v Dentalkit

Facts In 1978, Dentalkit developed a chain of franchised shops in Italy specializing in the sale of dental hygiene products. In 1992 Mr. Benincasa signed a franchising contract, which authorized him to exploit the exclusive right to the copyright within a particular geographical area with Dentalkit, with the scope of setting up a shop in Munich. Dentalkit in turn undertook various activities to promote the sale of such items, such as training, promotion, advertising and so forth. Mr. Benincasa undertook to equip his business at his own cost, stock Dentalkit products exclusively, not to disclose any documents or information concerning Dentalkit and to pay a sum of LIT 8 million as payment for the costs of technical and commercial assistance provided, plus 3% of his annual turnover.

The parties specifically approved a clause in the contract which provided that the Courts in Florence shall have jurisdiction over any issue relating to the interpretation, performance or other aspect of said contract, in accordance with Italian Civil law.

Mr. Benincasa set up the shop, paid the LIT 8 million, made several purchases he never paid for, and then ceased trading all together.

Subsequently, Mr. Benincasa instigated proceedings in the German Regional Court in Munich to void the contract, on the basis that it was void under German law. Benincasa said that following such a claim he stated that the sales contracts concluded pursuant to the franchising contract were consequently void.

As regards jurisdiction, Mr. Benincasa argued that the German Regional Court had jurisdiction as the Court for the place of performance of the obligation in question within the meaning of Article 5(1) of the Convention. Furthermore, he argued that since the contract ought to be declared, void the specific clause affording jurisdiction to the Florentine Courts ought also to be void.

Mr. Benincasa further argued that since he had not yet started

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trading, he should be regarded as a consumer within the meaning of the first paragraph of Article 13, and the first paragraph of Article 14 of the Convention. The German Regional Court rejected this argument, stating that the jurisdiction clause was valid and that the contract was not one concluded by a consumer.

Mr. Benincasa appealed this decision to a higher German Court, which Court referred the following questions to the Court of Justice for preliminary ruling;

(1) Is a plaintiff to be regarded as a consumer within the meaning of the first paragraph of Article 13 and the first paragraph of Article 14 of the Convention, even if his action relates to a contract which he concluded not for the purpose of a trade which he was already pursuing but a trade to be taken up only at a future date (here: a franchising agreement concluded for the purpose of setting up a business)?

(2) If Question 1 is to be answered in the affirmative: Does point 1 of the first paragraph of Article 13 of the Convention (contract for the sale of goods on instalment credit terms) cover a franchising agreement which obliges the plaintiff to buy from the other party to the agreement, over a period of several (three) years, the articles and goods required to equip and operate a business (without instalment credit terms having been agreed) and to pay an initial fee and, as from the second year of the business, a licence fee of 3% of turnover?

(3) Does the Court of a Member State specified in an agreement conferring jurisdiction, have exclusive jurisdiction pursuant to the first paragraph of Article 17 of the Convention, even when the action is inter alia for a declaration of the invalidity of a franchising agreement containing the jurisdiction clause itself, which is worded 201

C-269/95 Benincasa v Dentalkit ‘The

Courts at Florence shall have jurisdiction to entertain any dispute relating to the interpretation, performance or other aspects of the present contract’, that clause having been specifically approved within the meaning of Articles 1341 and 1342 of the Italian Civil Code?

Judgement The Court’s response to the first question was that:

the first paragraph of Article 13 and the first paragraph of Article 14 of the Convention must be interpreted as meaning that a plaintiff who has concluded a contract with a view to pursuing a trade or profession, not at the present time but in the future, may not be regarded as a consumer.

The response to the first question therefore negated the need to answer the second.

As regards the third question, the Court made a distinction between a jurisdictional clause and a substantiative provision of a contract in which it is incorporated. It stated that:

A jurisdiction clause, which serves a procedural purpose, is governed by the provisions of the Convention, whose aim is to establish uniform rules of international jurisdiction. In contrast, the substantive provisions of the main contract in which that clause is incorporated, and likewise any dispute as to the validity of that contract, are governed by the lex causae determined by the private international law of the State of the Court having jurisdiction.

The Court also stressed the objectives of the Convention regarding the rules on jurisdiction which should ultimately result in allowing the plaintiff to easily identify the Court before which he may file a case, 202

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and the defendant the ability to reasonably foresee the Court in which he maybe sued. Furthermore, the Court should be able to decide whether or not it has jurisdiction over a case based on the rules of the Convention, without having to make reference to the substance of the case.

The Court concluded that ‘the Courts of a Contracting State, which have been designated in a jurisdiction clause validly concluded under the first paragraph of Article 17 of the Convention, also have exclusive jurisdiction where the action seeks in particular a declaration that the contract containing that clause is void.’

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C-295/95

Jackie Farrell vs James Long 20 March, 1997

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C-295/95 Farrell v Long

Facts From the documents provided in the main proceedings, it appeared that Ms Farrell, a resident in Ireland, is the mother of a child born on 3rd July 1988. She claimed that the child’s father is Mr Long, a habitual resident in Belgium.

She brought an action against Mr Long before the District Court in Ireland, applying for a maintenance order in favour of her child. On the other hand, Mr Long denied that he was the child’s father, and contested the jurisdiction of the Irish Courts to entertain Ms Farrell’s application.

Judgement The question put forward in this case concerned the first limb of Article 5(2) of the 1968 Brussels Convention, as amended by the Accession Convention of 9 October 1978 of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland, as well as by the Accession Convention of the Hellenic Republic of 25 October 1982.

The Court stated that this provision has to be interpreted as meaning that the term ‘maintenance creditor’ covers all persons who apply for maintenance, thus including also a person who brings a maintenance action for the first time.

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C-391/95

Van Uden Maritime BV, trading as Van Uden Africa Line vs Kommanditgesellschaft in Firma Deco-Line and Another 17 November, 1998

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C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and Others

Facts This case concerned the dispute between Van Uden Maritime BV (‘Van Uden’) established in the Netherlands and Kommanditgesellschaft in Firma Deco Line and Another (‘Deco Line’) from Germany.

In March 1993 Van Uden and Deco Line concluded a charter agreement, under which Van Uden undertook to make available cargo space on board vessels operated on a liner service between the Northern and Western parts of Europe and West Africa. In return, Deco Line was to pay charter hire. Van Uden instituted arbitration in the Netherlands pursuant to the agreement, on the ground that Deco Line had failed to pay certain invoices. Van Uden also applied to the President of the Court for interim relief on the grounds that Deco Line was not displaying the necessary diligence in the appointment of arbitrators and that non-payment of the invoices was disturbing its cash flow.

In the Court proceedings Deco-Line objected, stating that the Court had no jurisdiction, as it was established in Germany, thus it could only be sued there. The President of the Court dismissed that objection on the ground that an interim relief sought must be considered as provisional measure according to the Article 24 of the Brussels Convention. Referring to the Code of Civil Procedure, he decided that, as Court of the plaintiff’s domicile, he had jurisdiction to entertain an application and concluded that the case had the requisite connection with Netherlands law.

The President also took the view that his jurisdiction was not affected by the fact that the parties had arbitration clause in their contract. He therefore ordered Deco-Line to pay Van Uden a certain amount of money. The second appeal against the decision was brought before the Supreme Court of the Netherlands which requested a preliminary ruling on eight questions.

The Supreme Court of the Netherlands questioned whether

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jurisdiction to hear application for interim relief could be established on the basis of Article 5(1) and whether it could be established on the basis of Article 24. In both cases, the questions relate to the relevance of the fact that the dispute in question is subject, under the term of the contract, to arbitration.

Judgement On a proper construction of Article 5, point 1, of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, the Court which has jurisdiction by virtue of that provision also has jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions.

Where the parties have validly excluded the jurisdiction of the Courts in a dispute arising under a contract and have referred that dispute to arbitration, no provisional or protective measures may be ordered on the basis of Article 5, point 1, of the Convention of 27 September 1968.

Where the subject-matter of an application for provisional measures relates to a question falling within the scope ‘ratione materiae’ of the Convention of 27 September 1968, that Convention is applicable and Article 24 thereof may confer jurisdiction on the Court hearing that application even where proceedings have already been, or may be, commenced on the substance of the case and even where those proceedings are to be conducted before arbitrators.

On a proper construction, the granting of provisional or protective measures on the basis of Article 24 of the Convention of 27 September 1968 is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the Court before which those

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measures are sought.

Interim payment of a contractual consideration does not constitute a provisional measure within the meaning of Article 24 of the Convention of 27 September 1968 unless, first, repayment to the defendant of the sum awarded is guaranteed if the plaintiff is unsuccessful as regards the substance of his claim and, second, the measure sought relates only to specific assets of the defendant located or to be located within the confines of the territorial jurisdiction of the Court to which application is made.

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C-85/96

María Martínez Sala vs Freistaat Bayern 12 May, 1998

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C-85/96 Martínez Sala v Freistaat Bayern

Facts The plaintiff is a Spanish national living in Germany since 1968 and had various jobs yet she had a interval from 1976 till 1986 and was under employment again in 1989. She was receiving social assistance from the City of Nuremberg. She had some issues with her permit to stay in Germany and in 1993 when she didn’t have a residence permit, she had applied for child-raising allowance for her child who was born in the same period.

The defendant rejected her application since she didn’t have German nationality or a valid residence permit at the time.

The Social Court dismissed the plaintiff’s case since she was not in possession of a valid residence permit at the time of application.

She appealed the decision and the Bayerisches Landessozialgericht decided to refer questions to the CJEU on the matter: (1) Was a Spanish national living in Germany who, with various interruptions, was employed until 1986 and, apart from a short period of employment in 1989, later received social assistance under the Bundessozialhilfegesetz (Federal Social Welfare Law, the ‘BSHG’) still, in 1993, a worker within the meaning of Article 7(2) of Regulation (EEC) No 1612/68 or an employed person within the meaning of Article 2 in conjunction with Article 1 of Regulation (EEC) No 1408/71?

(2) Is child-raising allowance granted under the Gesetz über die Gewährung von Erziehungsgeld und Erziehungsurlaub (Law on the Grant of Child-raising Allowance and Parental Leave, ‘the BErzGG’) a family benefit within the meaning of Article 4(1)(h) of Regulation 1408/71, to which Spanish nationals living in Germany are entitled in the same way as German nationals under Article 3(1) of Regulation 1408/71?

(3) Is child-raising allowance payable under the BErzGG 211

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a social advantage within the meaning of Article 7(2) of Regulation 1612/68?

(4) Is it compatible with the law of the European Union for the BErzGG to require possession of a formal residence permit for the grant of child-raising allowance to nationals of a Member State, even though they are permitted to reside in Germany?

Judgement The answer to the second and third question on whether children allowances could be granted simply by ensuring that certain objective criteria are met and if this would fall into the scope of the Community legislation within Regulation 1408/71 and 1612/68 was proved right by the CJEU. The CJEU then tackled the first question which asked whether a national of one Member State who is currently living, working and receiving social security in another Member State, has the status of worker under the Regulations above mentioned. Since there no single definition of worker under Community law it varies according to the context.

In fact the CJEU differentiates between the term ‘worker’ as under Article 48 of the Treaty and Regulation 1612/68 and the term ‘employed or self-employed person’ under Regulation 1408/71.

Therefore since there is no steadfast rule on the definitions, the CJEU held that it is up to the referring Court to determine if the person in question falls under one criteria or the other.

Finally the last question deals with the residence permits and if Community law precludes a Member State from necessitating that other Member State national need a valid residence permit to be entitled to social services such as child allowance in this case. The referring Court makes reference that there is a distinction between 212

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nationals and non-nationals and that there is an added burden on the latter since they must have such residence permits if they want to receive social services.

The CJEU refers to this as unequal treatment and that it is to be considered as a violation of Article 6 of the EC Treaty. This was a case of direct discrimination based on the nationality and cannot be justified under EU law since there was a huge disparity between nationals and non-nationals.

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Hans-Hermann Mietz vs Intership Yachting Sneek BV 27 April, 1999

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Facts The plaintiff was: Hans-Hermann Mietz – a German domiciliary.

The defendant was: Intership Yachting Sneek BV – a limited-liability company established in the Netherlands.

The dispute concerned a contract for the construction of a modified yacht and of its sale. The consideration for the yacht was to be paid in 5 instalments.

Judgement Article 13 paragraph 1 point 1 states the following: In proceedings concerning a contract concluded by a person for a purpose which can be regarded as being outside his trade or profession, hereinafter called `the consumer’, jurisdiction shall be determined by this Section, without prejudice to the provisions of Articles 4 and 5(5), if it is: [A] contract for the sale of goods on instalment credit terms; or The Court said that the above article does not apply to bilateral contracts with the following characteristics: • Manufacture by one of the parties of a standard model of an object with alterations, • Transfer of property to the other party who undertakes to pay the price in instalments, and • When the final instalment is to be paid before the definite transfer of possession.

Therefore, although the parties described this contract as a 215

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contract of sale, it was in reality a contract for the supply of services or of goods, under Article 13, Paragraph 1.3, which states that: [In proceedings concerning a contract concluded by a person for a purpose which can be regarded as being outside his trade or profession, hereinafter called `the consumer’, jurisdiction shall be determined by this Section, without prejudice to the provisions of Articles 4 and 5(5), if it is:] [A]ny other contract for the supply of goods or a contract for the supply of services, and (a) in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising; and (b) the consumer took in that State the steps necessary for the conclusion of the contract.

Therefore, it is the national Court that decides whether the contract is one of services or a supply of goods, regardless of how the parties describe it, as in this case.

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C-351/96

Drouot assurances SA vs Consolidated metallurgical industries (CMI industrial sites), Protea assurance and Groupement d’intérêt économique (GIE) Réunion européenne 19 May, 1998

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Facts Consolidated Metallurgical Industries (hereinafter ‘CMI’) charged Mr Velghe to transport a cargo of ferrochromium from the Netherlands to France.

The vessel sank in Dutch inland waters on 4th August 1989, after the captain was apparently able to steer it from the main channel.

The insurer of the vessel, Drouot Assurances SA, undertook the responsibility to refloat the ship at its own expense, salvaging CMI’s cargo. Drouot brought proceedings in the Commercial Court in Paris against CMI, amongst others, for payment of the sum of 99,485.53 Dutch Guilders. However it was pleaded by way of a procedural objection to the French action, a lis alibi pendens arising out of an action which they had brought earlier.

According to the case-file and the observations submitted to the Court, CMI, in the Netherlands action, sought a declaration to the effect that they were not obliged to contribute to the general average.

Such a negative declaration, which, apparently, could not have been sought if the action had been initiated in France, was sought in the alternative to a claim that Mr Velghe be held responsible for the occurrence of the accident on the ground that, as captain, he had permitted the barge to become unseaworthy by overloading it at Rotterdam.

Judgement Article 21 of the convention was the issue being discussed in this case. The national Court essentially asked whether this article applied in the case of two actions for contribution to the general average.

As the parties to the two actions did not appear to be the same, it should be considered whether, in a case such as that in the main proceedings, the insurer of the hull of a vessel must be deemed to be the same person as its insured when applying the ‘same parties’ 218

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criterion found in Article 21 of the Convention. ‘According to consistent case-law, the terms used in Article 21 of the Convention in order to determine whether a situation of lis pendens arises must be regarded as independent’ (Case C-406/92 The ‘Tatry’ [1994] ECR I-5439, paragraph 30).

In this case, the Court stated that it did not appear that the interests of the insurer of the vessel’s hull could be considered to be identical to and indissociable from those of its insured, the owner and the charterer of that vessel. However, it is the national Court’s competence to determine whether that is the case. The answer to the question was therefore that Article 21 of the Convention does not apply in the case of two actions for contribution to general average, unless it is established that, with regard to the subject-matter of the two disputes, the interests of the insurer of the hull of the vessel are identical to and indissociable from those of its insured, the owner and the charterer of that vessel.

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Réunion européenne SA and Others vs Spliethoff’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002 27 October, 1998

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Facts A cargo was initially onboard a vessel bearing a bill of lading issued on 8 May 1992 by Refrigerated Container Carriers PTY Ltd (‘RCC’) in Sydney, Australia and then by road under an international consignment note to France, where ‘Brambi Fruits’ discovered the damage.

However, the insurers (represented by Réunion Européenne SA.) paid compensation for the damage suffered by Brambi, which is when they became subrogated to Brambi’s rights in order to be able to institute proceedings in France, so as to recoup their losses against: (1) (Australia) RCC, since RCC issued the bill of lading; (2) (Netherlands) Spliethoff for the actual carrying of goods by sea, despite not heading the bill of lading; and (3) (Australia) the Master of the vessel as a representative of the owner and charterer of the vessel.

The Court of Justice, following a Tribunal de Commerce1 decision and a Cour d’Appel2 judgement asserting jurisdiction against Spliethoff but not against the remaining two, was subsequently asked whether the issue at hand, particularly in regards to the action by the consignee of goods found to be damaged on completion of transportation by both sea and land & whether the subrogated insurers may rely on the bill of lading covering the maritime transportation against the person whom the actual maritime carrier, fell within the scope of matters relating to contract within the meaning of Article 5(1) of the Convention.

Furthermore, should the latter questions be answered in the negative, is the matter one relating to tort, delict or quasi-delict within the meaning of Article 5(1) or under Article 2?

Further questions followed the latter question, predominantly relating to Article 5(3) of the question in regards to ‘the place where the harmful event occurred’ and whether a defendant domiciled in 1 2

17 May 1994 16 November 1994

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the territory of a Contracting State may be brought before the Court hearing an action against a co-defendant, in another Contracting State.

Judgement On the first question, the Court stated that such an action does not fall within the scope not of matters relating to a contract within the meaning of Article 5(1) of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters but falls within the scope of matters relating to tort, delict or quasi-delict within the meaning of Article 5(3) of that Convention.

Nonetheless, according to settled case-law3, the phrase ‘matters relating to a contract’ in Article 5(1) of the Convention is to be interpreted independently, having regard to the primary objectives and general scheme of the Convention. Therefore, the bill of lading did not disclose the contractual relationship entered freely into by Brambi, Spliethoff and the Master of the Vessel.

Furthermore, the place where the consignee of the goods, on completion of a transport operation by sea and then by land, merely discovered the existence of the damage to the goods delivered to him cannot serve to determine the ‘place where the harmful event occurred’ within the meaning of Article 5(3) of the Convention of 28 September 1968, as interpreted by the Court.

The Court cited Kalfelis vs. Schröder4 which stated that Article 5(3) seeks to establish, independently, all actions concerning the liability of a defendant which are not contractual within the meaning of Article 5(1) of the Convention. Therefore, the place where the consignee discovered the existence of the damage delivered to him cannot serve to determine ‘the place where the harmful event occurred’.

3 Peters vs. ZNAV (C-34/82) [1983] ECR 987; Arcado vs. Haviland (C-9/87) [1988] ECR 1539; Handte vs. Traitements Mécano-Chimiques des Surfaces [1992] ECR I-3967 4 Kalfelis vs. Schröder (C-189/87) [1988] ECR 5565

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Finally, Article 6(1) of the Convention must be interpreted as meaning that a defendant domiciled in a Contracting State cannot be sued in another Contracting State before a Court seised of an action against a co-defendant not domiciled in a Contracting State on the ground that the dispute is indivisible rather than merely displaying a connection. Article 6(2) must thus be interpreted as meaning that a defendant domiciled in a Contracting State cannot be sued in another Contracting State before a Court seised of an action against a codefendant not domiciled in a Contracting State on the ground that the dispute is indivisible rather than merely displaying a connection.

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C-159/97

Trasporti Castelletti Spedizioni Internazionali SpA vs Hugo Trumpy SpA 16 March, 1999

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Facts The case concerns proceedings for compensation for damage allegedly caused during the unloading of goods carried under a number of bills of lading from Argentina to Italy, between Trasporti Castelletti Spedizioni Internazionali SpA, having its registered office in Milan, Italy, to which the goods were delivered, and Hugo Trumpy SpA, having its registered office in Genoa, Italy, in its capacity as agent for the vessel and for the carrier Lauritzen Reefers A/S, whose registered office is in Copenhagen.

The goods at issue in the main proceedings were, according to the bills of lading issued in Buenos Aires on 14 March 1987, placed by various Argentine shippers on board a vessel operated by Lauritzen, bound for Savona, Italy, where they were to be delivered to Castelletti. As a result of problems which arose during the unloading of the goods, Castelletti brought an action against Trumpy before the Genoa District Court seeking an order for payment of compensation.

Trumpy, relying on a particular clause within the bills of lading, which confers jurisdiction on the High Court of Justice, London, argued that the Genoa Court had no jurisdiction. Reference had been made to the need to ascertain and protect the actual will of the parties with regard to the jurisdiction clause by means of the requirements laid down by that provision in respect of the validity of such clauses.

Furthermore, the question was raised, in regard to whether it is any longer necessary to ascertain the will of the parties, despite the fact that Article 17 uses the word ‘concluded’, which implies an expression of will and thus ‘commercial’ usage.

A further question concerned the meaning of the expression ‘form which accords’. The first aspect concerns the way in which the clause appears, that is whether it must necessarily be in writing signed by the party who has drawn it up and who has therefore expressed the intention of relying upon it. The second aspect consists in establishing whether it is necessary for the juris diction clause to stand out 225

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prominently on its own within the contract as a whole, or whether it is sufficient (and therefore of no consequence as regards the validity of the clause) for it to be inserted amongst numerous other clauses drawn up in order to regulate the contract of carriage in every respect.

The third aspect relates to the language in which the clause is drawn up, that is to say, whether it must be in some way related to the nationality of the parties to the contract or whether it is sufficient for it to be a language regularly used in international trade or commerce.

It is apparent from the wording of the questions submitted that the national Court seeks clarification of four factors affecting the validity of a jurisdiction clause which is drawn up in a form which accords with established practices, or usages, the case mentioned in the second sentence of the first paragraph of Article 17 of the Convention namely: - - - -

the consent of the parties to the clause; the notion of usage in international trade or commerce; the notion of form which accords with established usages; the parties’ awareness of the usage.

It is also clear from its questions that the national Court is unsure whether there are any restrictions as to the choice of Court under Article 17 of the Convention. Therefore, the usages to which Article 17 refers cannot be nullified by national statutory provisions which require compliance with additional conditions as to form.

Judgement The contracting parties’ consent to the jurisdiction clause is presumed to exist where their conduct is consistent with a usage which governs the area of international trade or commerce in which they operate and of which they are, or ought to have been, aware.

The existence of a usage, which must be determined in relation

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to the branch of trade or commerce in which the parties to the contract operate, is established where a particular course of conduct is generally and regularly followed by operators in that branch when concluding contracts of a particular type.

The specific requirements covered by the expression ‘form which accords’ must be assessed solely in the light of the commercial usages of the branch of international trade or commerce concerned, without taking into account any particular requirements which national provisions might lay down.

Awareness of the usage must be assessed with respect to the original parties to the agreement conferring jurisdiction, their nationality being irrelevant in this regard. Awareness of the usage will be established when, regardless of any specific form of publicity, in the branch of trade or commerce in which the parties operate a particular course of conduct is generally and regularly followed in the conclusion of a particular type of contract, so that it may be regarded as an established usage.

The choice of Court in a jurisdiction clause may be assessed only in the light of considerations connected with the requirements laid down in Article 17 of the Convention of 27 September 1968. Considerations about the links between the Court designated and the relationship at issue, about the validity of the clause, or about the substantive rules of liability applicable before the chosen Court are unconnected with those requirements.

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C-260/97

Unibank A/S vs Flemming G. Christensen 17 June, 1999

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Facts Between 1990 and 1992 Mr Christensen signed in favour of Unibank, a bank established under Danish law, three acknowledgments of indebtedness for DKK 270 000, DKK 422 000 and DKK 138 000, respectively, together with interest thereon.

The three documents are typewritten and also bear the signature of a third person, apparently an employee of Unibank, who witnessed the debtor’s signature. The documents expressly state that they may be used, as a basis for execution to be levied.

When the acknowledgments of indebtedness were drawn up, the debtor resided in Denmark. He then moved to Germany, where the acknowledgments of indebtedness were presented to him for payment. At the request of Unibank, the Regional Court authorised enforcement of those documents. Mr Christensen appealed against that decision to the Higher Regional Court in Frankfurt.

In the course of the proceedings, Mr Christensen had indicated that he had left Germany, but had not disclosed his new address. The appeal Court thereupon held that Unibank no longer had an interest in pursuing proceedings since it could no longer levy execution in respect of the acknowledgments of indebtedness in Germany and, accordingly, upheld the appeal.

Unibank appealed to the Federal Court of Justice, which stayed proceedings pending a preliminary ruling from the Court of Justice, asking whether an acknowledgment of indebtedness signed by a debtor without the involvement of a public official, an authentic instrument within the meaning of Article 50 of the Brussels Convention, if that acknowledgment of indebtedness expressly specifies that it can serve as the basis for enforcement and if it can constitute the basis for enforcement under the law of the State in which it was drawn up, albeit subject to the condition that the Court with jurisdiction to enforce it may refuse the creditor’s application for enforcement if, as

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a result of objections to the basis for enforcement, there are doubts as to whether enforcement proceedings should be continued?

Judgement The Court held that an acknowledgment of indebtedness enforceable under the law of the State of origin whose authenticity has not been established by a public authority or other authority empowered for that purpose by that State does not constitute an authentic instrument within the meaning of Article 50 of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, as amended by the Convention of 9 October 1978 on the accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland and by the Convention of 25 October 1982 on the accession of the Hellenic Republic.

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C-267/97

Eric Coursier v Fortis Bank and Martine Coursier, née Bellami 29 April, 1999

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Facts In the August of 1990 Fortis granted a loan of LUF 480,000 to Mr and Mrs Coursier. The Coursiers failed to meet their contractual obligations, and in March of the following year, Fortis called the loan in and commenced proceedings against them in the Courts which they were domiciled, pursuant to Articles 13 and 14 of the Brussels Convention. The Court, on the 24th February 1993, ruled that the Coursiers were liable to pay the sum of LUF 563, 282 together with interest and costs.

The case proceeded to pass through a number of national Courts in France which resulted in Court-supervised liquidation. which was later revoked by the Court in June 1994, on the grounds that ‘the right of creditors to bring individual proceedings shall be reinstated only under the conditions specified in Article 169 of the Law of 25 January 1985’. Mr Coursier found employment in Luxembourg, and as a result Fortis instituted proceedings against him, The Court in 1996 granted an order for enforcement of the contested judgement under the Brussels Convention.

Mr Coursier appealed that same year on the basis that:

the first paragraph of Article 1 thereof, is to apply in civil and commercial matters whatever the nature of the Court or tribunal. However, according to subparagraph 2 of the second paragraph of that article, bankruptcy, proceedings relating to the winding up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings are excluded from its scope.

The first paragraph of Article 31, Section 2, entitled `Enforcement’, of Title III of the Brussels Convention, provides:

A judgment given in a Contracting State and enforceable in that State shall be enforced in another Contracting State

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when, on the application of any interested party, it has been declared enforceable there.

Considering that the case involves a problem regarding the interpretation of the Brussels Convention, the Cour Superieure de Justice posed the following question to the Court of Justice in preliminary ruling;

Does a judgment delivered in the State of origin in the context of a Court-supervised liquidation - a matter which is excluded from the scope of the Brussels Convention and which is not open to recognition under the national law of the State in which enforcement is sought, but which, in the State in which it was given, confers on one of the parties immunity from execution of the judgment whose enforcement is sought, affect the quality of enforceability which, according to the first paragraph of Article 31 of the Convention, a judgment must possess in order to be recognised and enforced?

Judgement As regards the contested judgement the Court considered that:

That such judgement bears an order for enforcement, in the absence of an appeal against it, the judgement served on the 24th February 1993, is final.

Such a judgement could fall within the scope of Brussels Convention.

As regards the insolvency judgement, the Court considered that:

Insolvency is expressly excluded from the scope of the Brussels Convention by subparagraph 2 of the second 233

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paragraph of Article 1 thereof.

That a judgement closing Court-supervised liquidation for lack of funds does not extinguish the debtor’s obligation to pay and so the debtor still possesses a natural obligation to pay his creditor.

As regards the question posed to the Court:

Fortis contends that a degree of immunity from enforcement is conferred onto Mr Coursier alone by virtue of Article 169 of Law No 85-98, and solely in France. Mr Coursier on the other hand, contends that the contested judgement is no longer enforceable against him, by virtue of the same article. He also contends that Article 31 of the Brussels convention affors him the personal immunity that he enjoys in France, also operates in his favour in the other contracting states.

The Court therefore ruled that the term `enforceable’ in the first paragraph of Article 31 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial:

is to be interpreted as referring solely to the enforceability, in formal terms, of foreign decisions and not to the circumstances in which such decisions may be executed in the State of origin. It is for the Court of the State in which enforcement is sought, in appeal proceedings brought under Article 36 of the Brussels Convention, to determine, in accordance with its domestic law including the rules of private international law, the legal effects of a decision given in the State of origin in relation to a Courtsupervised liquidation.

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C-420/97

Leathertex Divisione Sintetici SpA vs Bodetex BVBA 05 October, 1999

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Facts For a number of years, Bodetex acted as commercial agent for Leathertex in the Belgian and Netherlands markets under a long-term arrangement. It received 5% commission by way of remuneration.

After asking Leathertex to no avail during 1987 for payment of commission which it considered to be owing to it, Bodetex regarded its commercial agency agreement as terminated and, by letter of 9 March 1988, took formal note of the termination and demanded from Leathertex payment of arrears of commission and compensation in lieu of notice. Since Leathertex did not reply to that letter, on 2 November 1988 Bodetex sued it for payment in the Rechtbank van Koophandel (Commercial Court), Courtrai.

By judgment of 1 October 1991, the Rechtbank found that two separate obligations formed the basis of the action. It held that the first, namely the obligation to give a reasonable period of notice on termination of a commercial agency agreement and, in the event of failure to give such notice, to pay compensation in lieu, was to be performed in Belgium, whereas the second, namely the obligation to pay commission, was to be performed in Italy under the principle that debts are payable where the debtor is resident.

The Rechtbank accordingly found that it had jurisdiction in respect of the obligation to pay compensation in lieu of notice, by virtue of Article 5(1) of the Convention, and then declared that it had jurisdiction over the whole proceedings given the connection between that obligation and the obligation to pay commission. It ordered Leathertex to pay Bodetex arrears of commission and compensation in lieu of notice. Leathertex appealed against that judgment to the Hof van Beroep (Court of Appeal), Ghent, which, by judgment of 29 October 1993, confirmed that the Rechtbank had jurisdiction to hear the action brought by Bodetex.

The Hof van Beroep held that two separate obligations arising

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from the agency agreement formed the basis of the action, that the obligation to pay commission could not be regarded as the principal obligation and that the two obligations had to be regarded as equal in rank, so that there was nothing to prevent Bodetex from bringing its action before the Courts for the place of performance of either of those two obligations.

It therefore ruled that the Rechtbank had jurisdiction to hear the main proceedings as the Court for the place where the obligation to give a reasonable period of notice was to be performed. Leathertex appealed on a point of law to the Hof van Cassatie. It submitted, first, that the Hof van Beroep had misconstrued Article 5(1) of the Convention in holding that it had jurisdiction to deal with the head of claim concerning payment of the arrears of commission when the obligation to pay that commission was to be performed in Italy.

According to Leathertex, if a Court is unable to identify the principal obligation and the ancillary obligations from among the various obligations forming the basis of an action, it is competent to rule only on the obligations for which the place of performance is located, in accordance with its own conflict rules, in its jurisdiction.

Leathertex maintained, secondly, that the Hof van Beroep had misinterpreted Article 22 of the Convention in holding that it had jurisdiction to hear the whole of the dispute, since that provision can apply only where related actions have been brought in the Courts of two or more Contracting States. In its order for reference, the Hof van Cassatie states first of all that Article 22 of the Convention was not applied in the judgment under appeal and rejects on this ground Leathertex’s plea based on the misinterpretation of that provision.

Insofar as the alleged infringement of Article 5(1) of the Convention was concerned, the Hof van Cassatie noted that, in Case 266/85 Shenavai v Kreischer [1987] ECR 239, at paragraph 19, the Court held that, in the particular case of a dispute concerned with a number of obligations arising under the same contract and forming the basis of the proceedings brought by the plaintiff, the Court before 237

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which the matter is brought should, when determining whether it has jurisdiction, be guided by the maxim accessorium sequitur principale so that, where a number of obligations are at issue, it will be the principal obligation which will determine its jurisdiction.

The Hof van Cassatie stated that, in this case, it is common ground that the obligation to pay commission cannot be regarded as the principal obligation in the context of the action brought by Bodetex, that the Belgian Courts have jurisdiction to rule on the obligation to pay compensation in lieu of notice since that obligation is contractual in nature and is to be performed in Belgium, and that the two above mentioned obligations are of equal rank. The Hof van Cassatie inquired whether it is possible to disapply the general rule set out in Article 2 of the Convention in the case of a dispute concerning various obligations arising under the same agency agreement where none of the obligations is subordinate to the others and only one, having regard to its place of performance, supports the jurisdiction of the Court before which the matter has been brought.

In those circumstances, the Hof van Cassatie decided to stay proceedings and to refer the following question to the Court for a preliminary ruling: ‘Are Articles 5(1) and 2 of the Brussels Convention, to be interpreted as meaning that a composite claim founded on different obligations arising from the same contract may be brought before the same Court, even though, according to the jurisdictional rules of the State in which the proceedings are brought, one of the contractual obligations on which the claim is based is to be performed in that State and the other is to be performed in another EC Member State?

Having regard to the fact that, the Court before which the proceedings are brought decides, on the basis of the claim brought before it, that neither of the two obligations 238

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forming the subject-matter of the claim is subordinate to the other and that they are of equal rank?’

Judgement The Court, in answer to the question, ruled that on a proper construction of Article 5(1) of the Convention (1968) on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as amended by the Convention of 9 October 1978 on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland, the same Court did not have jurisdiction to hear the whole of an action founded on two obligations of equal rank arising from the same contract when, according to the conflict rules of the State where that Court is situated, one of those obligations is to be performed in that State and the other in another Contracting State.

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C-440/97

GIE Groupe Concorde and Others vs The Master of the vessel Suhadiwarno Panjan and Others ‘

’

28 September, 1999

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Facts The plaintiff was the lead insurer of seven other insurance companies, with its registered office found in Paris. The defendant was Pro Line Ltd, with its registered office in Hamburg. Bottles of wine were loaded in cartons, themselves put in containers on board the ‘Suhadiwarno Panjan’ in the port of Le Havre.

They were to be carried to Santos (Brazil) by the Pro Line Ltd. Upon arrival, the goods were found to be damaged and short-delivered.

The insurers paid compensation to the consignee. Having been subrogated to the latter’s rights, the insurers commenced proceedings before the Commercial Court of Le Havre against, amongst others, the Master of the vessel and Pro Line.

Judgement The main point of discussion was Article 5(1) of the Brussels I convention, as amended by the Conventions on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland; of the Hellenic Republic; and of the Kingdom of Spain and the Portuguese Republic.

It was determined by the Court when answering the questions put forward that the place of performance of an obligation, always within the meaning of the aforementioned provision, is to be determined in accordance with the law governing the obligation in question according to the conflict rules of the Court seised.

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C-7/98

Dieter Krombach vs André Bamberski 28 March, 2000

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Facts Mr Krombach was the subject of a preliminary investigation in Germany following the death in Germany of a 14-year-old girl of French nationality. That preliminary investigation was subsequently discontinued. In response to a complaint by Mr Bamberski, the father of the young girl, a preliminary investigation was opened in France, the French Courts declaring that they had jurisdiction by virtue of the fact that the victim was a French national.

At the conclusion of that investigation, Mr Krombach was, by judgment of the Chambre d’Accusation of the Cour d’Appel de Paris, committed for trial before the Cour d’Assises de Paris. That judgment and notice of the introduction of a civil claim by the victim’s father were served on Mr Krombach.

Although Mr Krombach was ordered to appear in person, he did not attend the hearing. The Cour d’Assises de Paris thereupon applied the contempt procedure governed by Article 627 et seq of the French Code of Criminal Procedure. Pursuant to Article 630 of that Code, under which no defence counsel may appear on behalf of the person in contempt, the Cour d’Assises reached its decision without hearing the defence counsel instructed by Mr Krombach.

By judgment of 9 March 1995 the Cour d’Assises imposed on Mr Krombach a custodial sentence of 15 years after finding him guilty of violence resulting in involuntary manslaughter. By judgment of 13 March 1995, the Cour d’Assises, ruling on the civil claim, ordered Mr Krombach, again as being in contempt, to pay compensation to Mr Bamberski in the amount of FRF 350 000.

On application by Mr Bamberski, the President of a civil chamber of the Landgericht (Regional Court) Kempten (Germany), which had jurisdiction ratione loci, declared the judgment of 13 March 1995 to be enforceable in Germany. Following dismissal by the Oberlandesgericht (Higher Regional Court) of the appeal which he had lodged against

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that decision, Mr Krombach brought an appeal on a point of law before the Bundesgerichtshof in which he submitted that he had been unable effectively to defend himself against the judgment given against him by the French Court.

Those are the circumstances in which the Bundesgerichtshof decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: 1. May the provisions on jurisdiction form part of public policy within the meaning of Article 27(1) of the Brussels Convention where the State of origin has based its jurisdiction as against a person domiciled in another Contracting State (Article 2(1) of the Brussels Convention) solely on the nationality of the injured party (as in Article 3(2) of the Brussels Convention in relation to France)?

2. If Question 1 is answered in the negative: May the Court of the State in which enforcement is sought (Article 31(1) of the Brussels Convention) take into account under public policy within the meaning of Article 27(1), of the Brussels Convention that the criminal Court of the State of origin did not allow the debtor to be defended by a lawyer in a civillaw procedure for damages instituted within the criminal proceedings (Article II of the Protocol of 27 September 1968 on the interpretation of the Brussels Convention) because he, a resident of another Contracting State, was charged with an intentional offence and did not appear in person?

3. If Question 2 is also answered in the negative: May the Court of the State in which enforcement is sought take into account under public policy within the meaning of Article 27(1) of the Brussels Convention that the Court of the State of origin based its jurisdiction solely on the nationality of the injured party (see Question 1 above) and additionally prevented the defendant from being legally represented (see Question 2 244

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above)?

Judgement The Court, in answer to the questions referred to it by the Bundesgerichtshof by order of 4 December 1997, ruled that Article 27(1) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as amended by the Convention of 1978 on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland and by the Convention of 1982 on the Accession of the Hellenic Republic, must be interpreted as follows: 1. The Court of the State in which enforcement is sought cannot, with respect to a defendant domiciled in that State, take account, for the purposes of the public-policy clause in Article 27(1) of that Convention, of the fact, without more, that the Court of the State of origin based its jurisdiction on the nationality of the victim of an offence.

2. The Court of the State in which enforcement is sought can, with respect to a defendant domiciled in that State and prosecuted for an intentional offence, take account, in relation to the public-policy clause in Article 27(1) of that Convention, of the fact that the Court of the State of origin refused to allow that person to have his defence presented unless he appeared in person.

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C-8/98

Dansommer A/S vs Andreas Götz 27 January, 2000

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Facts The defendant, German national resident in Germany, rented a house in Denmark from the plaintiff, with the intention of spending a holiday there. The property was owned by a private individual, and the plaintiff merely acted as an intermediary in the transaction.

The terms and conditions of the contract provided for a premium for insurance in the defendant’s favour in the event of the cancellation of the trip. They also provided that Dansommer guaranteed reimbursement of the travel costs borne by the client. After the defendant stayed in the property, Dansommer brought proceedings against him, claiming the defendant failed to clean the house properly before his departure and complained about a number of damages.

Judgement In this case, the Court stated that the rule found in the 1968 Brussels Convention, in the form of Article 16(1)(a), which confers exclusive jurisdiction in those proceedings having as their object tenancies of immovable property, applies to this case, even though the action was brought by the intermediary, a professional tour operator from whom the defendant in question had rented the accommodation and who brought legal proceedings after being subrogated to the rights of the owner of the property, instead of by the owner of the property.

The Court also went on to state that both the insurance-related ancillary clauses in the event of cancellation, and the guarantee of repayment of the price paid by the client, which are both contained in the contract’s general terms and conditions, are concluded between that organiser and the tenant, and which do not form the subject of the dispute in the main proceedings, do not affect the nature of the tenancy as it is within the meaning of that provision of the Convention (Regulation).

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C-240/98

Océano Grupo Editorial SA vs Roció Murciano Quintero 27 June, 2000

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Facts This case concerned a request for a preliminary ruling under Article 177 ex Article 234 of the EC Treaty (now Article 267 TEU), and a question on the interpretation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts by the Barcelona Court of First Instance.

The judge was confronted with several cases initiated by two companies, Octano Grupo Editorial SA and Salvat Editores SA, against several consumers regarding the deferred payment terms of encyclopaedias. Under Spanish procedural law, such cases may be dealt with through summary proceedings, whereby the plaintiffs initiate their case with the judge and the Court will subsequently alert the defendants and invite them to appear.

In this case, however, notice of the claims was not served on the defendants since the national Court had doubts as to whether it had jurisdiction over the actions in question, due to the fact that its jurisdiction was based on a clause in the contract directing all actions towards the seat of the plaintiff company.

However, according to the Court making the reference, the decisions of the national Courts are inconsistent on the question of whether the Court may, in proceedings concerning consumer protection, determine of its own motion whether an unfair term is void.

The judge believed that such a jurisdiction clause was unjust and unfair. Therefore, he referred the question whether he could refuse to apply this provision of his own motion on the basis of Council Directive 93/13/EEC on unfair terms in consumer contracts to the CJEU.

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Judgement The CJEU, limited itself to an interpretation of the Directive. The Court concluded, that:

the Directive precludes a national rule which makes the validity of an agency contract conditional upon the commercial agent being entered in the appropriate register.

Thus, it appeared as if the Court wanted to directly apply the Directive to the relationship between the parties, thereby giving horizontal direct effect to a directive. The judge therefore suggested an approach based on the provisions on the freedom of establishment in the Treaty itself.

The Court stated that:

A term of this kind, the purpose of which is to confer jurisdiction in respect of all disputes arising under the contract on the Court in the territorial jurisdiction of which the seller or supplier has his principal place of business, obliges the consumer to submit to the exclusive jurisdiction of a Court which may be a long way from his domicile.

It follows that where a jurisdiction clause is included, without being individually negotiated, in a contract between a consumer and a seller or supplier within the meaning of the Directive and where it confers exclusive jurisdiction on a Court in the territorial jurisdiction of which the seller or supplier has his principal place of business, it must be regarded as unfair within the meaning of Article 3 of the Directive insofar as it causes, contrary to the requirement of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. This is due to the fact that the consumer is in a weaker position in contrast to the seller, as regard both bargaining power as well as knowledge.

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Such a position creates a situation in which the consumer is unable to influence the content of the terms which are set by the seller.

The Directive on unfair terms in consumer contracts gives the national Court the ability to determine of its own motion whether a term of a contract before it is unfair. The Court further held that the national Court is obliged, when it applies national law provisions predating or postdating the said Directive, to interpret those provisions, in light of the wording and purpose of the Directive.

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Ingmar GB Ltd vs Eaton Leonard Technologies Inc 9 November, 2000

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Facts This case concerned two companies, Ingmar being a company established in the United Kingdom, while Eaton Leonard was established in California. In 1989, both companies engaged in a contract which bound Ingmar as Eaton’s commercial agent in the UK, and that the law on such contract was the law of the State of California.

As the contract was terminated in 1996, Ingmar instituted proceedings before the English Courts for payment of its commissions in virtue of the contract.

According to the High Court, the Regulations didn’t apply, since as stipulated, the law of the contract was that of the State of California.

Therefore, Ingmar appealed the decision, and the Court of Appeal decided to refer the following question to the CJEU: Under English law, effect will be given to the applicable law as chosen by the parties, unless there is a public policy reason, such as an overriding provision, for not so doing. In such circumstances, are the provisions of Council Directive 86/653/EEC, as implemented in the laws of the Member States, and in particular those provisions relating to the payment of compensation to agents on termination of their agreements with their principals, applicable when:

(a) a principal appoints an exclusive agent in the United Kingdom and the Republic of Ireland for the sale of its products therein; and (b) insofar as sales of the products in the United Kingdom are concerned, the agent carries out its activities in the United Kingom; and (c) the principal is a company incorporated in a non-EU State, and in particular in the State of California, USA, and situated there; and (d) the express applicable law of the contract between the parties is that of the State of California, USA? 253

Judgement In its deliberations, the Court dealt with the rights of commercial agents after the termination of agency contract and which rights are guaranteed by where the agents carried on their activity even if the principal was established in a non-member state country (as was the State of California in this case).

An important consideration was that the freedom of the contracting parties to choose a system of law to govern their contractual relationship is ‚a basic tenet of private international law‘ and will only be overridden by mandatory rules. Therefore, is this a case for a mandatory rule?

Reference was made to Bellone v Yokohama [1998] Case C215/97 in which the nature of the Directive in question was discussed and it was concluded that the Directive is designed to protect commercial agents following termination of contract. Thus the Directive has led to a mandatory rule for protection to commercial agents in such a case.

Under Article 19 of the same Directive, the parties aren’t allowed to derogate from the mandatory nature of the articles and that by virtue of Article 22 the immediate application of implementing the Directive to contracts in operation is highlighted.

In the opinion of the Court, the choice-of-law clause is thus not deemed as possibility to evade and do away with the protection afforded to commercial agents as established by the Directive. The mandatory nature and rules of the Directive were considered as sufficient in this case to bypass the jurisdiction choice-of-law clause of the contract.

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C-387/98

Coreck Maritime GmbH vs Handelsveem BV and Others 09 November, 2000

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Facts This was a case concerning a contract about the shipment of groundnut kernels from China to the Netherlands on board a ship registered to a company which was incorporated under Russian law.

The Russian company was engaged by the plaintiff under various bills of lading whereby ‘any dispute’ were to be decided on the country where the carrier has ‘principal place of business and the law of such country shall apply except as provided herein’.

In 1993 Handelsveem called upon the Russian company and the plaintiff to make good for damages caused by the cargo during transportation. In its defence, the plaintiff quoted the jurisdictional clause in the bill of lading and claimed the Court had no jurisdiction.

According to the Rechtbank in Rotterdam, this claim was held inadmissible. The plaintiff appealed the case but the Gerechtshof upheld the same interpretation of the first Court.

Upon appeal to the Hoge Raad der Nederlanden, four questions where forwarded to the CJEU: 1) Must the first sentence of Article 17 of the Brussels Convention (in particular, the words ‚have agreed‘), read in conjunction with the case-law of the Court of Justice according to which ‚the purpose of Article 17 is to ensure that the [consent of the] parties... to such a clause, which derogates from the ordinary jurisdiction rules laid down in Articles 2, 5 and 6 of the Convention,... is clearly and precisely demonstrated to be interpreted as meaning: (a) that, in order for a clause vesting jurisdiction in a given Court, as provided for in that article, to be valid as between the parties, it is necessary in each case for that clause to be formulated in such a way that its wording alone makes it quite clear, or at least easy to ascertain, (even) for persons other than the parties — and in particular to the Court concerned — which 256

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Court is to have jurisdiction to settle disputes arising from the legal relationship in the context of which that clause is stipulated; or (b) that — generally or now, in consequence of or in connection with the progressive relaxation of the rules in Article 17 of the Brussels Convention, together with the case-law of the Court of Justice concerning the circumstances in which such a clause is to be regarded as having been validly concluded — in order for such a clause to be valid, it is enough that the parties themselves clearly know, on the basis (inter alia) of the (other) circumstances of the case, which Court is to have jurisdiction to settle such disputes?

2) Does Article 17 of the Brussels Convention also govern the validity, as against a third party holding a bill of lading, of a clause which specifies as the forum having jurisdiction to settle disputes ‚under this Bill of Lading‘ the Courts of the place where the carrier has his ‚principal place of business‘ and which is laid down in a bill of lading also containing an ‚identity of carrier‘ clause, that bill of lading being issued for the purposes of the carriage of goods, where (a) the shipper and one of the possible carriers are not established in a Contracting State and (b) the second possible carrier is indeed established in a Contracting State but it is not certain whether his ‚principal place of business‘ is situated in that State or in a State which is not a party to the Convention?

3) If the answer to Question 2 is in the affirmative: (a) Does the fact that the jurisdiction clause contained in the bill of lading must be regarded as valid as between the carrier and the shipper mean that it is also binding on any third party holding the

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bill of lading, or is that the position only as regards a third party who, upon acquiring the bill of lading, succeeds by virtue of the applicable national law to the shipper’s rights and obligations? (b) Assuming that the jurisdiction clause contained in the bill of lading must be regarded as valid as between the carrier and the shipper, does the answer to the question whether it is also binding on a third party holding the bill of lading also possibly depend to some extent on the contents of the bill of lading and/or the particular circumstances of the case, such as the particular state of knowledge of the third party concerned or the fact that the latter has a long-standing business relationship with the carrier and, if so, can the third party be deemed to be aware of the particular circumstances of the case if the contents of the bill of lading do not make it sufficiently clear to him that the clause in question is valid?

4) If the answer to Question 3(a) is as just suggested, which national law governs the decision as to whether the third party, upon acquiring the bill of lading, succeeded to the shipper’s rights and obligations, and what is the position if the national law in question has not hitherto provided, either in its legislation or in its case-law, an answer to the question whether the third party, upon acquiring the bill of lading, succeeds to the shipper’s rights and obligations?’

Judgement The first question relates to the Article 17 of the Convention is meant to be interpreted that the jurisdiction clause ‘must be formulated in such a way that it is possible to identify the Court having jurisdiction

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on its wording alone’. According to the Court’s opinion, the wording of Article 17 of the Convention it ‘cannot be interpreted as meaning that it is necessary for a jurisdiction clause to be formulated in such a way that the competent Court can be determined on its wording alone’.

Therefore if objective factors are stipulated and such factors are also precise on when such conditions and circumstance they are to apply, that is sufficient and fulfils Article 17 of the Convention.

In the second question, the national Court questions the conditions of application of Article 17 of the Convention which asks what happens when the jurisdictional clause selects a Court where a contracting party has its principal place of business yet that is not place of business is not a contracting state. Article 17 of the Convention is quite clear that the twofold conditions are both to be satisfied.

These include firstly that one of the contracting parties is domiciled in a Contracting State and secondly the ‘jurisdiction clause designates a Court or the Courts of a Contracting state’. The Court declared that Article 17 only applicable when one of the parties to the contract is domiciled in a Contracting State as well as that both parties agree to designate any disputes to a Court of a Contracting State.

As for the third question, the Court asks if the jurisdiction clause in the bill of lading is valid as against any third-party bearer of the bill of lading or whether it is only valid as against a ‘third-party bearer of the bill of lading who succeeded by virtue of the applicable national law to the shipper’s rights and obligations when he acquired the bill of lading’. In the Court’s response, the jurisdictional clause is only valid ‘if he succeeded to the rights and obligations of the shipper under the applicable national law when he acquired the bill of lading’.

The last question is about which would be the applicable law to establish the rights and obligations of the third party bearer of the bill of lading. The Court is of the opinion that this is not something within the remit of the Convention and the applicable law would be the private international law of the national Court. The Court continued that this question is therefore to be deemed inadmissible due to it 259

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relating too much on a hypothetical situation.

In answering the questions, the Court found that a jurisdiction clause can be determined not only by the wording itself but also by the competent Court so long as the conditions of the contract were agreed by the parties as well as they have both decided to which Court and jurisdiction they will submit themselves to. This will only be applicable if one of the contracting parties is domiciled in a Contracting State, which Contracting State is the same that both contracting parties mutually agreed to give jurisdiction to in case of conflicts.

With regard to the jurisdiction clause within a maritime context between a carrier and a shipper vis-à-vis third party it is only valid if one would succeed the rights and obligations of the shipper in question within the specific national law. If he hasn’t succeeded such rights, then it still may be possible through Article 17 of the Convention.

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C-412/98

Group Josi Reinsurance Company SA vs Universal General Insurance Company (UGIC) 13 July, 2000

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Facts Universal General Insurance Company (‘UCIC’) instructed its broker, Euromepa, a company incorporated under French law, having its registered office in France, to procure an insurance contract with effect from 1 April 1990 in relation to a portfolio of comprehensive home-occupiers’ insurance policies based in Canada. By fax dated 27 March 1990, Euromepa offered Group Josi a share in that reinsurance contract, stating that ‘the main reinsurers are Union Ruck with 24% and Agrippina Ruck with 20%’.

By fax of 6 April 1990, Group Josi agreed to acquire a 7.5% share.

On 28 March 1990, Union Ruck had told Euromepa that it did not intend to retain its share after 31 May 1990 and, by letter of 30 March 1990, Agrippina Ruck had informed the same broker that it would reduce its share to 1 0% with effect from 1 June 1990, the reason for those withdrawals being changes in economic policy imposed by the American-based parent companies of those insurance undertakings.

On 25 February 1991, Euromepa sent Group Josi first a statement of account showing a debit balance and then a final calculation showing that Group Josi owed 54 679.34 Canadian Dollars in respect of its share in the reinsurance transaction. By letter of 5 March 1991, Group Josi refused to pay that amount, essentially on the ground that it had been induced to enter into the reinsurance contract by the provision of information which subsequently turned out to be false. In those circumstances, on 6 July 1994, UGIC brought proceedings against Group Josi before the Commercial Court in Nanterre, France.

Group Josi argued that that Court lacked jurisdiction since the Tribunal de Commerce, Brussels, within whose territorial jurisdiction it has its registered office, had jurisdiction, and it relied, first, on the Convention and, second, in the event of the general law being found to apply, on Article 1247 of the French Code Civil (Civil Code).

The Tribunal de Commerce, Nanterre, held that it had jurisdiction

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on the ground that UGIC is a company incorporated under Canadian law without a place of business in the Community. The Court ordered Group Josi to pay the sum claimed by UGIC, plus statutory interest as from 6 July 1994. Group Josi subsequently appealed against that judgment before the Versailles Court of Appeal.

In support of its appeal, Group Josi submitted that the Convention applies to any dispute in which a connecting factor with the Convention is apparent. In the present case, the Convention should apply. The main connecting factor is that specified in the first paragraph of Article 2 of the Convention, namely the defendant’s domicile.

Since Group Josi has its registered office in Brussels and no subsidiary place of business in France, it can, in accordance with that provision, be sued only in a Belgian Court. UGIC, on the other hand, contended that the rules of jurisdiction established by the Convention can apply only if the plaintiff is also domiciled in a Contracting State.

Since UGIC is a company incorporated under Canadian law with no subsidiary place of business in a Contracting State, the Convention is not applicable in the present case.

The Versailles Court of Appeal questioned whether the Brussels Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters apply to ‘intra-Community’ disputes as well as to disputes which are ‘integrated into the Community’, furthermore, it questioned whether a defendant established in a Contracting State is able to rely on the specific rules on jurisdiction set out in that convention against a plaintiff domiciled in Canada. It also questioned whether the rules on jurisdiction specific to matters relating to insurance set out in Article 7 et seq. of the Brussels Convention apply to matters relating to reinsurance.

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Judgement Title II of the Convention of 27 September 1968, on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, is in principle applicable where the defendant has its domicile or seat in a Contracting State, even if the plaintiff is domiciled in a non-member country. It would be otherwise only in exceptional cases where an express provision of that convention provides that the application of the rule of jurisdiction which it sets out is dependent on the plaintiff’s domicile being in a Contracting State.

The rules of special jurisdiction in matters relating to insurance set out in Articles 7 to 12A of that Convention do not cover disputes between a reinsurer and a reinsured in connection with a reinsurance contract.

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C-456/98

Centrosteel Srl vs Adipol GmbH 13 July, 2000

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Facts The plaintiff (Centrosteel) was an Italian company based in Brescia.

Between 1989 and 1990, an oral agreement was made between itself and the defendant, an Austrian company, whereby Centrosteel was to find buyers and sellers of metal products and scrap. Said agreement was eventually terminated.

Centrosteel claimed that during this period where the agreement was in vigore, it was acting as an agent on behalf of Adipol, and sought compensation from the company for its services. Adipol argued that the payment couldn’t be made, because the agreement between the two companies was null and void. Centrosteel was not entered in the register of commercial agents and representatives, as made mandatory by Italian law, and that the same law ‘prohibits any person who is not so registered from pursuing the activity of commercial agent or representative’. On the basis of this law, Italian Courts had ‘consistently held that an agency contract entered into by a person not entered on the register is void... and that such a person cannot recover commission and payments in respect of the activities carried out by him’.

The national Italian Court also referenced Bellone vs Yokohama, in which case, the European Court of Justice had already stated that EU Council Directive 88/653/EEC (which attempted to harmonise he laws of EU Member States relating to commercial agents) precluded a national rule which made the validity of an agency contract conditional upon the commercial agent being entered in the appropriate register, but in that judgement, the Court held that the Directive mentioned ‘only writing as a requirement for the validity of a contract...

Since the Community legislature had dealt exhaustively with that matter, the Member States couldn’t impose any condition other than requiring that a written document be drawn up’.

Taking in consideration the effects of this case, as well as those of Bellone, the national Court argued that under the settled case-law of the Court of Justice, ‘directives do not have direct effect in relations between individuals, therefore Bellone cannot result in Law 204 be266

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ing disapplied in the proceedings before it.’ It therefore decided to stay proceedings and referred to the CJEU on these questions: 1) Do the previously mentioned Italian laws, under which entry in a register is compulsory for any person acting as an agent and an agency contract concluded by a person not entered on that register is void, constitute a restriction on the freedom of establishment?

2) Do the provisions of the Treaty on freedom of establishment, as well as those on freedom to provide services, preclude national legislation which makes the validity of a contract subject to entry of the commercial agent in an appropriate register?

Judgement In its judgement, the European Court of Justice argued that the Bellone judgement ‘ruled on a situation identical’ to the Centrosteel case, and that ‘the Directive precluded the validity of the agency contract from being conditional on the commercial agent’s entry in such a register.’

The CJEU also stated that: while in the absnece of proper transposition into national law, a directive cannot of itself impose obbligations on individuals... it is also apparent from the case law of the Court that, when applying national law, whether adopted before or after the directive, the national Court that has to interpret that law must do so, as far as possible, in the light of the wording and the purpose of the directive, so as to achieve the result it has in view.

The CJEU commented on the fact that, following the judgement in Bellone, the Italian Corte Suprema di Cassazione changed its case267

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law, so that a failure to comply with the obligation prescribed by Law No. 204 no longer entails the nullity of an agency contract in Italian law.’

Therefore, the Court reiterated once again that: the national Court is bound, when applying provisions of domestic law predating or postdating the said Directive, to interpret those provisions, so far as possible, in the light of the wording and purpose of the Directive, so that those provisions are applied in a manner consistent with the result pursued by the Directive.

The European Court of Justice also said that, since the case pending could be resolved on the basis of the Directive and the case-law of the Court of Justice, ‘it is unnecessary to answer the national Court’s questions concerning the Treaty provisions on freedom of establishment and freedom to provide services.’

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C-518/99

Richard Gaillard vs Alaya Chekili 05 April, 2001

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Facts Gaillard and Chekili were involved in the transfer and sale of two properties, together with several plots of land, which were situated in France. Chekili, the purchaser, paid Gaillard a 10% deposit on the sale price, and the official instrument of sale was to be signed four months after the conclusion of the contract.

A year later, Gaillard brought proceedings against Chekili for the rescission of the contract of sale, and for damages brought about by said rescission, as agreed upon by the contract of sale, after the latter defaulted in the performance of his obligations, and was served with a formal notice with which he did not comply.

The proceedings were instituted before the Court of First Instance in Brussels, Belgium. However, the Court argued that it did not have jurisdiction by reason of Article 16(1) of the Brussels convention, which states: The following Courts shall have exclusive jurisdiction, regardless of domicile: 1) In proceedings which have as their object rights in rem in, or tenancies of, immovable property, the Courts of the Contracting State in which the property is situated…

Gaillard then appealed the decision of the Court of First Instance.

In turn, the Brussels Court of Appeal stayed the proceedings, and referred the following question to the CJEU: ‘Does an action for rescission of a contract for the sale of land and consequential damages amount to proceedings ‘which have as their object rights in rem of immovable property’ within the meaning of Article 16 of the 1968 Brussels Convention?’

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Judgement In its decision, the Court decided that an action for rescission of a contract for the sale of land, and consequential damages, is not within the scope of the rules on exclusive jurisdiction in proceedings which have as their object rights in rem in immovable property.

In its deliberation, the European Court of Justice held that Article 16 ‘must not be given a wider interpretation than is required by objective, given that it results in depriving the parties of the choice of forum which would otherwise be theirs, and in certain cases, results in their being brought before a Court which is not that of the domicile of any of them.’

In those circumstances, the Court held that Article 16(1) must be interpreted as meaning that the exclusive jurisdiction does not encompass all actions concerning rights in rem in immovable property, but only those which both come within the scope of the Convention, i.e. determining the extent, content, ownership or possession of immovable property, or the existence of other rights in rem therein, and to provide the holders of those rights protection of their interests.

The Court also argued that the action might be based on a right in rem, and not on a right in personam, with the only exception being tenancies of immovable property. ‘While a right in rem has effect erga omnes, the latter can only be claimed against the debtor’.

With this in mind, the CJEU described the action for rescission of contract, as well as compensation for damages brought by the plaintiff against the defendant, as being predominantly an action in personam, therefore falling outside the scope of Article 16(1), and therefore not the subject of exclusive jurisdiction by the Contracting State in which the property is situated.

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C-37/00

Herbert Weber vs Universal Ogden Services Ltd 27 February, 2002

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Facts In this case, Mr Weber was a German national who was living in Germany, yet was employed by the defendant company, which was incorporated under Scottish law. The questions referred to the CJEU focused on the termination of the plaintiff’s contract of employment by the defendant company.

The plaintiff used to work as a cook on board mining vessels or mining installations which were within the Netherlands continental shelf, however the defendant contested the fact that between 1987 and 1993 the plaintiff was working on installations or ships under Dutch jurisdiction. Both parties however agreed that from 1993, the plaintiff was working within the Danish territorial waters.

In 1994, the plaintiff initiated proceedings against the defendant company in a Dutch cantonal Court, based on the allegation that his contract of employment was terminated unlawfully. The Dutch Court accepted the case and found for the plaintiff upon which the defendant company appealed to the Disctrict Court. The District Court disagreed with the Cantonal Court and it held that it did not have jurisdiction to preside on this case on the basis that the plaintiff’s prior employment before 1993 could not be invoked to claim jurisdiction, as the months he spent working within Danish territorial waters have more legal weight then the time he had spent working within the Dutch jurisdictional areas.

Mr Weber appealed the decision and the case moved in front of the Hoge Raad der Nederlanden. According to the latter, the District Court was in the wrong when it failed to consider the Brussels Convention appropriately.

The 3 questions put forward by the Dutch Court were primarily about the interpretation of the plaintiff’s work by ‘an employee as defined in the WAMN’ can be considered ‘as equivalent to work carried out in the Netherlands for the purposes of the application of

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Article 5(1) of the Brussels Convention’.

The questions put forward to the CJEU were: 1. Must work carried out on the Netherlands section of the continental shelf under the North Sea by an employee as defined in the WAMN be regarded as or treated as equivalent to work carried out in the Netherlands for the purposes of the application of Article 5(1) of the Brussels Convention?

2. If so, in order to answer the question whether the employee must be regarded as having carried out his work ‚habitually‘ in the Netherlands, must account be taken of the entire period of his employment or is only his most recent period of employment relevant?

3. In answering Question 2 must a distinction be drawn between the period before the WAMN entered into force — when Netherlands law had not yet designated a Court with territorial jurisdiction to deal with a case such as the present — and the period after the WAMN entered into force?

Judgement In answering the questions referred to the CJEU, the latter first pointed out that work on a Contracting State’s continental shelf is considered as work within the jurisdictional territory of that State and therefore Article 5(1) of the Brussels Convention is applicable.

This first conclusion was mainly based upon Public International Law considerations, by which a continental shelf is interpreted as ‘a natural prolongation of its land territory under the sea’ and the ‘State’s sovereignty over the land and by extension of that sovereignty in the form of the exercise of sovereign rights’.

The second question focused on the possibility of considering the work done as ‘habitually’ in the Netherlands and whether you are to consider the entire period of employment or just the most recent period. According to the CJEU, the determining factor for such 274

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a question relies ‘by reference to uniform criteria which it is for the Court to lay down on the basis of the scheme and objectives of the Brussels Convention’.

The Court also notes that the ‘close relationship between a dispute and the Court best placed’ and ‘the Courts for the place in which the employee is to carry out the agreed work’ would be the best suited to tackle such employment disputes. A third consideration includes that within the field of employment, the place of performance of the relevant obligation…is the place where the employee actually performs the work covered by the contract with his employer’.

On this issue the Court concludes that Article 5(1) of the Brussels Convention must be interpreted within the meaning that ‘the place where he habitually works…is the place where or from which taking account of all the circumstances of the case, he in fact performs the essential part of his duties vis-à-vis his employer’. If the work would necessitate work in more than one Contracting State, you have to take into consideration the whole duration of employment relationship in determining which would be the habitual work place. Only once all of these considerations fail, one can rely on where the person has worked for the longest or the employee may sue his employer where the employer is situated or domiciled.

The third question was about a distinction between the post and pre WAMN era. Since the Brussels Convention is not to be limited of affected by national law, the date of entry into force of the WAMN is not relevant in this case.

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C-208/00

Überseering BV vs Nordic Construction Company Baumanagement GmbH (NCC) 10 October, 1996

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Facts Uberseering BV was a Dutch company whose shares had all been acquired by two German nationals. However, it was unable to enforce a particular contract against Nordic Construction due to the fact that its inability to be reincorporated under German legislation meant that the company possessed no legal identity in Germany.

Seeing as Germany adheres to the real seat theory, the point was made that a company would only be seen to possess legal recognition depending on the location of the company’s ‘real seat’.

At the same time, Germany is not a follower of the incorporation theory. Even though Uberseering was carrying out its operations in Germany itself, due to the fact that it was not originally incorporated under German Law, it did not enjoy legal recognition in the same country.

Uberseering BV brought forward the argument that the above constituted an imposition upon its freedom of establishment, enshrined in Articles 43 and 48 EC (now Articles 49 and 54 TFEU respectively), and the case was brought before the European Court of Justice.

The latter was faced with the task of deciding whether German Law could actually lead to the validation of the aforementioned events.

Judgement The Court held that it was vital for Member States to give recognition to companies originally incorporated in foreign countries, in spite of the fact that said Member States might not have engaged in conventions discussing the mutual recognition of companies (discussed in Article 293). Therefore, due to the effect of Articles 43 and 48 EC, German

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Law was not justified in preventing legal recognition to Uberseering BV. The Court also moved on to pronounce that, should a company be registered in one Member State but proceed to establish itself inside another Member State, the latter is obliged to legally recognise the rights and obligations of the company, such as is implied in the company’s freedom of establishment as enshrined in Articles 43 and 48 EC. Once the company enjoys certain rights and freedoms in the Member State within which it has been incorporated, so too should it enjoy the same rights in the company within which it establishes itself. Along the same lines, the Court stated that Uberseering BV’s enjoyment of the freedom of establishment allowed it to contest the German legislation’s rejection of its legal personality.

The Court also stated that should certain actions need to be taken in the general interest, the company’s freedom of establishment would not be allowed to provide an obstacle to such actions taking place.

Examples of these actions in the general interest include the protection of minority shareholders and of creditors’ interests.

However, these same actions would not preclude companies such as Uberseering BV from enjoying their legal capacity in the country of incorporation, as this would constitute an infringement to the regulations set out in Articles 43 and 48 EC. This judgement represented a major change insofar as national German legislation was concerned. As a result of the ruling by the European Court of Justice, the non-recognition of the legal personality of foreign incorporated countries in Germany was entirely overruled.

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C-334/00

Fonderie Officine Meccaniche Tacconi SpA vs Heinrich Wagner Sinto Maschinenfabrik GmbH (HWS) 17 September, 2002

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Facts The plaintiff initiated proceedings against HWS in the District Court for a declaration on a contract between HWS and a leasing company for the sale of a moulding plant on the basis that HWS breached the duty to act honestly and in good faith by unjustifiably refusing to make the sale.

The legitimate expectation that the contract was going to be completed was obstructed, and therefore, the plaintiff demanded compensation for this. The defendant argued that the Italian Court didn’t have jurisdiction since there was an arbitration clause.

Three years later, the plaintiff made use of Article 41 of the local legislation in an attempt to ensure that the Italian Courts indeed had jurisdiction to hear his claim. Since no agreement was reached between both parties, only the pre-contractual liability of HWS on consideration of Article 1337 of the Italian Civil Code and Article 5(3) of the Brussels Convention. It was here that the Corte Suprema di Cassazione decided to refer the following questions to the CJEU: 1. Does an action against a defendant seeking to establish pre-contractual liability fall within the scope of matters relating to tort, delict or quasi-delict (Article 5(3) of the Brussels Convention)?

2. If not, does it fall within the scope of matters relating to a contract (Article 5(1) of the Brussels Convention), and if it does, what is ‘the obligation in question’?

3. If not, is the general criterion of the domicile of the defendant the only criterion applicable?’

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Judgement On the first question, the case law of the Court has always distinguished between ‘matters relating to a contract’ (Article 5(1) of the Brussels Convention) and those ‘relating to tort, delict of quasidelict’ (Article 5(3) of the Brussels Convention). Since there was no sort of agreement between both parties, any sort of liability that may arise has to be based on Article 5(3) of the Convention.

The Court found no need to answer the second and third question since the answer to the first question should be sufficient for the case at hand.

Therefore, the main consideration of this case is that in situations when there is no contractual obligation, any sort of action would have to be a case of tort, delict or quasi-delict within Article 5(3) and not Article 5(1) of the Brussels Convention.

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C-167/01

Kamer van Koophandel en Fabrieken voor Amsterdam vs Inspire Article Ltd 30 September, 2003

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Facts A company by the name of ‘Inspire Article Ltd’ was set up by a Dutch national in accordance with English and Welsh rules. The commercial registry in the Netherlands was requested to register the company’s branch office in the same country. However, the Dutch registry replied that, seeing as Inspire Article Ltd was a foreign entity, the latter would need to abide by special laws specifically designed for such entities in order for this registration to occur. This meant that Inspire Article Ltd would have been requested to point out its foreign origin through its company name, as well as fully comply with the rules applicable to all Dutch limited liability companies as far as minimal capitalisation was concerned. It is worth noting that the United Kingdom, the place of incorporation of the entity, With regard to questions of conflict of laws in cases of business establishment, adheres to the incorporation theory rather than the real seat theory.

Inspire Article Ltd claimed that this latter requirement limited its enjoyment of the right to freedom of establishment (contained in Article 49 TFEU). The main issue to be decided in this case was whether the Dutch authorities’ request for the entity to comply with the special Dutch laws constituted an interference with Inspire Article Ltd’s freedom of establishment.

Judgement The European Court of Justice made reference to Article 10 EC, which provides that Member States should ensure the effective application of any Community Law in question, should a Community Regulationt specifically provide remedies or punishments in the case of an infringement, or instead refer to national legislation or other relevant stipulations. The penalisation of any such offences must be ensured by the Member States in a manner which would make them

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applicable to the relevant national legislation. Moreover, it ought to be ensured that the penalties allotted are effective and suitable in comparison to the offence in question.

A discrepancy was noted insofar as Article 2 of the Eleventh Directive 89/666 was concerned, which considered the necessity of disclosure regarding companies which fall under the purview of a particular Member State’s legal system being opened in another Member State. The aforementioned disclosure requirements cannot be imposed on companies which were established in accordance with the laws of another Member State should such requirements not have been provided for by the directive. In this case, the Wet op de Formeel Buitenlandse Vennootschappen (Law on Formally Foreign Companies) could not impose such obligations on Inspire Article Ltd, since such requirements had not been previously laid out by the directive.

Furthermore, the Court moved on to discuss Articles 43 and 48 EC (now Articles 49 and 54 TFEU respectively). As stated in such articles, a company set up in one Member State enjoys the freedom of establishment in a secondary Member State, meaning that national legislation cannot interfere with such freedom insofar as conditions of Company Law are concerned. The company in question cannot be deprived of its freedom of establishment due to the frequency of its carrying out of activities in another Member State, or even because of the reason behind its establishment in such foreign establishment in the first place. Only cases of abuse would constitute a possible exception to the above.

With the aforementioned decisions, the European Court of Justice abided by a trend in its own decisions, marking another judgement in favour of foreign companies holding on to their freedom of establishment, as well as concluding that national legislation could not be used to subject such foreign companies to the rules of the country within which the companies carry out their activities.

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C-159/02

Gregory Paul Turner vs Felix Fareed Ismail Grovit, Harada Ltd and Changepoint SA 27 April, 2004

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Facts The Defendant (Turner) took his car to a garage for repairs. The repairs were completed by the garage and the car was left outside such garage on the nearby road. Turner called the garage and told the proprietor that he would return the following day, pay him and take the car. Instead, he drove away with the car several hours later without paying for the repairs.

Judgement The Court of Appeal dismissed T’s appeal. The Court held that property belonged to a person if, at the time of the appropriation, that person was in fact in possession or control of it. The words ‘possession or control’ in Section 5(1) of the 1968 Regulation did not need to be qualified in any way, i.e. the person from whom the property is taken must, in fact, be in possession or control and any question of legal possession or control, for instance, through a hire purchase agreement, was irrelevant. Secondly, the Court of Appeal confirmed that the trial jury had been properly directed that it was essential for the prosecution to show that Turner had acted dishonestly and his illfounded belief that he had a lawful claim of right to take the car in the circumstances was immaterial.

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C-281/02

Andrew Owusu vs N. B. Jackson, trading as Villa Holidays Bal-Inn Villas and Others ‘

01 March, 2005

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Facts The case concerned a serious accident in Jamaica. Mr Owusu, the claimant, a British national domiciled in the United Kingdom, suffered serious injuries in Mammee Bay, Jamaica, when he struck his head against a submerged sandbank whilst swimming.

Mr Jackson, the first defendant, who was also domiciled in the United Kingdom, had let the holiday villa to Mr Owusu. The latter sued the first defendant in the English Courts for breach of an implied term that the private beach where the accident occurred would be reasonably safe or free from hidden dangers.

In the same action, Mr Owusu also sued several Jamaican companies who owned, occupied or licensed the use of the beach. The action alleged a failure to warn swimmers of the hazard constituted by the submerged sandbank, and also that the defendants had failed to heed a similar earlier accident.

Judgement The CJEU first rejected an argument put forward by the defendants and the UK government (and which had formed the basis of the Court of Appeal decision in the Harrods Buenos Aires case) that the domicile ruled in Article 2 of the Brussels Convention (since replaced, with no material differences in this respect, by the Brussels Regulation) had no application because the claimant and one of the defendants were domiciled in the UK, and the other defendants were domiciled in a non-Contracting State (rather than in another Contracting State).

Article 2 provides: Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the Courts of that State…

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The Court held that Article 2 was not subject to a condition that there should be a legal relationship involving a number of Contracting States, although for the Convention to apply at all, the existence of an international element was required (as it did in this case).

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C-96/04

Familiensache: Standesamt Stadt Niebüll 27 April, 2006

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Facts Leonard Matthias was born to a married German couple, Dorothee Paul and Stefan Grunkin, who were living in Denmark. In accordance with Danish law, the child was registered by the Danish authorities and given the surname Grunkin-Paul, which was then entered on his Danish birth certificate.

The German Registry’s Office (Standesamt) in Neibull, however, refused to recognise the child’s surname as listed in the Danish birth certificate. It made reference to Paragraph 10(1) of the Law introducing the Civil Code (the Einführungsgesetz zum Bürgerlichen Gesetzbuch, or the EGBGB), which stated that ‘a person’s name falls to be decided by the law of the State of his or her nationality’, as well as Paragraph 1617 of the German Civil Code (Bürgerliches Gesetzbuch, or BGB), which states the following: 1) If the parents do not share a married name, but have joint custody of the child, they shall, by declaration before a registrar, choose either the father’s or the mother’s surname at the time of the declaration to be the surname given to the child at birth; 2) If the parents have not made that declaration within a period of one month following the child’s birth, the Familiengericht shall transfer the right to determine the child’s surname to one of the parents. Subparagraph 1 shall apply mutatis mutandis; 3) Where a child is born outside German territory, the Court shall not transfer the right to choose the child’s surname in accordance with subparagraph 2, unless either a parent or the child so requests, or unless it is necessary to record the child’s surname on a German registration, or identity document.

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The child’s parents brought an action which was dismissed by the Higher Regional Court (Kammergericht) in Berlin, while the Federal Constitutional Court (Bundesverfassungsgericht) refused to examine the subsequent constitutional complaint. Nevertheless, Paul and Grunkin, who had divorced in the meantime, did not use a common married name and refused to determine the name of their child as stipulated by Paragraph 1617.

In light of this, the Registry’s Office brought an action before the Local Court (Amtsgericht) in Niebull, in its capacity as a Family Court, in order to transfer the right to determine the child’s surname to one of his parents, as stipulated by Paragraph 1617 of the BGB. The Court decided to stay these proceedings, as it determined that the proceedings pending before it would have no purpose if Community law requires that the name valid under Danish law be recognised under the German legal system. It therefore referred the following question to the European Court of Justice: Is the provision on the conflict of laws contained in Article 10 of the EGBGB valid, insofar as it provides that the right to bear a name governed by nationality alone?

Judgement The European Court of Justice refused to answer the question referred to it by the Local Court of Niebull, on the grounds of jurisdiction.

The CJEU stipulated that, following the provisions laid down under Article 234 of the European Convention, there were no dispute in the action brought forward by the Registry’s Office, as it was merely the exercise of an Administrative function following a previous decision: A national Court may refer a question to the (European)

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Court only if there is a case pending before it, and if it is called upon to give judgement in proceedings intended to lead to a decision of a judicial nature… When it exercises administrative authority, without at the same time being called on to decide a dispute, the referring body... cannot be regarded as exercising a judicial function.

It argued that the Niebull Local Court was not called to decide a dispute (as that dispute was settled at last instance by the Higher Regional Court in Berlin), but rather, the Registry’s Office only brought the action in order for the Court ‘to exercise administrative authority’, therefore falling outside the scope of Article 234.

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C-210/06

CARTESIO Oktató és Szolgáltató bt 16 December, 2008

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Facts On 20th May 2004, Cartesio (a limited partnership) was formed under Hungarian law. The partnership particularly specialised in areas relating to human resources, secretarial activities, training and teaching, and had incorporated its seat in Hungary.

The partnership comprised of two partners, one being a limited partner responsible for the investment of capital, whilst the other was an unlimited partner who was, therefore, unlimitedly liable for all debts accruing from the partnership. Both partners were natural persons with Hungarian nationality and residency.

On 11th November 2005, Cartesio filed an application before the Regional Court for the seat of the partnership to be moved to Italy, without changing the applicable national law governing the affairs of the partnership. However, in 2006, this application was rejected on the grounds that the Hungarian law in force at the time strictly prohibited a company from transferring its seat overseas, and instead required the company to undergo a liquidation procedure in order to be reincorporated in another Member State. Therefore, it was not possible that after the seat transfer, Cartesio could still be governed by the law of its incorporation.

Upon the rejection of the application, Cartesio appealed the judgement before the Regional Court of Appeal, basing its argument on the grounds that Hungarian law was acting in breach of Community law, particularly Articles 43 and 48 EC, regarding the right to freedom of establishment within the European Union.

According to Article 43 EC: ‘restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.’ This provision also goes on to highlight

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that when speaking of freedom of establishment rights, this not only applies to natural persons, but also legal persons such as agencies, companies and firms, as well as the possibility of exercising this right within Member States as a self-employed person.

Additionally, Article 48 EC stipulates that such agencies, companies or firms shall be subjected to the same treatment as any natural person. Therefore, the argument brought forward by Cartesio before the European Court of Justice condemned Hungarian law as acting in breach of Community law by requesting Hungarian companies to establish their seat in Hungary.

Judgement In this case, the Regional Court of Appeal requested the CJEU’s interpretation on Articles 43 EC and 48 EC. The CJEU ruled that these provisions in no way preclude national legislation that prevents a company from transferring its seat to another Member State, whilst remaining under governance of the law of the Member State of incorporation.

It was therefore held that the question of whether a company formed under one Member State’s law could transfer its registered office to another without losing legal personality was a question of national law. This case is therefore fundamentally important seeing as, despite the company exercising its movement rights within the Union, the maintaining of Hungarian national law as the applicable law governing the affairs of the company was considered to fall outside the freedom of establishment rights imposed through Community law.

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C-353/06

Stefan Grunkin and Dorothee Regina Paul 14 October, 2008

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Facts Leonhard Matthias Grunkin-Paul, born to Dr Paul and Mr Grunkin, was born in Denmark having, as well as his parents, German nationality.

At the time, the parents had wed and lived in Denmark, and thus the child was further registered according to Danish law and now had the compound surname of Grunkin-Paul, a combination of his mother’s and father’s surnames.

Upon moving back to Germany, the German authorities refused to recognise the double-barrelled surname of the child as registered under Danish law since, according to German law, parents who do not share a married name shall choose either the father’s or mother’s surname to be the child’s surname. The child’s parents, who had divorced at the time, had failed to make use of their right to choose their son’s surname in compliance with Paragraph 1617(2) and (3) BGB. According to German Private International Law, Article 10 EGBGB clearly stipulates that the name of a person is subject to the law of the State according to his or her nationality. In this case, the nationality of the child is German, and thus, German law should apply, rendering the German Authorities competent in refusing to accept the doublebarrelled surname of their son as valid under German law.

Judgement The Standesamt Niebüll brought the matter before the local Court (Amtsgericht Niebüll) for a decision on the possible transfer of the right to determine a child’s surname to one of his parents in accordance with Paragraph 1617(2) and (3) BGB. In addition, the Amtsgericht Niebüll made further reference to a preliminary ruling to the Court of Justice under Article 234 EC for the matter at hand.

The question raised before the Court of Justice was merely that of

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identifying the compatibility of Article 10 EGBGB with Articles 12 and 18 EC. Primarily, Article 12 EC protects nationals from discrimination on the grounds of nationality, whereas Article 18 EC adds on this point by highlighting one’s right to move and reside freely within the territory of other Member States.

In this way, the question was that of identifying whether Community law precludes authorities of a Member State from refusing to recognise a surname which has been determined and registered in a second Member State in which the person, who has only the nationality of the first Member State, was born and has resided. In this case, the Court stressed that although the rules governing a person’s surname fall within the competence of the Member States, they must nonetheless comply with Community law in its entirety.

It was held that in respect of Article 12 EC, the child in this case was not facing any form of discrimination on the grounds of nationality.

However, when assessing the compatibility with Article 18 EC, the Court of Justice held: ‘having to use a surname, in the Member State of which the person concerned is a national, that is different from that conferred and registered in the Member State of birth and residence is liable to hamper the exercise of the right, established in Article 18 EC, to move and reside freely within the territory of the Member States’.

The Court reiterated in this case that one could only interfere with an individual’s free movement rights upon legitimate and justifiable grounds. It was held that the grounds put forward by the German authorities in refusing the child’s double- barrelled surname were thus unfounded, and instead constituted a significant interference with one’s free movement rights as guaranteed under Community law.

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C-185/07

Allianz SpA and Generali Assicurazioni Generali SpA vs West Tankers Inc 10 February, 2009

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Facts The case arose from an incident where West Tanker’s vessel, chartered to Erg Petroli SpA (‘Erg’), collided with Erg’s jetty. Erg claimed from its insurers, Allianz SpA (formerly Riunione Adriatica di Sicurta SpA), and also commenced arbitration proceedings in London under the charter party agreement against West Tankers.

Sometime later, Allianz SpA began proceedings against West Tankers in the Italian Courts, seeking to recover the sum it had paid to Erg. West Tankers challenged the jurisdiction of the Italian Court and applied to the English Courts to issue an injunction restraining Allianz SpA from continuing the Italian proceedings, arguing that the dispute arose out of the charter party, and therefore, Allianz SpA (which was claiming by right of subrogation) was bound by the arbitration clause in that agreement.

At first instance, Coleman J in the High Court agreed that the right of Allianz SpA to claim against West Tankers was subject to the arbitration clause in the charter party, issuing a declaration to this effect and granting the requested injunction. During the proceedings, Allianz SpA questioned whether it would be consistent with the Brussels I Regulation for an English Court to grant an injunction restraining proceedings in another Member State. Leave was granted to appeal on this issue directly to the House of Lords.

On 21 February 2007, the House of Lords referred the question to the CJEU for final determination, concluding that there were varying views on the issue and that it was a matter of considerable importance.

However, they suggested that granting an injunction in this case would not be inconsistent with the Regulation as the proceedings fell outside its scope.

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Judgement The operative part of the CJEU’s judgment sets down that ‘[i]t is incompatible with Council Regulation (EC) No 44/2001… for a Court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the Court of another Member State on the ground that such proceedings would be contrary to an arbitration agreement.’

In reaching this conclusion, the CJEU applied the following reasoning: 1. In order to determine whether a dispute falls within the scope of Regulation 44/2001, reference must be made solely to the subject-matter of the proceedings – that is, the nature of the rights which the proceedings in question serve to protect. It followed, therefore, that proceedings such as the arbitration between Erg and West Tankers could not come within the scope of the Regulation; 2. However, even proceedings which do not fall within the scope of the Regulation may have consequences which undermine its effectiveness. The unification of the rules of conflict of jurisdiction will be impeded if such proceedings are permitted to prevent a Court of another Member State from exercising the jurisdiction conferred on it by the Regulation; 3. It was therefore appropriate to consider whether the Italian proceedings initiated by Allianz SpA fell within the scope of the Regulation. In this regard, the CJEU concurred with the Attorney General’s opinion that, if such proceedings, because of their subject-matter (in this case a claim for damages), fell within the scope of the Regulation, a preliminary question as to the applicability of an arbitration agreement also fell within that scope;

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4. It followed that West Tankers’ challenge to the jurisdiction of the Italian Court was a matter to be determined exclusively by that Court. A contrary decision would amount to stripping the Italian Court of the power to rule on its own jurisdiction as conferred by the Regulation; 5. Moreover, an anti-suit injunction, such as that sought by West Tankers, which would effectively prevent the Italian Court from determining the applicability of the Regulation, including in respect of the exclusion of arbitration at Article 1(2)(d), ‘would run counter to the trust which Member States accord to one another’s legal systems’.

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C-133/08

Intercontainer Interfrigo SC (ICF) vs Balkenende Oosthuizen BV and MIC Operations BV 06 October, 2009

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Facts In August 1998, in the context of a project for a train connection for freight traffic between Amsterdam (Netherlands) and Frankfurt (Germany), ICF entered into a charter party with Balkenende and MIC. That contract provided, inter alia, that ICF was to make train wagons available to MIC and would ensure their transport via the rail network.

MIC, which had hired out the acquired load capacity to third parties, was responsible for all operational aspects of the transport of the goods concerned. The parties did not enter into any written contract they did, however, give effect, during a limited period, to what had been agreed between them. Nevertheless, ICF sent to MIC a written draft contract, which contained a clause stating that Belgian law had been chosen as the law applicable. That draft was never signed by any of the parties to the agreement.

In December 1998, ICF sent invoices to MIC for two amounts in Euro. The first of those amounts was not paid by MIC, the second was. In September 2001, ICF, for the first time, gave Balkenende and MIC notice to settle the invoice sent in November 1998. On the 24th of December 2002, ICF brought an action against Balkenende and MIS before Local Court, Haarlem in the Netherlands seeking an order for payment of the sum corresponding to that invoice and the related value-added tax.

As is apparent from the order for reference, Balkenende and MIC submitted that the claim at issue in the main proceedings is timebarred under the law applicable to the contract binding them to ICF, in this case Netherlands law. By contrast, according to ICF, that claim is not yet time-barred under Belgian law, which it claims is the law applicable to the contract. In that regard, ICF maintains that as the contract at issue in the main proceedings is not a contract of carriage, the law applicable must be ascertained not on the basis of Article

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4(4)14 of the Rome Convention 1980, but on the basis of Article 4(2)15, according to which the law applicable to the contract is that of the country in which ICF’s principal place of business is situated.

The Rechtbank Haarlem upheld the objection of limitation raised

by Balkenende and MIC. In accordance with Netherlands law, that Court therefore held that the right to payment of the invoice on which ICF was relying was time-barred and declared its claim inadmissible.

The Regional Court of Appeal of Amsterdam, Netherlands upheld that judgment. The Courts hearing the merits of the case categorised the contract at issue as a contract for the carriage of goods and took the view that, even though ICF did not have the status of carrier, the main purpose of the contract was the carriage of goods.

However, those Courts excluded the application of the connecting factor provided for in Article 4(4) of the Convention and held that the contract at issue in the main proceedings was more closely connected with the Kingdom of the Netherlands than with the Kingdom of Belgium, relying on a number of circumstances of the case, such as the other contracting parties’ place of business, which is in the Netherlands, and the route taken by the train wagons between Amsterdam and Frankfurt am Main, the cities in which the goods

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4. ‘A contract for the carriage of goods shall not be subject to the presumption in paragraph 2. In such a contract if the country in which, at the time the contract is concluded, the carrier has his principal place of business is also the country in which the place of loading or the place of discharge or the principal place of business of the consignor is situated, it shall be presumed that the contract is most closely connected with that country. In applying this paragraph single voyage charter-parties and other contracts the main purpose of which is the carriage of goods shall be treated as contracts for the carriage of goods’

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‘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, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.’

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were, respectively, loaded and unloaded.

It is apparent from the order for reference that those Courts pointed out, in that regard, that, if that contract principally concerns the carriage of goods, Article 4(4) of the Convention is not applicable because, in the present case, there is no relevant connecting factor for the purposes of that provision. The contract is therefore governed, according to the principle set out in Article 4(1) of the Convention, by the law of the country with which it is most closely connected, in this case the Kingdom of the Netherlands.

According to those Courts, if, as ICF maintains, the contract at issue in the main proceedings is not categorised as a contract of carriage, then Article 4(2) of the Convention is not applicable either since it is apparent from the circumstances of the present case that that contract is more closely connected with the Kingdom of the Netherlands and thus the derogating provision in the second sentence of Article 4(5) of the Convention must be applied.

In its appeal on a point of law, ICF relied not only on an error of law in the categorisation of that contract as a contract of carriage, but also on the possibility of the Court’s derogating from the general rule laid down in Article 4(2) of the Convention to apply Article 4(5) thereof.

According to the applicant in the main proceedings, that possibility may be used only where it is apparent from all the circumstances that the place where the party who is to affect the performance which is characteristic of the contract is established has no genuine connecting value. That has not been established.

Questions were asked when it came to the interpretation of Article 4 of the Convention. Where first of all one is to examine how article 4 (4) was formatted and if it only related to voyage charter parties and that other forms of charter party fall outside the scope of that provision.

Also, if Article 4(4) is formatted to mean that, insofar as other forms of charter party also relate to the carriage of goods, the contract in question comes, so far as that carriage is concerned, within the scope 307

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of that provision and the applicable law is for the rest determined by Article 4(2).

In addition, one is to also ask if the aforementioned questions were answered in the affirmative, which of the two legal bases indicated should be used as the basis for examining a contention that the legal claims based on the contract are time-barred? If the predominant aspect of the contract relates to the carriage of goods, should the division referred to in the second question not be taken into account and must then the law applicable to all constituent parts of the contract be determined pursuant to Article 4(4)? Last but not least one is to examine the exemption found in Article 4(5) and how would it apply in this particular situation.

Article 4(4) of the Convention covers not only single voyage charter-parties, but also all other contracts the main purpose of which is the carriage of goods. This provision is intended to make it clear that charter-parties may be considered to be contracts for the carriage of goods insofar as that is their substance. That category thus covers short-term charter-parties, in which a means of transport along with its crew is made available to a charterer for a certain period of time for the purpose of carriage. However, there were conflicting views on such sub article especially on the last sentence of such sub-article.

The Commission of the European Communities submits that the last sentence of Article 4(4) of the Convention has a ‘restrictive scope’. The connecting criterion set out in that sentence concerns only certain categories of charter-parties, namely those by which a means of transport is made available by a carrier on a single occasion and those entered into by a carrier and a consignor which relate exclusively to the carriage of goods.

Even though it is undeniable that the contract at issue in the main proceedings, which provides for means of transport to be made available and transported via the rail network, necessarily involves the carriage of goods, such factors are not sufficient to categorise it

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as a contract for the carriage of goods for the purposes of applying Article 4(4) of the Convention. Contractual relationships with various obligations relating to the actual carriage of the goods, including loading and unloading, appear to have been entered into between MIC and ‘third parties’ to which MIC had hired out the load capacity in the train wagons chartered.

The Court took into consideration that, pursuant to the second sentence of Article 4(4) of the Convention, a contract for the carriage of goods is governed by the law of the country in which, at the time the contract is concluded, the carrier has his principal place of business if the place of loading or the place of discharge or the principal place of business of the consignor is situated in that same country. The last sentence of Article 4(4) of the Convention provides that, in applying that paragraph, ‘single voyage charter-parties and other contracts the main purpose of which is the carriage of goods shall be treated as contracts for the carriage of goods’.

It is apparent from the wording of that provision that the Convention equates with contracts of carriage not only single voyage charterparties but also other contracts, insofar as the main purpose of those contracts is the carriage of goods. Therefore, one of the aims of that provision is to extend the scope of the rule of private international law lreguaid down in the second sentence of Article 4(4) of the Convention to contracts the main purpose of which is the carriage of goods, even if they are classified as charter-parties under national law. In order to ascertain that purpose, it is necessary to take into consideration the objective of the contractual relationship and, consequently, all the obligations of the party who effects the performance which is characteristic of the contract. In a charter-party, the owner, who effects such a performance, undertakes as a matter of course to make a means of transport available to the charterer.

However, it is conceivable that the owner’s obligations relate not merely to making available the means of transport but also to the carriage of goods proper. In such circumstances, the contract in 309

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question comes within the scope of Article 4(4) of the Convention where its main purpose is the carriage of goods. It must, however, be pointed out that the presumption set out in the second sentence of Article 4(4) of the Convention applies only when the owner assuming that he is regarded as the carrier has his principal place of business, at the time the contract is concluded, in the country in which the place of loading or the place of discharge or the principal place of business of the consignor is situated.

On the basis of those considerations, the answer to the first question and the first part of the second question is that the last sentence of Article 4(4) of the Convention must be interpreted as meaning that the connecting criterion provided for in the second sentence of Article 4(4) applies to a charter-party, other than a single voyage charterparty, only when the main purpose of the contract is not merely to make available a means of transport, but the actual carriage of goods.

Now let’s examine the third and fourth question mentioned above.

The Netherlands Government considers that the severance of the contract is possible, under the second sentence of Article 4(1) of the Convention, only by way of exception where a part of the contract is severable and has a closer connection with a country other than that with which the other parts of the contract are connected and where that severance is not likely to disrupt the relations between the applicable provisions. According to that government if the contract at issue in the main proceedings in the present case does not concern mainly the carriage of goods it is completely excluded from the scope of Article 4(4) of the Convention. By contrast, if that contract concerns mainly the carriage of goods it comes entirely within the scope of Article 4(4).

Therefore, it cannot be accepted that Article 4(4) is applicable only to the aspects of the contract relating to the carriage of goods and that, as for the rest, the same contract may be governed by the law determined pursuant to Article 4(2) of the Convention.

The Czech Government maintains that the second sentence of Article 4(1) of the Convention should be applied by way of exception, 310

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insofar as the application of a separate law to certain parts of a contract, even though they are severable from the rest, undermines the principles of legal certainty and of the protection of legitimate expectations. Therefore, as is apparent that there is the possibility of severance of the various parts of a contract has to meet requirements of overall consistency.

The Commission states that the severance of contract provided for in Article 4(1) of the Convention is not an obligation but a possibility which the Court before which a case has been brought has available to it and which can be used only where a contract comprises various parts which are independent and separable. As the subject-matter of the case in the main proceedings is a complex agreement in which the relationship between the chartering and the carriage of goods is itself at issue, severance appears, according to the Commission, to be an artificial approach.

If it were a question of a contract coming within the scope of Article 4(4) of the Convention there would be no need to sever it because there would be no need to make possible ancillary aspects connected with carriage subject to legislation other than that which applies to the main purpose of the contract. In particular, the right to a consideration for the performance of the contract and the fact of being time-barred are connected so closely with the principal contract that it is not possible to separate them without infringing the principle of legal certainty. the national Court in essence asks in which circumstances it is possible, under the second sentence of Article 4(1) of the Convention, to apply different national laws to the same contractual relationship, in particular as regards the limitation of the rights under a contract such as that at issue in the main proceedings.

It was also asked whether, if the connecting criterion provided for in Article 4(4) of the Convention applies to a charter-party, that criterion relates only to the part of the contract concerning the carriage of goods. In that regard, it must be borne in mind that, under the second sentence of Article 4(1) of the Convention, a part of the contract may, 311

by way of exception, be made subject to a law other than that applied to the rest of the contract, where it has a closer connection with a country other than that with which the other parts of the contract are connected. It is apparent from the wording of that provision that the rule providing for the severance of a contract is of an exceptional nature.

The words ‘by way of exception’ in the last sentence of Article 4(1) are to be interpreted in the sense that the Court must have recourse to severance as seldom as possible. The Advocate General pointed out that, the possibility of separating a contract into a number of parts in order to make it subject to a number of laws runs counter to the objectives of the Convention and must be allowed only where there are a number of parts to the contract who may be regarded as independent of each other. Consequently, in order to determine whether a part of a contract may be made subject to a different law it is necessary to ascertain whether the object of that part is independent in relation to the purpose of the rest of the contract.

If that is the case, each part of a contract must be made subject to one single law. In particular, therefore, the rules relating to the prescription of a right must fall under the same legal system as that applied to the corresponding obligation. In that regard, it must be borne in mind that, under Article 10(1)(d) of the Convention, the law applicable to a contract governs in particular the prescription of obligations. In the light of those considerations, the answer to the second part of the second question and the third and fourth questions is that the second sentence of Article 4(1) of the Convention must be interpreted as meaning that a part of a contract may be governed by a law other than that applied to the rest of the contract only where the object of that part is independent.

Where the connecting criterion applied to a charter-party is that set out in Article 4(4) of the Convention, that criterion must be applied to the whole of the contract, unless the part of the contract relating to carriage is independent of the rest of the contract.

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By its fifth question, the national Court asks whether the exception in the second clause of Article 4(5) of the Convention must be interpreted in such a way that the presumptions in Article 4(2) to (4) of the Convention do not apply only if it is evident from the circumstances in their totality that the connecting criteria indicated therein do not have any genuine connecting value, or whether the Court must also refrain from applying them if it is clear from those circumstances that there is a stronger connection with some other country.

Article 4 of the Convention, which sets out the connecting criteria applicable to contractual obligations in the absence of a choice by the parties of the law applicable to the contract, lays down, in Article 4(1), the general principle that the contract is to be governed by the law of the country with which it is most closely connected. In order to ensure a high level of legal certainty in contractual relationships, Article 4(2) to (4) of the Convention provides for a set of criteria on the basis of which it is possible to presume which country the contract is most closely connected with. Those criteria operate like presumptions in the sense that the Court before which a case has been brought must take them into consideration in determining the law applicable to the contract. Article 4(5) states that the connecting criterion of the place of residence of the party effecting the performance which is characteristic of the contract may be disregarded if that place of residence cannot be determined.

It further states that all the presumptions may be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country. In that regard, it is necessary to establish the function and objective of such article. It follows that the objective of Article 4(5) of the Convention is to counterbalance the set of presumptions stemming from the same article by reconciling the requirements of legal certainty, which are satisfied by Article 4(2) to (4), with the necessity of providing for a certain flexibility in determining the law which is actually most closely connected with the contract in question. Since the primary objective of Article 4 of the Convention is to have applied to the contract the law of the 313

country with which it is most closely connected, Article 4(5) must be interpreted as allowing the Court before which a case has been brought to apply, in all cases, the criterion which serves to establish the existence of such connections, by disregarding the presumptions if they do not identify the country with which the contract is most closely connected. It therefore falls to be ascertained whether those presumptions may be disregarded only where they do not have any genuine connecting value or where the Court finds that the contract is more closely connected with another country.

As is apparent from the wording and the objective of Article 4 of the Convention, the Court must always determine the applicable law on the basis of those presumptions, which satisfy the general requirement of foreseeability of the law and thus of legal certainty in contractual relationships. However, where it is clear from the circumstances as a whole that the contract is more closely connected with a country other than that identified on the basis of the presumptions set out in Article 4(2) to (4) of the Convention, it is for that Court to refrain from applying Article 4(2) to (4). In the light of those considerations, the answer to the fifth question must be that Article 4(5) of the Convention must be construed as meaning that, where it is clear from the circumstances as a whole that the contract is more closely connected with a country other than that determined on the basis of one of the criteria set out in Article 4(2) to (4) of the Convention, it is for the Court to disregard those criteria and apply the law of the country with which the contract is most closely connected.

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Judgement On those grounds, the Court hereby ruled: The last sentence of Article 4(4) must be interpreted as meaning that the connecting criterion provided for in the second sentence of Article 4(4) applies to a charter-party, other than a single voyage charter-party, only when the main purpose of the contract is not merely to make available a means of transport, but the actual carriage of goods.

The second sentence of Article 4(1) must be interpreted as meaning that a part of a contract may be governed by a law other than that applied to the rest of the contract only where the object of that part is independent. Where the connecting criterion applied to a charter-party is that set out in Article 4(4), that criterion must be applied to the whole of the contract, unless the part of the contract relating to carriage is independent of the rest of the contract. Article 4(5) of the Convention must be construed as meaning that, where it is clear from the circumstances as a whole that the contract is more closely connected with a country other than that determined on the basis of one of the criteria set out in Article 4(2) to (4), it is for the Court to disregard those criteria and apply the law of the country with which the contract is most closely connected.

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C-585/08 / C-144/09

Peter Pammer vs Reederei Karl Schlüter GmbH & Co. KG / Hotel Alpenhof GesmbH vs Oliver Heller 07 December, 2010

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Facts Peter Pammer v Reederei Karl Schluter C-585/08 The parties were an Austrian individual and a shipping company established in Germany and the dispute concerns a voyage by freighter from Trieste (Italy) to the Far East. Mr Pammer booked the voyage through an intermediary company whose seat is in Germany.

The amenities of the voyage, as described by the intermediary company on its website, included among others, a fitness room, outdoor swimming pool, saloon, three double bedrooms with toilet and shower. The plaintiff refused to embark and sought reimbursement of the sum he had paid for the voyage on the ground that in his view, the description in the intermediary company did not correspond with the conditions on the vessel.

The defendant company only reimbursed part of the sum and consequently, Mr Pammer brought an action for payment of the balance, together with interest, before an Austrian District Court.

Reederei Karl Schluter contended that it did not pursue a professional or commercial activity in Austria and raised the plea that the Court lacked jurisdiction.

The District Court dismissed this plea on the ground that the voyage contract was a consumer contract, namely a contract for package travel, and that the intermediary company conducted advertising activity in Austria via internet on behalf of the shipping company.

This judgment was reversed on appeal in June 2008 by the Regional Court. It declared that the Austrian Courts lacked jurisdiction, holding that the voyage contract constituted a contract of transport not covered by Regulation 44/2001 and is thus, not considered a consumer contract. Mr Pammer appealed against this judgment on a point of law.

The Austrian Supreme Court stayed proceedings and referred the 317

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following questions to the Court of Justice of the European Union (CJEU): 1. Does a voyage by freighter constitute a package travel for the purposes of Article 15(3) of Regulation 44/2001?

2. If the answer to 1 is in the affirmative, is accessibility of the intermediary company’s website sufficient to justify a finding that ‘activities are being directed to the Member State of the consumer’s domicile’ within the meaning of Article 15(3) Hotel Alpenhof v Oliver Heller C-144/09 The plaintiff was a company operating a hotel with the same name in Austria while the defendant was domiciled in Germany. After finding out about the hotel from its website, Mr Heller reserved a number of rooms for a week. His reservation and the confirmation were effected by email that featured in the hotel’s website.

After having found fault with the hotel’s services, Mr Heller left the hotel without paying the bill, despite an offer of a reduction by the hotel. Hotel Alpenhof brought an action against Mr Heller before an Austrian Court for the payment of €5,000.

Mr Heller argued that the Austrian Court lacked jurisdiction because, as a consumer, ha can only be sued in the Courts of the Member State of his domicile (Germany) in terms of Article 15(1)(c) of Regulation 44/2001.

Both the Court of First Instance and the Regional Court of Salzburg dismissed the action, holding that the Austrian Courts lacked jurisdiction.

Hotel Alpenhof appealed to the Austrian Supreme Court and since the question was identical to the second question of the Peter Pammer case above and it was not sure that Court would answer the second question (as it was dependent on the answer to the first question) it 318

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stayed proceedings in this case too and referred the question for a preliminary ruling.

Given the similarity between the second question of the Pammer case and the question of the above case, the CJEU joined the two cases.

Judgement 1. Does a voyage by freighter qualify as ‘package travel’ in terms of Article 15(3) of Regulation 44/2001?

The Court outlined that the term ‘package travel’ does not appear in Article 15(3) of the above Regulation. Package Travel is the subject of a specialised Directive numbered 90/314.

Article 2(1) of that directive provided a definition that package travel would subsist if two of the three services referred to in that provision (transport, accommodation and other tourist services not ancillary to transport or accommodation) are present and cover a period of more than 24 hours or include overnight accommodation.

As a result, the Court had to determine whether the definition in Article 2(1) of the Directive is relevant to interpreting Article 15(3) of the Regulation.

As outlined by Advocate General Trstenjak in her opinion16, the terms used by the European Union in Regulation 44/2001 are identical to those of the Rome I Convention17. Article 6(4)(b) makes a specific reference to ‘package travel’ as an exception to the general provision that carriage contracts do not qualify as consumer contracts.

The link between Regulation 593/2008 (which has a reference to

16 17

Opinion of Advocate General Trstenjak (18/05/2010) para.45 Since replaced by Regulation 593/2008

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‘package travel’) and Regulation 44/2001 (which does not) is provided in Recital 7 in the preamble to Regulation 593/2008 which states that: The substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001…

Having established that Article 15(3) of Regulation 44/2001 can be interpreted in the light of the corresponding provision of Regulation 593, the Court went on to examine whether a voyage by freighter qualifies as ‘package travel’.

Consequently, the answer of the Court to the first question was in the affirmative as the voyage by freighter constituted transport and accommodation for an inclusive price in a voyage for a period of more than 24 hours.

2. What’s the criteria of website accessibility that would qualify as ‘directing’ activity to the Member State of the consumer’s domicile in terms of Article 15(1)(c) of Regulation 44/2001?

The Court explained that Article 15(1)(c) is a derogation from both the general principle that confers jurisdiction upon the Courts of domicile of the defendant and from Article 5(1)18 which provides special jurisdiction for contracts with the Courts of the place of performance of the obligation.

It further explained that Article 15(1)(c) of the Regulation is not identical to Article 13 of the 1968 Convention it replaced and the change in wording, which strengthened consumer protection, was made due to the development of internet communication which made it more difficult to determine where a contract was concluded and increased the vulnerability of consumers with regard to traders.

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Nevertheless, the Court held that for Article 15(1)(c) to apply, the mere presence of a website does not suffice, and the trader must have manifested an intention to establish commercial relations with consumers from one or more other Member States.

Whilst holding that it is up to the national Courts to ascertain said intention of the trader, the Court identified a list of indicators, which is not exhaustive, which may lead to the conclusion that trader’s activity is directed to the Member State of the consumer’s domicile. These include: • The international nature of the activity; • Itineraries from other Member States for going to the place where the trader is established; • Use of a language or currency other than the language or currency generally used in the Member State in which the trader is established (with the possibility of making and confirming a reservation in that other language or currency); • Inclusion of telephone numbers with an international code; • Payment of Search Engine Optimisation (SEO’s) measures to facilitate access to the trader’s site (or his intermediary) by consumers domiciled in other Member States; • Use of a top-level domain instead of that of the Member State where the trader is domiciled (e.g. .com or .eu instead of .de); • Testimonials by past clients domiciled in various Member States.

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C-256/09

Bianca Purrucker vs Guillermo Vallés Pérez 15 July, 2010

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Facts Ms Purrucker went to Spain to live with Mr Vallés Pérez. She gave birth to twins who were born prematurely in May 2006. The boy, Merlín, was able to leave hospital in September 2006. The girl, Samira, could do so only in March 2007, after intervening complications. By that time, the relationship between Ms Purrucker and Mr Vallés Pérez had deteriorated. Ms Purrucker wanted to return to Germany with her children, while Mr Vallés Pérez was, initially, opposed to this.

On 30 January 2007, the parties signed an agreement before a notary which had to be approved by a Court in order to be enforceable.

In February 2007, after concluding an agreement before a notary which provided that both parents would have custody of and parental responsibility for the twins and fixed Germany as their permanent place of residence, Ms Purrucker left for Germany with her son Merlin.

Samira had to stay in Spain because she still required surgery. In Ms Purrucker’s understanding of the agreement, Samira was to be brought to Germany after she left hospital.

The agreement regarding parental responsibility broke down and both parents initiated proceedings, in Spain and in Germany respectively. The father obtained provisional measures giving him rights of custody and ordering the mother to return the boy to Spain.

The Spanish Court issued a certificate pursuant to Article 39(1) of Brussels IIa19 confirming that the judgment was enforceable. The father successfully initiated proceedings in Germany to enforce the Spanish orders and the mother appealed.

The referring Court asked the following question to the CJEU. It was asked if the provisions of Article 2120 and others of Brussels IIa, in conjunction with Article 2(4), also apply to enforceable provisional

19

‘The competent Court or authority of a Member State of origin shall, at the request of any interested party, issue a certificate using the standard form set out in Annex I (judgments in matrimonial matters) or in Annex II (judgments on parental responsibility).’

20

Council Regulation (EC) No 2201/2003

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measures, within the meaning of Article 20, concerning the right to child custody. The relevance of such question was challenged, first, on the ground that the provisional measures concerned in the main proceedings did not fall within the scope of Article 20 of the Regulation, since they were taken by a Court which had jurisdiction as to the substance of the matter. It was not clear from the Spanish judgment on which ground the Spanish Court had assumed jurisdiction, and, also on the ground that even if those measures had been taken by a Court which did not have jurisdiction as to the substance of the matter, they could not in any event fall within the scope of Article 20 insofar as they related to the boy who was not in Spain when the Court delivered its judgment.

The CJEU ruled that the provisions laid down in Article 21 and the rest of Brussels IIa on recognition and enforcement do not apply to provisional measures, relating to rights of custody, falling within the scope of Article 20. The Court accepted that other international instruments or national legislation might be used to secure the recognition of such provisional measures. The Court noted that it was not clear from the Spanish Court’s judgment how it had applied the jurisdictional rules of the Regulation to the particular facts of the case. The Court of a Member State hearing an application concerning parental responsibility must determine whether it has jurisdiction having regard to Articles 8 to 14 of the Brussels IIa Regulation. It must be clearly evident from the judgment that the Court concerned had intended to respect the directly applicable rules of jurisdiction, or that the Court had made its ruling in accordance with those rules. Where this clarity is lacking, it may be inferred that the judgment was not adopted in accordance with the Regulation’s jurisdictional rules.

Although the Courts of other Member States must not review the assessment made by the first Court of its jurisdiction, this does not prevent an examination of the judgment determining whether it falls within the scope of Article 20. Indeed, to make such a determination is not to review the jurisdiction of the Court of origin but merely to ascertain the basis on which that Court considered itself competent.

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The Court held that the person affected by provisional measures must be given the opportunity to bring an appeal against the judgment without this being viewed as an acceptance of the substantive jurisdiction of the Court that ordered the provisional measures.

Judgement On those grounds, the Court ruled that the provisions laid down in Article 21 et seq. of Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility. It repealed the Regulation (EC) No 1347/200021 and also stated that it did not apply to provisional measures, relating to rights of custody, falling within the scope of Article 20 of that regulation.

21

Which relates with the jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility for children of both spouses.

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C-509/09

eDate Advertising GmbH and Others vs X and Société MGN LIMITED 25 October, 2011

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Facts Two joint appeals were considered by the Grand Chamber of the CJEU. In both cases, the claimants alleged that their personality rights had been infringed as a result of online publications on websites that were based in different Member States to those in which the claimants lived. In eDate Advertising, X, a German national and resident, had been convicted of murdering a well-known actor in 1993. He was released on parole in 2008. He complained that a website publication by eDate Advertising, based in Austria which reported his full name, stated that he had been convicted of the murder, and highlighted the fact he was currently appealing on the basis that his rights had been infringed.

In Martinez, the French actor Olivier Martinez complained that there had been an infringement of the right to his image by an article entitled ‘Kylie Minogue back with Olivier Martinez’, published on the UKbased Sunday Mirror website. Both domestic Courts faced arguments from the defendants that they could not make orders restricting publication outside their jurisdictions.

Judgement Whether, given that the publications complained of were made on a website based in a different Member State to the one in which the claimant lived, the domestic Court has jurisdiction to try the image right claims in another member state from where the website was hosted and, in particular, how Article 5(3) of Regulation 44/2001 was to be interpreted in this context, and the effect of Articles 3(1) and (2) of Directive 2000/31/EC (Directive on electronic commerce).

As regards the latter, whether Article 3(2) of the Directive established a choice of law rule providing for the application of the law of the service provider (publisher).

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(1) In the event of an alleged infringement of personality rights by means of content placed online on an internet website, the person who considers that his rights have been infringed has the option of bringing an action for liability, in respect of all the damage caused, either before the Courts of the Member State in which the publisher of that content is established or before the Courts of the Member State in which the centre of his interests is based. That person may also, instead of an action for liability in respect of all the damage caused, bring his action before the Courts of each Member State in the territory of which content placed online is or has been accessible. Those Courts have jurisdiction only in respect of the damage caused in the territory of the Member State of the Court seised.

Article 3 of Directive 2000/31/EC must be interpreted as not requiring transposition in the form of a specific conflict-of-laws rule.

Nevertheless, in relation to the coordinated field, Member States must ensure that, subject to the derogations authorised in accordance with the conditions set out in Article 3(4) of Directive 2000/31, the provider of an electronic commerce service is not made subject to stricter requirements than those provided for by the substantive law applicable in the Member State in which that service provider is established.

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C-29/10

Heiko Koelzsch vs État du Grand Duchy of Luxemburg 15 March, 2011

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Facts By a contract of employment signed in Luxembourg on 16 October 1998, Mr Koelzsch, a heavy goods vehicle driver, domiciled in Germany, was engaged as an international driver by Gasa. That contract contains a clause which refers to the Luxembourg Law of 24 May 1989 on contracts of employment, and a clause conferring exclusive jurisdiction on the Courts of that State. Gasa is a subsidiary of Gasa Odense Blomster amba, a company established under Danish law. Its business consists in the transport of flowers and other plants from Denmark to destinations situated mostly in Germany, but also in other European countries, by means of lorries stationed in Germany.

The lorries are registered in Luxembourg and the drivers are covered

by Luxembourg social security.

The CJEU was asked to give guidance on how national Courts should determine whether a lorry driver ‘habitually’ worked in one country for the purpose of the Rome Convention.

Mr Koelszch was a lorry driver based in Germany who delivered all over Europe but mainly to destinations in Germany as stated above.

He wanted to sue his employer under German unfair dismissal law.

However, the employer was based in Luxembourg and his contract stated that it was governed by Luxembourg law. The European Court of Justice held that the national Courts must look at all the factors including the place from which the employee carries out his transport tasks, receives instructions and organises his work and where his tools are situated as well as places where the transport is principally carried out, goods unloaded and the place to which the employee turns up to complete any tasks when deciding jurisdiction. This will favour the employee.Mr Koelzsch first of all challenged the dismissal decision in Germany before the Arbeitsgericht (Labour Court) Osnabrück, which, by a ruling of 4 July 2001, declined jurisdiction ratione loci.

Mr Koelzsch unsuccessfully appealed against that decision to the Landesarbeitsgericht (Regional Labour Court) Osnabrück. By 330

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application of 24 July 2002, Mr Koelzsch subsequently brought proceedings against Ove Ostergaard Luxembourg SA, the successor to Gasa, before the Tribunal du travail de Luxembourg (Labour Court, Luxembourg), seeking an order requiring it to pay both damages for unfair dismissal and compensation in lieu of notice and arrears of salary. He argued that, notwithstanding the choice of Luxembourg law as the lex contractus, the mandatory rules of German law which protect members of works councils were applicable to the dispute, within the terms of Article 6(1) of the Rome Convention, on the ground that the contract would have been governed by German law in the absence of choice by the parties. Therefore, he contended, his dismissal was unlawful inasmuch as Paragraph 15 of the German Law on protection against dismissal prohibits the dismissal of members of the works council and, according to the case-law of the Bundesarbeitsgericht (Federal Labour Court), that prohibition extends to alternate members.

In its judgment of 4 March 2004, the Tribunal du travail de Luxembourg held that the dispute was subject exclusively to Luxembourg law and, consequently, it applied, inter alia, the Law of 18 May 1979 reforming works councils. That judgment was upheld on the substance by the judgment of 26 May 2005 of the Cour d’appel de Luxembourg (Court of Appeal, Luxembourg), which also took the view that Mr Koelzsch’s application to have the German Law on protection against dismissal applied to all of his claims was new and, for that reason, inadmissible.

The Cour de Cassation de Luxembourg (Luxembourg Court of Cassation) also dismissed the appeal against that decision by judgment of 15 June 2006.

As that first set of proceedings before the Luxembourg Courts was definitively terminated, Mr Koelzsch, on 1 March 2007, brought an action for damages against the État du Grand-Duché de Luxembourg pursuant to the first paragraph of Article 1 of the Loi du 1er septembre 1988 relative à la responsabilité civile de l’État et des collectivités publiques (Law of 1 September 1988 concerning the civil liability of 331

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the State and of public authorities) (Mémorial A 1988, No 51, p. 1000) by invoking maladministration on the part of its judicial services.

Mr Koelzsch claimed in particular that those judicial decisions had breached Article 6(1) and (2) of the Rome Convention in declaring that the mandatory rules of German law on protection against dismissal were not applicable to his contract of employment and by turning down his application to have a reference for a preliminary ruling made to the Court of Justice in order to clarify, in the light of the facts of the case, the criterion of the habitual place of performance of the work.

By judgment of 9 November 2007, the Tribunal District Court, Luxembourg, declared the action to be admissible but unfounded.

With regard, in particular, to the question of determining the applicable law, that Court observed that the Courts dealing with the dispute between Mr Koelzsch and his employer had been correct to hold that the parties to the contract of employment had designated Luxembourg law as the applicable law, with the result that Article 6(2) of the Rome Convention was not to be taken into consideration.

Furthermore, it pointed out that staff representation bodies are governed by the mandatory provisions of the country in which the employer is established.

On 17 June 2008, Mr Koelzsch appealed against that judgment to the referring Court. The Cour d’appel de Luxembourg takes the view that the appellant’s criticism regarding the interpretation of Article 6(1) of the Rome Convention by the Luxembourg Courts does not appear to be entirely unfounded, because those Courts did not determine the law which, in the absence of choice by the parties, would be applicable on the basis of that provision. It points out that, if Luxembourg law is to be considered as the law which would be applicable to the contract in the absence of choice by the parties, it is not necessary to proceed to a comparison between that law and the provisions of German law relied on by the appellant to establish which is more favourable to the employee, for the purposes of Article 6(1) of the Rome Convention.

However, if German law is to be considered as the law which would be applicable in the absence of choice by the parties, the mandatory 332

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nature of the rules established by the Luxembourg law on dismissal should not prevent the application of the German law on the special protection of members of works councils against dismissal. In that regard, according to the referring Court, the connecting criteria set out in Article 6(2) of the Rome Convention, in particular that of the country of habitual performance of the work, do not, in contrast to the approach taken by the Tribunal d’arrondissement de Luxembourg in its judgment, allow German law to be rejected at the outset as the lex contractus.

The referring Court takes the view that a need for consistency militates in favour of an interpretation of the concept of ‘law of the country in which the employee habitually carries out his work’, within the terms of Article 6(2)(a) of the Rome Convention, in the light of that set out in Article 5(1) of the Brussels Convention and by taking account of the wording used in Article 19 of Regulation 44/2001 and in Article 8 of Regulation 593/2008, which refer not only to the country in which the work is carried out but also to the country from which the employee carries out his activities. In the light of those considerations, the Cour d’appel de Luxembourg decided to stay the proceedings and ask the Court for a preliminary ruling if the rule of conflict in Article 6(2)(a) of the Rome Convention which states that an employment contract is governed by the law of the country in which the employee habitually carries out his work in performance of the contract, to be interpreted as meaning that, in the situation where the employee works in more than one country, but returns systematically to one of them, that country must be regarded as that in which the employee habitually carries out his work.

As the question was referred by an appeal Court, the Court has jurisdiction to rule on the reference for a preliminary ruling pursuant to the First Protocol on the interpretation of the Rome Convention, which entered into force on 1 August 2004. In order to answer the question referred, it is necessary to interpret the rule set out in Article 6(2)(a) of the Rome Convention and, in particular, the criterion of the country in which the employee ‘habitually carries out his work’. In that 333

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regard, it should be noted, as the European Commission has correctly pointed out, that that criterion must be interpreted autonomously, in the sense that the meaning and scope of that referential rule cannot be established on the basis of the law of the Court seized, but must be established according to consistent and independent criteria in order to guarantee the full effectiveness of the Rome Convention in view of the objectives which it pursues (see, by way of analogy, Case C125/92 Mulox IBC [1993] ECR I4075, paragraphs 10 and 16). Moreover, such an interpretation must not disregard that relating to the criteria set out in Article 5(1) of the Brussels Convention where they lay down the rules for determining jurisdiction for the same matters and set out similar concepts. It follows from the preamble to the Rome Convention that it was concluded in order to continue, in the field of private international law, the work of unification of law set in motion by the adoption of the Brussels Convention (see Case C133/08 ICF [2009] ECR I9687, paragraph 22).

With regard to the content of Article 6 of the Rome Convention, it should be noted that it lays down special conflict rules relating to individual contracts of employment. Those rules derogate from those of a general nature set out in Articles 3 and 4 of that convention, which concern, respectively, the freedom of choice of the applicable law and the criteria for determining that law in the absence of such a choice. Article 6(1) of the Rome Convention limits the freedom to choose the applicable law. It provides that the parties to the contract cannot, by their agreement, exclude the application of mandatory rules of law which would govern the contract in the absence of such choice.

Article 6(2) of the Rome Convention lays down specific connecting criteria, which are either that of the country in which the employee ‘habitually carries out his work’ (a), or, in the absence of such a place, that of the seat of ‘the place of business through which he was engaged’ (b). Article 6(2) also provides that those two connecting criteria are not to apply where it appears from the circumstances as a whole that the contract of employment is more closely connected 334

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with another country, in which case the law of that other country is to apply.

In its order for reference, the Cour d’Appel de Luxembourg seeks to determine, essentially, which of the first two criteria is applicable to the employment contract at issue in the main proceedings. According to the État du Grand-Duché de Luxembourg, it follows from the wording of Article 6 of the Rome Convention that the situation referred to in the question submitted for a preliminary ruling, which concerns employment in the transport sector, is that referred to by the criterion set out in Article 6(2)(b) thereof. To allow the application to such a contract of the connecting rule set out in Article 6(2)(a) would, it argues, have the effect of rendering meaningless Article 6(2) (b), which refers precisely to cases in which the employee does not habitually carry out his work in a single country.

By contrast, according to the appellant in the main proceedings, the Greek Government and the Commission, it follows from the Court’s case-law on Article 5(1) of the Brussels Convention that the consistent interpretation of the criterion of the place where the employee ‘habitually carries out his work’ has the result that that rule can also be applied in cases where work is carried out in several Member States.

In particular, they point out that, for the purposes of specifically determining that place, the Court has made reference to the place from which the employee mainly carries out his obligations towards his employer or to the place in which he has established the effective centre of his working activities or, in the absence of an office, to the place in which the employee carries out the majority of his work.Article 6 there of was intended to provide ‘a more appropriate arrangement for matters in which the interests of one of the contracting parties are not the same as those of the other, and … more adequate protection for the party who from the socio-economic point of view is regarded as the weaker in the contractual relationship’.

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The Court has also been guided by those principles in the interpretation of the rules of jurisdiction relating to those contracts which are laid down by the Brussels Convention. It has held that, in a situation in which, as in the main proceedings, the employee carries out his working activities in more than one Contracting State, it is necessary to take due account of the need to guarantee adequate protection to the employee as the weaker of the contracting parties.

Consequently, in the light of the objective of Article 6 of the Rome Convention, it must be held that the criterion of the country in which the employee ‘habitually carries out his work’, set out in Article 6(2)(a) thereof, must be given a broad interpretation, while the criterion of ‘the place of business through which the employee was engaged’, set out in Article 6(2)(b) thereof, ought to apply in cases where the Court dealing with the case is not in a position to determine the country in which the work is habitually carried out.

It also follows from the foregoing that the criterion in Article 6(2) (a) of the Rome Convention can apply also in a situation, such as that at issue in the main proceedings, where the employee carries out his activities in more than one Contracting State, if it is possible, for the Court seised, to determine the State with which the work has a significant connection. According to the Court’s case-law which remains relevant to the analysis of Article 6(2) of the Rome Convention, where work is carried out in more than one Member State, the criterion of the country in which the work is habitually carried out must be given a broad interpretation and be understood as referring to the place in which or from which the employee actually carries out his working activities and, in the absence of a centre of activities, to the place where he carries out the majority of his activities.

Moreover, that interpretation is consistent also with the wording of the new provision on the conflict-of-law rules relating to individual contracts of employment, introduced by Regulation 593/2008, which is not applicable to the present case rationae temporis. According to Article 8 of that regulation, to the extent that the law applicable to the individual employment contract has not been chosen by the 336

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parties, the contract is to be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. That law remains applicable also where the employee carries out duties temporarily in another State. Furthermore, as stated in recital 23 in the preamble to that regulation, the interpretation of that provision must be prompted by the principles of favor laboratoris in that the weaker parties to contracts must be protected ‘by conflict-of-law rules that are more favourable’. It follows from the foregoing that the referring Court must give a broad interpretation to the connecting criterion laid down in Article 6(2)(a) of the Rome Convention in order to establish whether the appellant in the main proceedings habitually carried out his work in one of the Contracting States and, if so, to determine which one.

Accordingly, in the light of the nature of work in the international transport sector, such as that at issue in the main proceedings, the referring Court must take account of all the factors which characterise the activity of the employee. It must, in particular, determine in which State is situated the place from which the employee carries out his transport tasks, receives instructions concerning his tasks and organises his work, and the place where his work tools are situated.

It must also determine the places where the transport is principally carried out, where the goods are unloaded and the place to which the employee returns after completion of his tasks.

In those circumstances, the answer to the question referred is that Article 6(2)(a) of the Rome Convention must be interpreted as meaning that, in a situation in which an employee carries out his activities in more than one Contracting State, the country in which the employee habitually carries out his work in performance of the contract, within the meaning of that provision, is that in which or from which, in the light of all the factors which characterise that activity, the employee performs the greater part of his obligations towards his employer.

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Judgement Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national Court, the decision on costs is a matter for that Court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Grand Chamber) hereby rules that Article 6(2)(a) of the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980, must be interpreted as meaning that, in a situation in which an employee carries out his activities in more than one Contracting State, the country in which the employee habitually carries out his work in performance of the contract, within the meaning of that provision, is that in which or from which, in the light of all the factors which characterise that activity, the employee performs the greater part of his obligations towards his employer.

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Berliner Verkehrsbetriebe (BVG), Anstalt des öffentlichen Rechts vs JPMorgan Chase Bank NA, Frankfurt Branch 12 May, 2011

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Facts A recent decision of the CJEU provides welcome clarification as to the circumstances in which a party can seek to escape a contractual jurisdiction clause by arguing that, because it has raised a lack of capacity defence, it has thereby engaged certain mandatory exclusive jurisdiction rules in the Brussels Regulation which require the dispute to be tried in its home Court.

The question for the CJEU was:

whether, by raising such a capacity argument and relying on Article 22(2)22 Council Regulation (EC) No 44/2001, a party could effectively trump an agreed jurisdiction clause. The CJEU decision was made in a reference made by the Berlin Court in BVG v JPMorgan Chase Bank NA (JPM). The CJEU rejected BVG’s argument on Article 22(2) of the Brussels Regulation. BVG claimed that the Berlin Court, as the Court of the place where it has its seat, should determine the dispute, because the dispute was principally concerned with the issue as to whether or not the swap contracts it had entered into with JPM were ultra vires and thus void.

According to the order for reference, on 19 July 2007 JPM, an American investment bank whose company seat is in New York, United States and which has various branches and subsidiaries in Europe, including in Germany and the United Kingdom, and BVG, a legal person governed by public law whose seat is in Berlin, Germany and which provides public transport services in the Berlin, concluded, by means of a trade confirmation involving, inter alia, a contract (‘the JPM Swap Contract’). This contract contains a clause conferring 22 The following Courts shall have exclusive jurisdiction, regardless of domicile: 2. in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the Courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the Court shall apply its rules of private international law;

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jurisdiction on the English Courts.

JPM submits that since September 2008 some of the third-party companies covered by the JPM Swap Contract have been unable to meet payments and it therefore demanded that BVG pay the sums due under that contract. Since BVG refused to pay those sums, on 10 October 2008 JPM’s London branch and its United Kingdom subsidiary brought proceedings against BVG in England before the High Court of Justice of England and Wales, Queen’s Bench Division (Commercial Court), the Court having jurisdiction under the terms of the JPM Swap Contract and therefore, in principle, under Regulation 44/2001, by virtue of Article 23 thereof.

That action sought the payment under BVG’s payment obligations arising from the JPM Swap Contract, or the award of damages of the same amount, and the grant by the Court of a series of declarations establishing, essentially, that the JPM Swap Contract had been freely entered into by BVG, without reliance on its part upon advice from JPM or its United Kingdom subsidiary, and that that contract was consequently valid and enforceable. BVG opposed the action brought by JPM and its subsidiary by stating that it had no obligation to pay since JPM had given it poor advice as regards the JPM Swap Contract. BVG subsequently put forward other arguments in its defence, submitting that the JPM Swap Contract was not valid because it had acted ultra vires when that contract was concluded and that the decisions of its organs which had led to the conclusion of that contract were therefore null and void.

BVG also requested the High Court to decline jurisdiction in favour of the German Courts, which, in its submission, have exclusive jurisdiction to adjudicate upon the case, under Article 22(2) of Regulation 44/2001. By judgment of 7 September 2009 the High Court dismissed that application. Following an appeal brought before it by BVG, the Court of Appeal of England and Wales (Civil Division) upheld that judgment by a judgment of 28 April 2010, without awaiting the outcome of the present reference for a preliminary ruling. Leave was 341

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granted to appeal to the Supreme Court of the United Kingdom. By the decision in December 2010 the Supreme Court made a reference for a preliminary ruling in those appeal proceedings.

On March 2009, BVG brought an action against JPM’s branch the Regional Court, Berlin, Germany, asking that Court to declare that the JPM Swap Contract is void because its subject-matter is ultra vires in the light of BVG’s statutes, in the alternative, to order JPM to release it from any obligation stemming from that contract, as compensation in respect of its right to damages by reason of the incorrect advice given by JPM, and to order JPM to pay it damages. In this action BVG contends, in particular, that such Court, has exclusive jurisdiction under Article 22(2) of Regulation 44/2001.

Thus, that Court must conduct the proceedings brought before it without taking account of the proceedings brought in England and it is not entitled to stay the proceedings pursuant to Article 27(1) of Regulation 44/2001. BVG appealed against that decision of such Court. Since that Court did not grant the appeal, the case was brought automatically before the Higher Regional Court of Berlin. This Court took the view, like the previous Court, that the proceedings brought in England and Germany have given rise to a situation of a pending legal action for the purposes of Article 27(1)23 of Regulation 44/2001.

It was in those circumstances that such Court decided to ask questions to the Court for a preliminary ruling. Where first of all one is to see at what point does the scope of Article 22(2) of Regulation 44/2001 extend to proceedings in which a company or legal person objects, with regard to a claim made against it stemming from a legal transaction, that decisions of its organs which led to the conclusion of the legal transaction are ineffective as a result of infringements of its statutes. If the above question is asked in the affirmative one has to ask if Article 22(2) of Regulation 44/2001 is also applicable to legal

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Where proceedings involving the same cause of action and between the same parties are brought in the Courts of different Member States, any Court other than the Court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the Court first seised is established.

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persons governed by public law insofar as the effectiveness of the decisions of its organs is to be reviewed by civil Courts. Again if the answer of the previous question is asked in the affirmative than one is to examine if the Court of the Member State has last seised in legal proceedings required to stay the proceedings pursuant to Article 27 of Regulation 44/2001 even if it is claimed that, because a decision of the organs of one of the parties is ineffective under its statutes, an agreement conferring jurisdiction is likewise ineffective.

By its first question, the national Court asks, in essence, whether Article 22(2) must be interpreted as applying to proceedings in which a company pleads that a contract cannot be relied upon against it because a decision of its organs which led to the conclusion of the contract is supposedly invalid on account of infringement of its statutes.

It states that the proceedings brought in England and Germany have given rise to a situation of a pending legal action under Article 27(1) of Regulation 44/2001 because both sets of proceedings concern the existence of the same right to payment alleged to result from the Swap Contract. According to the national Court, the subject-matter of both of those sets of proceedings comprises the contractual claim based on that right to payment.

The national Court explains that its first question concerns the applicability of Article 22(2) of Regulation 44/2001 in the context of a review, necessary only as a collateral question, of the effectiveness, under the statutes, of decisions of organs of a company. Article 22(2) is to be interpreted by taking account of matters other than its wording, in particular of the purpose and the general scheme of that regulation. In this regard, it is to be recalled that the jurisdiction provided for in Article 2 of Regulation 44/2001, namely that the Courts of the Member State in which the defendant is domiciled are to have jurisdiction, constitutes the general rule. It is only by way of derogation from that general rule that the regulation provides for special rules of jurisdiction for cases, which are exhaustively listed, in which the defendant may or must, depending on the case, be sued in the Courts of another Member State. The Court has thus adopted 343

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a strict interpretation in respect of Article 22 of Regulation 44/2001 where it must not be given an interpretation broader than is required by their objective. It is true that Article 23(5) of Regulation 44/2001 provides that agreements conferring jurisdiction are to have no legal force if the Courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22 of the regulation. However, this primacy of Article 22 cannot justify a broad interpretation of its provisions.

On the contrary, a strict interpretation of Article 22(2) which does not go beyond what is required by the objectives pursued by it is particularly necessary because the jurisdiction rule which it lays down is exclusive, so that its application would deny the parties to a contract all autonomy to choose another forum. There is another aim of the jurisdiction rules which result from Article 22 of Regulation 44/2001 is to confer exclusive jurisdiction on the Courts of a Member State in specific circumstances where, having regard to the matter at issue, those Courts are best placed to adjudicate upon the disputes falling to them, because there is a particularly close link between those disputes and the Member State.

Thus, Article 22(2) of Regulation 44/2001 confers jurisdiction to adjudicate on disputes which relate to the validity of a decision of a company’s organs upon the Courts where the company has its seat.

Those Courts are best placed to adjudicate upon disputes which relate exclusively, or even principally, to such a question. However, in a dispute of a contractual nature, questions relating to the contract’s validity, interpretation or enforceability are at the heart of the dispute and form its subject-matter. Any question concerning the validity of the decision to conclude the contract, taken previously by the organs of one of the companies party to it, must be considered ancillary.

While it may form part of the analysis required to be carried out in that regard, it nevertheless does not constitute the sole, or even the principal, subject of the analysis. Thus, the subject-matter of such a contractual dispute does not necessarily display a particularly close 344

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link with the Courts where the party which pleads that a decision of its own organs is invalid has its seat. It would therefore be contrary to the sound administration of justice to confer exclusive jurisdiction for such disputes upon the Courts of the Member State in which one of the contracting companies has its seat. Nor would a broad interpretation of Article 22(2) of Regulation 44/2001 be consistent with the specific objective of that provision, which consists simply in centralising jurisdiction to adjudicate upon disputes concerning the existence of a company or the validity of the decisions of its organs, in order to avoid conflicting judgments being given. That objective is limited solely to disputes with this subject-matter and Article 22(2) is thus not designed to centralise jurisdiction to adjudicate upon all disputes concerning a contract involving a legal person which pleads as a ground of defence that the decisions of its own organs are invalid.

As has been observed in the present judgment, any question concerning the validity of a decision to enter into a contract taken by organs of one of the parties thereto must be considered ancillary in the context of a contractual dispute. Such a dispute is not, in principle, liable to give rise to conflicting judgments by Courts of different Member States since counterclaims or parallel claims founded on the same contract involve, in principle, an instance of a pending legal action covered by Article 27(1) of Regulation 44/2001 and the judgments given by the Court having jurisdiction must be recognised and enforced in all the Member States.

It follows from all of the foregoing that a broad interpretation of Article 22(2) of Regulation 44/2001, under which it would apply to any proceedings in which a question concerning the validity of a decision of a company’s organs is raised, would extend the scope of that provision beyond what is required by the objectives pursued by it. It has been explained by the Jenard Report on the Brussels Convention about the appropriateness of a strict interpretation of Article 16(2) of the Convention and, therefore, of Article 22(2) of the regulation.

According to the report, Article 16(2) of the convention provides for exclusive jurisdiction in proceedings which are ‘in substance’ 345

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concerned with the validity of the constitution, the nullity or the dissolution of the company, legal person or association, or with the validity of the decisions of its organs.

Thus, the divergence noted the present judgment between the language versions of Article 22(2) of Regulation 44/2001 is to be resolved by interpreting that provision as covering only proceedings whose principal subject-matter comprises the validity of the constitution, the nullity or the dissolution of the company, legal person or association or the validity of the decisions of its organs. The Court further held that Article 16(4) of the Brussels Convention, a provision essentially identical to Article 22(4) of Regulation 44/2001, applies to any proceedings in which the validity of a patent is put in issue, be it by way of an action or a plea in objection, thereby conferring exclusive jurisdiction on the Courts of the State in which the patent was registered.

That case-law cannot be applied to proceedings in which a question concerning the validity of a decision of a company’s organs is raised.

Since the validity of the patent concerned is an essential premises, in particular in any infringement action, it is in the interests of the sound administration of justice that exclusive jurisdiction to adjudicate upon any dispute in which the patent’s validity is contested is accorded to the Courts of the Member State in which deposit or registration of the patent has been applied for or has taken place, they being best placed to adjudicate upon the dispute. That is not so in the case of the Courts where a company party to a contractual dispute has its seat if it pleads that the decision to enter into the contract taken by its own organs is invalid. In light of all the foregoing considerations, the answer to the first question is that Article 22(2) of Regulation 44/2001 must be interpreted as not applying to proceedings in which a company pleads that a contract cannot be relied upon against it because a decision of its organs which led to the conclusion of the contract is supposedly invalid on account of infringement of its statutes. In light of the answer given to the first question, there is no need to answer the second and third questions referred.

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Judgement On these grounds the Court hereby ruled that Article 22(2) of Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as not applying to proceedings in which a company pleads that a contract cannot be relied upon against it because a decision of its organs which led to the conclusion of the contract is supposedly invalid on account of infringement of its statutes.

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Wolf Naturprodukte GmbH vs SEWAR spol. s r.o.

21 June, 2012

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Facts In its judgment delivered on the 15 April 2003, the Regional Civil Court, Graz (Austria) ordered SEWAR to pay a claim brought against by it by Wolf Naturprodukte. On 21 May 2007 Wolf Naturprodukte applied to the District Court, Znojmo in Czech Republic seeking, on the basis of Regulation 44/2001, for that judgment to be declared enforceable in the Czech Republic and inter alia for assets of SEWAR to be ordered to be seised for that purpose. The District Court, Znojmo ě dismissed the application on the ground that Regulation 44/2001 was binding on the Czech Republic only from the accession of that State to the European Union, namely 1 May 2004. Wolf Naturprodukte after many failed attempts thereupon appealed on a point of law to the Supreme Court Czech Republic, asking it to set aside the judgment given on appeal and to rule that Regulation 44/2001 was binding on all the Member States as of the date of its entry into force, 1 March 2002. Since it considered that the wording of Article 66 of Regulation 44/2001 did not allow a clear determination of the temporal scope of that regulation it was decided that the proceedings would be referred with the following question to the Court for a preliminary ruling. It was asked if Article 66(2) of Regulation 44/2001would be interpreted as meaning that for that regulation to take effect it is necessary that at the time of delivery of a judgment the regulation was in force both in the State whose Court delivered the judgment and in the State in which a party seeks to have that judgment recognised and enforced.

By its question the referring Court essentially asks whether Article 66(2)24 of Regulation 44/2001 must be interpreted as meaning

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This Regulation shall apply only to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after the entry into force. 2. However, if the proceedings in the Member State of origin were instituted before the entry into force of this Regulation, judgments given after that date shall be recognised and enforced in accordance with Chapter III, (a) if the proceedings in the Member State of origin were instituted after the entry into force of the Brussels or the Lugano Convention both in the Member State or origin and in the Member State addressed; (b) in all other cases, if jurisdiction was founded upon rules which accorded with those provided for either in Chapter II or in a convention concluded between the Member State of origin and the Member State addressed which was in force when the proceedings were instituted.

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that, for that regulation to be applicable for the purpose of the recognition and enforcement of a judgment, it is necessary that at the time of delivery of that judgment the regulation was in force both in the Member State of origin and in the Member State addressed.

Regulation 44/2001, which replaced the Brussels Convention between all the Member States except the Kingdom of Denmark, entered into force on 1 March 2002, in accordance with Article 76 of the regulation. However, it was observed that in the territory of States which, like the Czech Republic, acceded to the European Union on 1 May 2004, it entered into force only on that date.

It is apparent in particular from recital 19 in the preamble to Regulation 44/2001 that continuity between the Brussels Convention and the regulation must be ensured. To that end, the European Union legislature inter alia adopted the transitional provisions in Article 66 of the regulation. Article 66(1) of Regulation 44/2001 provides that the regulation is to apply only to legal proceedings instituted after the entry into force of the regulation. That principle is intended to govern both the question of jurisdiction and the provisions relating to the recognition and enforcement of judgments.

Article 66(2) of Regulation 44/2001, however, provides that, as an exception to that principle, the provisions of the regulation relating to the recognition and enforcement of judgments are to apply to judgments made after the entry into force of the regulation in consequence of legal proceedings instituted before that date if, in essence, common rules of jurisdiction applied in the two Member States concerned or if the jurisdiction of the Court of the Member State of origin was founded on rules similar to those provided for in the second chapter of Regulation 44/2001. Nowhere in Article 66 specifies, whether the concept of the ‘entry into force’ of the regulation, which must be given a uniform interpretation within that article, refers to the entry into force of the regulation in the State in which the judgment has been given, that is to say the State of origin, or in the State in which recognition and enforcement of that judgment

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is sought, that is to say the State addressed.

It must be observed in this respect that the provisions of Regulation 44/2001 show the close link that exists between the rules relating to jurisdiction which are the subject of the second chapter of the regulation and the rules relating to the recognition and enforcement of judgments which are the subject of the third chapter of the regulation. The rules on jurisdiction and the rules on the recognition and enforcement of judgments in Regulation 44/2001 do not constitute distinct and autonomous systems but are closely linked.

The Court has also previously held that the simplified mechanism of recognition and enforcement set out in Article 33(1) of that regulation, to the effect that a judgment given in a Member State is to be recognised in the other Member States without any special procedure being required, which leads in principle, pursuant to Article 35(3) of that regulation, to the lack of review of the jurisdiction of Courts of the Member State of origin, rests on mutual trust between the Member States and, in particular, by that placed in the Court of the State of origin by the Court of the State addressed, taking account in particular of the rules of direct jurisdiction set out in Chapter II of that regulation. It follows that the application of the simplified rules of recognition and enforcement laid down by Regulation 44/2001, which protect the claimant especially by enabling him to obtain the swift, certain and effective enforcement of the judgment delivered in his favour in the Member State of origin, is justified only to the extent that the judgment which is to be recognised or enforced was delivered in accordance with the rules of jurisdiction in that regulation, which protect the interests of the defendant, in particular by providing that in principle he may be sued in the Courts of a Member State other than that in which he is domiciled only by virtue of the rules of special jurisdiction in Articles 5 to 7 of the regulation.

By contrast, in a situation such as that at issue in the main proceedings, in which the defendant is domiciled in a State which was 351

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not yet a Member of the Union either at the date of bringing the action or at the date of delivery of the judgment, and is therefore regarded as domiciled in a third State for the purposes of the applicability of Regulation 44/2001, the balance of interests between the parties laid down by that regulation are no longer ensured. Where the defendant is not domiciled in a Member State, jurisdiction is determined, in accordance with Article 4(1) of Regulation 44/2001, by the law of the State of origin.

Furthermore, Regulation 44/2001 contains certain mechanisms which protect the defendant’s rights during the original proceedings in the State of origin, but they apply only if the defendant is domiciled in a Member State of the Union. Thus Article 26(1) of Regulation 44/2001 states that ‘when a defendant is domiciled in one Member State is sued in a Court of another Member State and does not enter an appearance, the Court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Regulation’. Similarly, under Article 26(2) of Regulation 44/2001, the Court hearing the case must stay the proceedings so long as it is not shown that the defendant who fails to appear has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end. It should be noted in this respect that, in the main proceedings, it is apparent from the order for reference that the judgment sought to be recognised and enforced was a judgment in default and that it may be supposed that the defendant in the main proceedings, who was unable to benefit from the protection mechanisms provided for in Article 26 of Regulation 44/2001 in that the Czech Republic had not yet acceded to the European Union at the time of delivery of the judgment in the Member State of origin, was denied the opportunity of taking part effectively in the legal proceedings, since the judgment was given on the very date on which the document instituting the proceedings was served. It thus follows both from the history and from the scheme and purpose of Article 66 of Regulation 44/2001 that the concept of

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‘entry into force’ in that provision must be understood as the date from which that regulation applies in both the Member States concerned.

The answer to the question referred is therefore that Article 66(2) of Regulation 44/2001 must be interpreted as meaning that, for that regulation to be applicable for the purpose of the recognition and enforcement of a judgment, it is necessary that at the time of delivery of that judgment the regulation was in force both in the Member State of origin and in the Member State addressed.

Judgement On those grounds, the Court hereby ruled that Article 66(2) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that, for that regulation to be applicable for the purpose of the recognition and enforcement of a judgment, it is necessary that at the time of delivery of that judgment the regulation was in force both in the Member State of origin and in the Member State addressed.

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ERSTE Bank Hungary Nyrt vs Magyar Állam and Others 05 July, 2012

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Facts The dispute which arose before the referring national Court, the Hungarian Court of cassation Legfelsobb Bíróság, was between ERSTE Bank Hungary Nyrt and the Hungarian State. A letter of credit had been issued in 1998 by Postabank és Takarékpénztár Rt (‘Postabank’), a Hungarian bank, in favour of BCL Trading GmbH, an Austrian company. BCL Trading subsequently took shares in Postabank which it held as a security deposit so that, in the event that the letter of credit was drawn upon, Postabank would be required to make payment. Insolvency proceedings were opened in Austria in respect of BCL Trading on 5 December 2003. This is prior to the accession of Hungary as a Member State of the European Union on 1 May 2004.

Subsequently the Hungarian Court ordered the Hungarian state, pursuant to an obligation to which it was subject as a matter of Hungarian law, to purchase the shares held by BCL Trading by way of a security deposit. The Hungarian state duly purchased the shares and paid an amount into the Hungarian Court representing the value of those shares.

Article 4(1) of Council Regulation (EC) No 1346/2000 known as the ‘Insolvency Regulation’ provides as a general rule that insolvency proceedings and their effects are governed by the law of the Member State in which they are opened meaning the ‘lex concursus’. Article 5(1) of the Insolvency Regulation provides one of the exceptions to this general rule, namely that rights in rem shall not be subject to the effects of the main proceedings arising under the ‘lex concursus’.

Article 5 has been described its effect as to prevent rights in rem from being governed by the law of a state other than that in which the rest is situated.

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Judgement The European Court of Justice First Chamber, in its recent TFEU Article 267 preliminary ruling decided that Article 5(1) of the Insolvency Regulation is applicable even in circumstances where insolvency proceedings had been opened in a Member State in this case in Austria prior to the accession to the European Union of another Member State, here referring to Hungary in which the debtor’s assets, on which the relevant right in rem was based, were situated.

The CJEU’s decision was in contrast to the Opinion of Advocate General who expressed the view that Article 5(1) was inapplicable in such circumstances since it was a condition of its applicability that an asset of the debtor should be located within the territory of another Member State, i.e. not the territory of a prospective Member State, as at the time of the opening of the insolvency proceedings.

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flyLAL-Lithuanian Airlines AS vs Starptautiska lidosta Riga VAS and Air Baltic Corporation AS 23 October, 2014

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Facts The Court of Justice confirmed that actions brought by undertakings seeking redress or compensation for damage resulting from alleged infringements of EU competition law, come within the definition of ‘civil and commercial matters’ within the meaning of Article 125(1) of Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

This request for a preliminary ruling concerns the interpretation of Articles 1, 22(2)26, 34(1)27 and 35(1)28 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. The file lodged with the Court and the observations submitted during the written procedure and at the hearing, the present request for a preliminary ruling forms part of a wider dispute pending before the Lithuanian Court of Appeal.

By that action, flyLAL seeks compensation for damage resulting, first, from the abuse of a dominant position by Air Baltic on the market for flights from or to Vilnius Airport in Lithuania and, second, from an anti-competitive agreement between the co-defendants. To that

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‘This Regulation shall apply in civil and commercial matters whatever the nature of the Court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters. 2. The Regulation shall not apply to: (a) the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession; (b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings; (c) social security; (d) arbitration. 3.

In this Regulation, the term Member State shall mean Member States with the exception of Denmark.’

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‘The following Courts shall have exclusive jurisdiction, regardless of domicile: in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the Courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the Court shall apply its rules of private international law;’

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‘A judgment shall not be recognised: 1. if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought;’

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‘Moreover, a judgment shall not be recognised if it conflicts with Sections 3, 4 or 6 of Chapter II, or in a case provided for in Article 72.’

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end, the applicant in the main proceedings applied for provisional and protective measures. By a judgment of 31 December 2008, the Lithuanian Court of Appeal granted that application and issued an order for sequestration, on a provisional and protective basis, of the moveable and immoveable assets and property rights of Air Baltic and Starptautiskā Lidosta Rīga in a large amount.

The District Court of Vidzeme in the City of Riga, Latvia decided to recognise and enforce that judgment in Latvia, insofar as the recognition and enforcement related to the sequestration of the moveable and immoveable assets and property rights of Air Baltic and Starptautiskā Lidosta Rīga. The application by flyLAL for a guarantee of enforcement of that judgment was rejected. On appeal, that decision was confirmed by the Civil Division of the Riga Court of Appeal, Latvia. 18 Appeals were brought against the decision of the Civil Division of the Riga Court of Appeal, Latvia before the referring Court. Starptautiskā Lidosta Rīga and Air Baltic submit that the recognition and enforcement of the judgment of the Lithuanian Court of Appeal are contrary to both the rules of public international law on immunity from jurisdiction and Regulation 44/2001. They argue that the present case does not fall within the scope of that regulation. Since the dispute relates to airport charges set by State rules, it does not, they submit, concern a civil or commercial matter within the meaning of that regulation. That judgment should be neither recognised nor enforced in Latvia. In response, flyLAL takes the view that its action is a civil matter because it seeks compensation for damage resulting from the infringement of Articles 81 EC and 82 EC. 19 On account of the nature of the rules setting the levels of airport charges and reductions in those charges, the referring Court doubts, first of all, that the case before it is a civil or commercial matter within the meaning of Article 1 of Regulation 44/2001. In effect, that a judgment ordering provisional and protective measures may be recognised on the basis of that regulation only if the case in which those measures have been requested is a civil or commercial matter within the meaning of that regulation. If the Court should take the 359

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view that the dispute in the main proceedings falls within the scope of Regulation 44/2001, the question of exclusive jurisdiction will then arise. Article 22(2) of that regulation provides for such a rule of jurisdiction in proceedings which have as their object the validity of the decisions of the organs of companies or other legal persons in favour of the Courts of the Member State concerned. The reduction in airport charges is applied by way of decisions taken by organs of commercial companies. Consequently, there is uncertainty, first, as regards the jurisdiction of the Lithuanian Courts. Second, as Article 35(1) of Regulation 44/2001 precludes recognition of judgments if they infringe rules of exclusive jurisdiction, the referring Court is unsure whether it is appropriate to examine such a question. Finally, Article 34(1) of the aforementioned Regulation provides that a judgment is not to be recognised if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought. First, although the sum claimed is substantial, the judgment of the Court of Appeal, Latvia provides no explanations as to the method by which the amounts concerned were calculated. Second, the action is directed against commercial companies in which the State is a shareholder.

Since FlyLAL is in liquidation, Starptautiskā Lidosta Rīga, Air Baltic and the Republic of Latvia would, if the substantive action were to be dismissed, have no means of recovering the losses sustained as a result of the application of the provisional and protective measures ordered by that judgment. Such circumstances thus raise doubts as to whether recognition of that judgment is compatible with the public policy of the State in which recognition is sought.

Issues arose and questions had to be answered on this matter. One has to see if such act was appropriate to regard as a civil or commercial matter, within the meaning of Regulation 44/2001, a case in which the applicant seeks compensation for damage and a declaration of the unlawfulness of the defendants’ conduct consisting in an unlawful agreement and abuse of a dominant position, and which is based on the application of legislative acts of general scope of another Member State, bearing in mind that unlawful agreements are void from the

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moment they are concluded, and that, on the other hand, the adoption of a rule of law is an act of the State in the sphere of public law, to which the rules of public international law relating to the immunity of a State from the jurisdiction of other States apply. If this question is answered in the affirmative than one has to see if the compensation proceedings to be regarded as an action having as its object the validity of the decisions of the organs of companies, within the meaning of Article 22(2) of the Regulation, in which case the judgment need not be recognised, in accordance with Article 35(1) of the Regulation. If the subject-matter of the compensation proceedings falls within the scope of Article 22(2) of the Regulation which is exclusive jurisdiction one has to see if the Court of the State in which recognition is sought required to verify the presence of the circumstances listed in Article 35(1) of the Regulation in relation to the recognition of a judgment adopting provisional and protective measures. Also on is to examine if the public-policy clause contained in Article 34(1) of the Regulation be interpreted as meaning that recognition of a judgment adopting provisional and protective measures is contrary to the public policy of a Member State if, first, the principal ground for the adoption of the provisional and protective measures is the considerable size of the amount requested without a well-founded and substantiated calculation having been made and, second, if the recognition and enforcement of that judgment may cause the defendants damage for which the applicant, a company which is in liquidation, will not be able to provide compensation in the event that the claim for compensation is dismissed, which might affect the economic interests of the State in which recognition is sought, and thereby jeopardise the security of the State, in view of the fact that the Republic of Latvia holds full number of the shares in Starptautiskā Lidosta Rīga and 52.6% of the shares in Air Baltic.

By its first question, the referring Court asks, essentially, whether Article 1(1) of Regulation 44/2001 must be interpreted as meaning that an action, such as that at issue in the main proceedings, seeking legal redress for damage resulting from alleged infringements of

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European Union competition law is covered by the concept of ‘civil and commercial matters’ within the meaning of that provision and, therefore, falls within the scope of that regulation. First of all, it must be remembered that, according to settled case-law, in order to ensure, as far as possible, that the rights and obligations which derive from Regulation 44/2001 for the Member States and the persons to whom it applies are equal and uniform, ‘civil and commercial matters’ should not be interpreted as a mere reference to the internal law of one or other of the States concerned. That concept must be regarded as an independent concept to be interpreted by referring, first, to the objectives and scheme of that regulation and, second, to the general principles which stem from the corpus of the national legal systems.

Next, insofar as Regulation 44/2001 now replaces the Brussels Convention in relations between Member States, the interpretation given by the Court concerning the provisions of that convention is also valid for those of that regulation insofar as the provisions of those instruments may be regardedas equivalent. The scope of Regulation 44/2001 is, like that of the Brussels Convention, limited to ‘civil and commercial matters’. In order to determine whether a matter falls within the scope of of such Regulation the elements which characterise the nature of the legal relationships between the parties to the dispute or the subject-matter thereof must be examined. It follows that, in principle, actions seeking legal redress for damage are civil and commercial matters and therefore come within the scope of that regulation. Its scope must cover all the main civil and commercial matters apart from certain well-defined matters.

There are however exclusions from the scope of such Regulation and are considered as exceptions which, must be strictly interpreted.

The action brought by flyLAL seeks legal redress for damage relating to an alleged infringement of competition law. Therefore, an action such as that at issue in the main proceedings, the subject-matter of which is legal redress for damage resulting from the infringement of rules of competition law, is civil and commercial in nature. It is true that the Court has held that, although certain actions between a public 362

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authority and a person governed by private law may come within the scope of civil and commercial matters, the position is otherwise where the public authority is acting in the exercise of its public powers.Thus, so far as air navigation charges are concerned, the Court has held that the control and surveillance of air space are activities which in essence fall within the remit of the State and which, in order to be carried out, require the exercise of public powers.

However, the Court had already held that the provision of airport facilities in return for payment of a fee constitutes an economic activity.

Such legal relations therefore do indeed come within the scope of civil and commercial matters. It is irrelevant that Starptautiskā Lidosta Rīga is subject, as regards the determination of the rates of airport charges and reductions in those charges, to generally applicable statutory provisions of the Republic of Latvia. That fact, on the contrary, concerns the legal relations between that Member State and Starptautiskā Lidosta Rīga and does not affect the legal relationships between the latter and the airlines which benefit from its services.

The non-application of the national legal provisions at issue in the main proceedings is not a direct consequence of the action for compensation but is, at the very most, an indirect consequence resulting from a review by way of exception. In addition, thee Latvian State is not a party to the main proceedings and the mere fact that it is a shareholder in those entities does not in itself constitute a situation equivalent to that in which that Member State exercises public powers. This is even more true where those entities, the majority or sole shareholder in which is, admittedly, that State, behave like any economic operator, whether a natural or legal person, operating on a given market. The action is brought, not against conduct or procedures which involve an exercise of public powers by one of the parties to the case, but against acts carried out by individuals. So to answer the first question Article 1(1) of Regulation 44/2001 must be interpreted as meaning that an action such as that in the main proceedings, seeking legal redress for damage resulting from alleged infringements of European Union competition law, comes within the definition of civil 363

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and commercial matters within the meaning of that provision and, therefore, falls within the scope of that regulation.

It is important in this case to examine the second and third question together. So far as Article 22(2) of Regulation 44/2001 is concerned, the Court has already had the opportunity to rule that that provision must be interpreted as meaning that its scope covers only disputes in which a party is challenging the validity of a decision of an organ of a company under the company law applicable or under the provisions governing the functioning of its organs. Thus, as is clear from the answer to the first question, the subject-matter of the substance of the dispute in the main proceedings concerns a claim for compensation in respect of damage resulting from alleged infringements of European Union competition law, and not the validity, nullity or dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs within the meaning of Article 22(2) of Regulation 44/200.

Therefore, the answer to the first part of the second and third questions is that Article 22(2) of Regulation 44/2001 must be interpreted as meaning that an action such as that in the main proceedings, seeking compensation for damage resulting from alleged infringements of European Union competition law, does not constitute proceedings having as their object the validity of the decisions of organs of companies within the meaning of that provision. In the light of the answer to the first part of the second and third questions, there is no need to answer the second part of those questions relating to Article 35(1) of that regulation.

By looking at the fourth question it must be noted, as is stated in some of the recitals of the preamble of Regulation 44/2001, that the rules on recognition and enforcement laid down by that regulation are based on mutual trust in the administration of justice in the European Union.

Such trust requires that judicial decisions delivered in one Member State are not only recognised automatically in another Member State, but also that the procedure for making those decisions enforceable 364

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in that Member State is efficient and rapid. Such a procedure must involve only a purely formal check of the documents required for enforceability in the Member State in which enforcement is sought.

Also, according to Article 34(1) of such Regulation a judgment is not to be recognised if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought.

The grounds of challenge that may be relied upon are expressly set out in Articles 34 and 35 of the Regulation, to which Article 45 thereof refers. That list, the items of which must, in accordance with settled case-law, be interpreted restrictively, is exhaustive in nature. Finally, according to settled case-law, while the Member States in principle remain free, by virtue of the proviso in Article 34(1) to determine, according to their own national conceptions, what the requirements of their public policy are, the limits of that concept are a matter of interpretation of that regulation. Consequently, while it is not for the Court to define the content of the public policy of a Member State, it is nonetheless required to review the limits within which the Courts of a Member State may have recourse to that concept for the purpose of refusing recognition of a judgment emanating from a Court in another Member State.

In that connection, by disallowing any review of a judgment delivered in another Member State as to its substance, Articles 36 and 45(2) of Regulation 44/2001 prohibit the Court of the State in which enforcement is sought from refusing to recognise or enforce that judgment solely on the ground that there is a discrepancy between the legal rule applied by the Court of the State of origin and that which would have been applied by the Court of the State in which enforcement is sought had it been seised of the dispute. Similarly, the Court of the State in which enforcement is sought cannot review the accuracy of the findings of law or fact made by the Court of the State of origin. Recourse to the public-policy clause in Article 34(1) of Regulation 44/2001 can therefore be envisaged only where recognition or enforcement of the judgment given in another Member State would be at variance to an unacceptable degree with the legal 365

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order of the State in which enforcement is sought inasmuch as it would infringe a fundamental principle. In order for the prohibition of any review of the substance of a judgment of another Member State to be observed, the infringement would have to constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or of a right recognised as being fundamental within that legal order.

In the present case, the referring Court is unsure, first, as to the consequences to be drawn from the failure to state reasons for the methods of determining the amount of the sums concerned by the provisional and protective measures granted by the judgment in respect of which recognition and enforcement are sought and, second, as to the consequences linked to the amount of those sums.

In the first place, as far as concerns the failure to state reasons, the Court has held that the observance of the right to a fair trial requires that all judgments be reasoned in order to enable the defendant to understand why judgment has been pronounced against him and to bring an appropriate and effective appeal against such a judgment.

It must be held that the extent of the obligation to give reasons may vary according to the nature of the judgment and must be examined, in the light of the proceedings taken as a whole and all the relevant circumstances, taking account of the procedural guarantees surrounding that judgment, in order to ascertain whether those guarantees ensure that the persons concerned have the possibility to bring an appropriate and effective appeal against that decision.

In the present case, it follows from all of the information before the Court, first, that there is no lack of reasoning, since it is possible to follow the line of reasoning which led to the determination of the amount of the sums at issue. Second, the parties concerned had the opportunity to bring an action against such a decision and they exercised that option. Therefore, the basic principles of a fair trial were respected and, accordingly, there are no grounds to consider that there has been a breach of public policy. In the second place, as regards the consequences attached to the amount of the sums which 366

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are the subject of the provisional and protective measures ordered by the judgment in respect of which recognition and enforcement are sought, it must be stated, that the concept of public policy is intended to prevent a manifest breach of a rule of law regarded as essential in the legal order of the State in which recognition is sought or of a right recognised as fundamental within that legal order.

The concept of ‘public policy’ as stated in Article 34(1) seeks to protect legal interests which are expressed through a rule of law, and not purely economic interests. Second, as the European Commission stresses, the provisional and protective measures at issue in the main proceedings do not consist in the payment of a sum but simply in the monitoring of the assets of the defendants in the main proceedings.

Consequently, it must be held that the mere invocation of serious economic consequences does not constitute an infringement of the public policy of the Member State in which recognition is sought.

It follows from all of the foregoing considerations that Article 34(1) must be interpreted as meaning that neither the detailed rules for determining the amount of the sums which are the subject of the provisional and protective measures granted by a judgment in respect of which recognition and enforcement are requested, in the case where it is possible to follow the line of reasoning which led to the determination of the amount of those sums, and even where legal remedies were available which were used to challenge such methods of calculation, nor the mere invocation of serious economic consequences constitute grounds establishing the infringement of public policy of the Member State in which recognition is sought which would permit the refusal of recognition and enforcement in that Member State of such a judgment given in another Member State.

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Judgement On these grounds, the Court Third Chamber hereby ruled that Article 1(1) (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that an action such as that in the main proceedings, seeking legal redress for damage resulting from alleged infringements of European Union competition law, comes within the notion of ‘civil and commercial matters’ within the meaning of that provision and, therefore, falls within the scope of that regulation.

Article 22(2) of the stated Regulation must be interpreted as meaning that an action such as that in the main proceedings, seeking legal redress for damage resulting from alleged infringements of European Union competition law, does not constitute proceedings having as their object the validity of the decisions of organs of companies within the meaning of that provision.

Article 34(1) must be interpreted as meaning that neither the detailed rules for determining the amount of the sums which are the subject of the provisional and protective measures granted by a judgment in respect of which recognition and enforcement are requested, in the case where it is possible to follow the line of reasoning which led to the determination of the amount of those sums, and even where legal remedies were available which were used to challenge such methods of calculation, nor the mere invocation of serious economic consequences constitute grounds establishing the infringement of public policy of the Member State in which recognition is sought which would permit the refusal of recognition and enforcement in that Member State of such a judgment given in another Member State.

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C-352/13

Cartel Damage Claims (CDC) Hydrogen Peroxide SA vs Evonik Degussa GmbH and Others 21 May, 2015

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Facts In March 2009, CDC29 brought damages claim against six companies fined by the European Commission in 2006 for their involvement in a cartel among suppliers of hydrogen peroxide and perborate used in pulp and paper processing. The only exception was that of the intervening party and former defendant, Evonik Degussa GmbH which has its seat in Essen, Germany, while the others were domiciled in five Member States other than the Federal Republic of Germany.

Article 1 of the Brussels Regulation requires a defendant to be sued in the Courts where it is domiciled. CDC accordingly brought the claim in the German Courts, because Evonik Degussa, one of the defendants, was domiciled there. Relying on Article 6(1)30 of the Regulation, it brought proceedings against the other five defendants in the German Courts, although none of them were domiciled there, on the basis that these claims were closely connected with the claim against the anchor defendant Evonik Degussa and that there was a risk of irreconcilable judgments if the claims were brought in different jurisdictions. In that regard, CDC invokes agreements concerning the transfer of claims for damages entered into with 32 undertakings domiciled in 13 different Member States of the European Union or of the European Economic Area some of which undertakings had previously concluded similar transfer agreements with 39 other undertakings.

The undertakings at issue operate in the industrial pulp and paper processing industry. The applicant submits that, from 1994 to 2006, those undertakings purchased substantial quantities of hydrogen

29

The CDC is a company governed by Belgian law domiciled in Brussels, was established for the purpose of pursuing, both judicially and extra-judicially, claims for damages of undertakings affected by a cartel.

30

‘A person domiciled in a Member State may also be sued: where he is one of a number of defendants, in the Courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine those applications together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’

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peroxide in various EU and EEA Member States, some undertakings having supplied hydrogen peroxide to plants in several EU Member States. According to the defendants in the main proceedings, some of the contracts of sale included agreements on arbitration and jurisdiction. In September 2009, CDC withdrew its action against Evonik Degussa, following a settlement.

The other defendants argued that CDC and Evonik Degussa had in fact settled before the German proceedings were brought, but had then delayed the formal conclusion and announcement of the settlement so as to ensure that the German Court would have jurisdiction over the other non-German defendants too. They therefore argued that CDC was not entitled to rely on Article 6(1).

They also argued that jurisdiction clauses in various supply contracts overrode CDC’s choice of the German Courts. In that context, the referring Court considers that it could have international jurisdiction only by virtue of Articles 5(3)31 and 6(1) of Regulation 44/2001. If the conditions for such jurisdiction were satisfied, CDC would be free to sue the defendants in the main proceedings before one of the Courts deemed to have jurisdiction in accordance with those provisions, provided that the jurisdiction of those Courts is not validly excluded in accordance with Article 23 of Regulation 44/2001 or by an arbitration agreement.

Three important questions were asked by the Court so to be tackled.

First of all, the aforementioned Article 6(1) would be interpreted as meaning that, in the case of an action in which a defendant domiciled in the same State as the Court and other defendants domiciled in other Member States are together the subject of an application for disclosure and damages on account of a single and continuous infringement Article 101 TFEU and Article 5332 of the EEA Agreement

31

‘A person domiciled in a Member State may, in another Member State, be sued: on a counter-claim arising from the same contract or facts on which the original claim was based, in the Court in which the original claim is pending;’

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‘1. The following shall be prohibited as incompatible with the functioning of this Agreement: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Contracting Parties and which

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which has been established by the Commission and committed in several Member States and in which the defendants have participated in different places and at different times if it is expedient to hear and determine those applications together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Also it was asked if it would be significant in this regard if the action against the defendant domiciled in the same State as the Court is withdrawn after having been served on all the defendants, before the expiry of the periods prescribed by the Court for lodging a defence and before the start of the first hearing. Also if Article 5(3) of Regulation 44/2001 is to be interpreted as meaning that, in the case of an action for disclosure and damages brought against defendants domiciled in a number of Member States on account of a single and continuous infringement of Article 81 EC/Article 101 TFEU and Article 53 of the EEA Agreement which has been established by the European Commission and committed in several Member States and in which the defendants have participated in different places and at different times, the harmful event occurred in relation to each defendant and in relation to all heads of damage claimed or the overall loss in those Member States in which cartel agreements were concluded and implemented.

In the end it was questioned if in the case of actions for damages for infringement of the prohibition of agreements, decisions and have as their object or effect the prevention, restriction or distortion of competition within the territory covered by this Agreement, and in particular those which: a) directly or indirectly fix purchase or selling prices or any trading conditions; b) limit or control production, markets, technical development, or investment; c) share markets or sources of supply; d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: any agreement or category of agreements between undertakings; any decision or category of decisions by associations of undertakings; any concerted practice or category of concerted practices; which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.’

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concerted practices contained in Article 101 TFEU33 and Article 53 of the EEA Agreement, does the requirement of effective enforcement of the prohibition of agreements, decisions and concerted practices laid down in European Union law allow account to be taken of arbitration and jurisdiction clauses contained in contracts for the supply of goods, where this has the effect of excluding the jurisdiction of a Court with international jurisdiction under Article 5(3) or Article 6(1) in relation to all the defendants or all or some of the claims brought.

By its first question, the referring Court asks, in essence, whether Article 6(1) of Regulation 44/2001 must be interpreted as meaning that it may, under that provision, be expedient to hear and determine applications together to avoid the risk of irreconcilable judgments resulting from separate proceedings in the case of an action for damages, and for disclosure in that regard, brought jointly against undertakings which have participated in different places and at different times in a single and continuous infringement, as found by a decision of the Commission, of the prohibition of anti-competitive agreements, decisions and concerted practices provided for in EU law, even where the applicant has withdrawn its action against

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1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: any agreement or category of agreements between undertakings, any decision or category of decisions by associations of undertakings, any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

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the sole co-defendant domiciled in the same State as the Court seized. It should be borne in mind from the outset that Article 6(1) of Regulation 44/2001 must be interpreted independently, by reference to its scheme and purpose.

The rule of jurisdiction laid down in Article 6(1) provides that a person may, where he is one of a number of defendants, be sued in the Courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. That special rule, because it derogates from the principle stated in Article 234 of Regulation 44/2001 that jurisdiction is based on the defendant’s domicile, must be strictly interpreted and cannot be given an interpretation going beyond the cases expressly envisaged by that regulation. In accordance with recitals 1235 and 1536 in the preamble to Regulation 44/2001, that rule of jurisdiction meets the wish to facilitate the sound administration of justice, to minimise the possibility of concurrent proceedings and thus to avoid irreconcilable outcomes if cases are decided separately.

Therefore, in order for Article 6(1) of Regulation 44/2001 to apply, it is necessary to ascertain whether, between various claims brought by the same applicant against various defendants, there is a connection of such a kind that it is expedient to determine those actions together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings. In that regard, in order for judgments to be

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‘Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the Courts of that Member State. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.’

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‘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.’

36

‘In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending.

For the purposes of this Regulation that time should be defined autonomously.’

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regarded as irreconcilable, it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the context of the same situation of fact and law. The requirement that the same situation of fact and law must arise is satisfied in circumstances such as those of the case in the main proceedings.

Despite the fact that the defendants in the main proceedings participated in the implementation of the cartel at issue by concluding and performing contracts under it, in different places and at different times, upon which the claims in the main proceedings are based, the cartel agreement amounted to a single and continuous infringement of Article 101 TFEU and Article 53 of the EEA Agreement. That decision does not, however, determine the requirements for holding the defendants liable in tort, jointly and severally as the case may be, since this is to be determined by the national law of each Member State. As regards, finally, the risk of irreconcilable judgments resulting from separate proceedings, since the requirements for holding those participating in an unlawful cartel liable in tort may differ between the various national laws, there would be a risk of irreconcilable judgments if actions were brought before the Courts of various Member States by a party allegedly adversely affected by a cartel.

Nevertheless, the Court points out that, even in the case where various laws are, by virtue of the rules of private international law of the Court seized, applicable to the actions for damages brought

by CDC against the defendants in the main proceedings, such a difference in legal basis does not, in itself, preclude the application of Article 6(1) of Regulation 44/2001, provided that it was foreseeable by the defendants that they might be sued in the Member State where at least one of them is domiciled.

That latter condition is fulfilled in the case of a binding decision of the Commission finding there to have been a single infringement of EU law and, on the basis of that finding, holding each participant liable for the loss resulting from the tortious actions of those participating in the infringement. In those circumstances, the participants could have 375

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expected to be sued in the Courts of a Member State in which one of them is domiciled.

It must therefore be considered that determining separately actions for damages against several undertakings domiciled in different Member States which, contrary to EU competition law, participated in a single and continuous cartel may lead to irreconcilable judgments within the meaning of Article 6(1) of Regulation 44/2001. That said, it remains to be considered to what extent the applicant’s withdrawal of its action against the sole co-defendant domiciled in the same Member State as the Court seised is capable of rendering the rule of jurisdiction provided for in Article 6(1) of Regulation 44/2001 inapplicable.

According to settled case-law, that rule cannot be interpreted as allowing an applicant to make a claim against a number of defendants for the sole purpose of removing one of them from the jurisdiction of the Courts of the Member State in which that defendant is domiciled. The Court has nevertheless stated that, where claims brought against various defendants are connected within the meaning of Article 6(1) of Regulation 44/2001 when the proceedings are instituted, the rule of jurisdiction laid down in that provision is applicable without there being any further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the Courts of the Member State where one of the defendants is domiciled.

It follows that where, when proceedings are instituted, claims are connected within the meaning of Article 6(1) of Regulation 44/2001, the Court seised of the case can find that the rule of jurisdiction laid down in that provision has potentially been circumvented only where there is firm evidence to support the conclusion that the applicant artificially fulfilled, or prolonged the fulfilment of, that provision’s applicability. In the case in the main proceedings, some of the parties allege that, before the action in the proceedings was brought, an out-of-Court settlement was reached between the applicant in the main proceedings and Evonik Degussa, whose seat is in Germany, 376

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and that the parties purposefully delayed the formal conclusion of that settlement until proceedings had been instituted, for the sole purpose of securing the jurisdiction of the Court seised of the case as against the other defendants in the main proceedings. In order to be able to exclude the applicability of the rule of jurisdiction laid down in Article 6(1) of Regulation 44/2001, an allegation of that nature must nevertheless be supported by firm evidence that, at the time that proceedings were instituted, the parties concerned had colluded to artificially fulfil, or prolong the fulfilment of, that provision’s applicability.

Although it is for the Court seised of the case to assess such evidence, it must nevertheless be made clear that simply holding negotiations with a view to concluding an out-of-Court settlement does not in itself prove such collusion. However, it would be otherwise if it transpired that such a settlement had, in fact, been concluded, but that it had been concealed in order to create the impression that the conditions of application of Article 6(1) had been fulfilled.

In the light of the above, the answer to the first question is that Article 6(1) of Regulation 44/2001 must be interpreted as meaning that the rule on centralisation of jurisdiction in the case of several defendants, as established in that provision, can apply in the case of an action for damages, and for disclosure in that regard, brought jointly against undertakings which have participated in different places and at different times in a single and continuous infringement, which has been established by a decision of the Commission, of the prohibition of anti-competitive agreements, decisions and concerted practices provided for under EU law, even where the applicant has withdrawn its action against the sole co-defendant domiciled in the same State as the Court seized, unless it is found that, at the time the proceedings were instituted, the applicant and that defendant had colluded to artificially fulfil, or prolong the fulfilment of, that provision’s applicability.

By its second question, the referring Court asks whether Article 5(3) of Regulation 44/2001 is to be interpreted as meaning that, in the 377

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case of an action for damages brought against defendants domiciled in various Member States on grounds of a single and continuous infringement, as found by the Commission, of Article 101 TFEU and Article 53 of the EEA Agreement in which the defendants participated in several Member States, at different times and in different places, the harmful event occurred in relation to each defendant and in relation to all damages claimed in those Member States in which cartel agreements were concluded and implemented.

Given that the circumstances of the present case are characterised by the consolidation of a number of potential claims for damages brought by the applicant in the main proceedings which had been assigned to the applicant by several undertakings allegedly victims of the Hydrogen Peroxide cartel, it should be pointed out from the outset that the transfer of claims by the initial creditor cannot, by itself, have an impact on the determination of the Court having jurisdiction under Article 5(3).

It follows that the location of the harmful event must be assessed for each claim for damages independently of any subsequent assignment or consolidation. In that regard, the Court notes that Article 5(3) of Regulation 44/2001 must be interpreted independently and strictly. The fact that it refers to the place where the harmful event occurred or may occur it is intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the applicant, in the Courts for either of those places. The rule in this article is based on the existence of a particularly close linking factor between the dispute and the Courts of the place where the harmful event occurred or may occur, which justifies the attribution of jurisdiction to those Courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings.

It needs to be examined, in the circumstances of the case in the main proceedings, where the linking factors capable of establishing the jurisdiction of the Court in matters relating to tort and delict and 378

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quasi-delict lie. With regard to the place of the causal event, it must be pointed out at the outset that, in circumstances such as those in the present case, the buyers were supplied by various participants in the cartel within the scope of their contractual relations. However, the event giving rise to the alleged loss did not consist in a potential breach of contractual obligations, but in a restriction of the buyer’s freedom of contract as a result of that cartel in the sense that that restriction prevented the buyer from being supplied at a price determined by the rules of supply and demand. In those circumstances, the place of a causal event of loss consisting in additional costs that a buyer had to pay because a cartel has distorted market prices can be identified, in the abstract, as the place of the conclusion of the cartel.

Once concluded, the participants in a cartel ensure through action or forbearance that there is no competition and that prices are distorted.

Where the place of a cartel’s conclusion is known, it would be consistent with the aims for the Courts of that place to have jurisdiction.

That conclusion is, however, not relevant in circumstances such as those in the main proceedings where, according to the findings of the Commission as set out in the order for reference, it is not possible to identify a single place where the cartel at issue was concluded since the cartel consisted of a number of collusive agreements concluded during various meetings and discussions which took place in various places in the European Union. The above considerations are without prejudice to a situation in which, among several agreements that, as a whole, amounted to the unlawful cartel at issue, there was one in particular which was the sole causal event giving rise to the loss allegedly inflicted on a buyer. In that case, the Courts in whose jurisdiction that particular agreement was concluded would have jurisdiction to adjudicate on the loss thereby inflicted upon that buyer.

In the latter case, as well as in that in which the referring Court were to find that the cartel at issue in the main proceedings was nevertheless definitively concluded in its jurisdiction, the issue still needs to be addressed as to whether several participants in that cartel can be sued before the same Court.

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The Court has indeed held on another set of facts that Article 5(3) does not allow the Courts of the place where a harmful event occurred which is imputed to one of the presumed perpetrators of damage, who is not a party to the dispute, to take jurisdiction in an action against another presumed perpetrator of that damage who has not acted within the jurisdiction of that Court. However, in circumstances such as those in the main proceedings, there is no reason for preventing several perpetrators from being sued together before the same Court.

It follows that jurisdiction by virtue of Article 5(3) to adjudicate, on the basis of the causal event and with regard to all of the perpetrators of an unlawful cartel which allegedly resulted in loss, depends upon the identification, in the jurisdiction of the Court seised of the matter, of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer.

The identification of the place where the damage occurred must make it possible to establish the jurisdiction of the Courts objectively best placed to determine whether the constitutive elements that found the liability of the person sued are in fact fulfilled. The place where the damage occurred is the place where the alleged damage actually manifests itself. As for loss consisting in additional costs incurred because of artificially high prices, such as the price of the hydrogen peroxide supplied by the cartel at issue in the main proceedings, that place is identifiable only for each alleged victim taken individually and is located, in general, at that victim’s registered office. That place fully guarantees the efficacious conduct of potential proceedings, given that the assessment of a claim for damages for loss allegedly inflicted upon a specific undertaking as a result of an unlawful cartel, as already found by the Commission in a binding decision, essentially depends on factors specifically relating to the situation of that undertaking. In those circumstances, the Courts in whose jurisdiction that undertaking has its registered office are manifestly best suited to adjudicate such a claim.

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Those Courts, as identified, have jurisdiction to hear an action brought either against any one of the participants in the cartel or against several of them for the whole of the loss inflicted upon that undertaking as a result of additional costs that it had to pay to be supplied with products covered by the cartel concerned. However, given that the jurisdiction of the Court seised of the matter by virtue of the place where the loss occurred is limited to the loss suffered by the undertaking whose registered office is located in its jurisdiction, an applicant such as CDC, who has consolidated several undertakings’ potential claims for damages, would therefore, in accordance with the case-law set out in paragraph 35 above, need to bring separate actions for the loss suffered by each of those undertakings before the Courts with jurisdiction for their respective registered offices.

In the light of the above, the answer to the second question is that Article 5(3) of must be interpreted as meaning that, in the case of an action for damages brought against defendants domiciled in various Member States as a result of a single and continuous infringement of Article 101 TFEU and Article 53 of the EEA Agreement, which has been established by the Commission, in which the defendants participated in several Member States, at different times and in different places, the harmful event occurred in relation to each alleged victim on an individual basis and each of the victims can, by virtue of Article 5(3), choose to bring an action before the Courts of the place in which the cartel was definitively concluded or, as the case may be, the place in which one agreement in particular was concluded which is identifiable as the sole causal event giving rise to the loss allegedly suffered, or before the Courts of the place where its own registered office is located.

By its third question, the referring Court asks, in essence, whether Article 23(1) of Regulation 44/2001 and the requirement of effective enforcement of the prohibition of cartel agreements in EU law must, in the case of actions for damages for an infringement of Article 101 TFEU and Article 53 of the EEA Agreement, be interpreted as allowing account to be taken of jurisdiction clauses contained in contracts

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for the supply of goods where this has the effect of excluding the jurisdiction of a Court with international jurisdiction under Article 5(3) and/or Article 6(1) of that regulation. Before assessing that question, it must be made clear that, with regard to certain terms derogating from otherwise applicable rules allegedly contained in the contracts at issue but which do not fall within the scope of application of Regulation 44/2001, the Court does not have sufficient information at its disposal in order to provide a useful answer to the referring Court.

With regard to the terms at issue in the third question which fall within the scope of that regulation, it is to be observed that, in the context of the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, signed in Brussels37, the Court has stated that, by concluding an agreement on the choice of Court under Article 17 of the Brussels Convention, the parties may derogate, not only from the general jurisdiction under Article 2 thereof, but also from the special jurisdiction laid down in Articles 5 and 6 of that convention. Since the interpretation given by the Court in respect of the provisions of that convention is also valid for those of Regulation 44/2001 whenever the provisions of those instruments may be regarded as equivalent, it must be found that such is the case as regards the first paragraph of Article 17 of the Brussels Convention and Article 23(1) of Regulation 44/2001, which are drafted in almost identical terms. It must therefore be concluded that the Court seised of a matter can, in principle, be bound by a jurisdiction clause derogating from the rules of jurisdiction laid down in Articles 5 and 6 of Regulation 44/2001 which was concluded by the parties under Article 23(1) of that regulation. That conclusion cannot be called into question by the requirement of effective enforcement of the prohibition of cartel agreements. First, the Court has already held that the substantive rules applicable to the substance of a case must not affect the validity of a jurisdiction clause agreed in accordance with Article 17 of the Brussels Convention.

In accordance with the case-law referred to in paragraph 60

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above, that interpretation is also relevant to Article 23 of Regulation 44/2001. Second, it must be considered that the Court seised of the matter cannot, without undermining the aim of Regulation 44/2001, refuse to take into account a jurisdiction clause which has satisfied the requirements of Article 23 of that regulation solely on the ground that it considers that the Court with jurisdiction under that clause would not give full effect to the requirement of effective enforcement of the prohibition of cartel agreements by not allowing a victim of the cartel to obtain full compensation for the loss it suffered. On the contrary, it must be considered that the system of legal remedies in each Member State, together with the preliminary ruling procedure provided for in Article 267 TFEU, affords a sufficient guarantee to individuals in that respect. In a case such as that in the main proceedings, the Court before which the action is brought must, nevertheless, ensure that the clauses at issue actually bind the applicant in the main proceedings before examining the requirements of form laid down in Article 23 of Regulation 44/2001.

As the Court had already made clear, a jurisdiction clause incorporated in a contract may, in principle, produce effects only in the relations between the parties who have given their agreement to the conclusion of that contract. In order for a third party to rely on such a clause it is, in principle, necessary that the third party has given his consent to that effect. Only where a party not privy to the original contract had succeeded to an original contracting party’s rights and obligations in accordance with national substantive law as established by the application of the rules of private international law of the Court seised of the matter could that third party nevertheless be bound by a jurisdiction clause to which it had not agreed. If the applicant to the main proceedings did prove to be bound by the clauses at issue, it would be necessary to ascertain whether they did, in fact, derogate from the referring Court’s jurisdiction as far as the case in the main proceedings is concerned.

In that regard, it is for the national Court to interpret the clause conferring jurisdiction invoked before it in order to determine which 383

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disputes fall within its scope. A jurisdiction clause can concern only disputes which have arisen or which may arise in connection with a particular legal relationship, which limits the scope of an agreement conferring jurisdiction solely to disputes which arise from the legal relationship in connection with which the agreement was entered into. The purpose of that requirement is to avoid a party being taken by surprise by the assignment of jurisdiction to a given forum as regards all disputes which may arise out of its relationship with the other party to the contract and stem from a relationship other than that in connection with which the agreement conferring jurisdiction was. In the light of that purpose, the referring Court must, in particular, regard a clause which abstractly refers to all disputes arising from contractual relationships as not extending to a dispute relating to the tortious liability that one party allegedly incurred as a result of its participation in an unlawful cartel.

Given that the undertaking which suffered the loss could not reasonably foresee such litigation at the time that it agreed to the jurisdiction clause and that that undertaking had no knowledge of the unlawful cartel at that time, such litigation cannot be regarded as stemming from a contractual relationship. Such a clause would not therefore have validly derogated from the referring Court’s jurisdiction.

By contrast, where a clause refers to disputes in connection with liability incurred as a result of an infringement of competition law and designates the Courts of a Member State other than the Member State of the referring Court, the latter ought to decline its own jurisdiction, even where that clause entails disregarding the special rules of jurisdiction laid down in Articles 5 or 6 of Regulation 44/2001.

Consequently, the answer to the third question is that Article 23(1) of Regulation 44/2001 must be interpreted as allowing, in the case of actions for damages for an infringement of Article 101 TFEU and Article 53 of the EEA Agreement, account to be taken of jurisdiction clauses contained in contracts for the supply of goods, even if the effect thereof is a derogation from the rules on international jurisdiction provided for in Article 5(3) or Article 6(1) of that regulation, provided 384

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that those clauses refer to disputes concerning liability incurred as a result of an infringement of competition law.

Judgement The Court Fourth Chamber ruled that Article 6(1) of Council Regulation 44/2001 must be interpreted as meaning that the rule on centralisation of jurisdiction in the case of several defendants, as established in that provision, can apply in the case of an action for damages, and for disclosure in that regard, brought jointly against undertakings which have participated in different places and at different times in a single and continuous infringement, which has been established by a decision of the European Commission, of the prohibition of anti-competitive agreements, decisions and concerted practices provided for under EU law, even where the applicant has withdrawn its action against the sole co-defendant domiciled in the same State as the Court seized, unless it is found that, at the time the proceedings were instituted, the applicant and that defendant had colluded to artificially fulfil, or prolong the fulfilment of, that provision’s applicability.

Article 5(3) of Regulation 44/2001 must be interpreted as meaning that, in the case of an action for damages brought against defendants domiciled in various Member States as a result of a single and continuous infringement of Article 101 TFEU and Article 53 of the Agreement on the European Economic Area, which has been established by the European Commission, in which the defendants participated in several Member States, at different times and in different places, the harmful event occurred in relation to each alleged victim on an individual basis and each of the victims can, by virtue of Article 5(3), choose to bring an action before the Courts of the place in which the cartel was definitively concluded or, as the case may be, the place in which one agreement in particular was concluded which is identifiable as the sole causal event giving rise to the loss allegedly 385

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suffered, or before the Courts of the place where its own registered office is located.

Article 23(1) of Regulation 44/2001 must be interpreted as allowing, in the case of actions for damages for an infringement of Article 101 TFEU and Article 53 of the Agreement on the European Economic Area, account to be taken of jurisdiction clauses contained in contracts for the supply of goods, even if the effect thereof is a derogation from the rules on international jurisdiction provided for in Article 5(3) or Article 6(1) of that regulation, provided that those clauses refer to disputes concerning liability incurred as a result of an infringement of competition law.

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Hermann Lutz vs Elke Bäuerle 16 April, 2015

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Facts This request for a preliminary ruling concerns the interpretation of Articles 4(2)(m) and 13 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings. The request has been made in proceedings between Mr Lutz, residing in Austria, and Ms Bäuerle, acting as liquidator in insolvency proceedings opened in Germany in respect of the assets of ECZ Autohandel GmbH who is the debtor company’, concerning an action to set a transaction aside. ECZ GmbH was a German company whose registered office was in Germany. Its object was the sale of cars.

In order to trade on the Austrian market, it used a subsidiary established in Austria who is the debtor company in this present case. Mr Lutz purchased a car from that company but, owing to the failure to deliver that car, he brought an action before the District Court, Bregenz where the subsidiary establishment was seeking reimbursement of the price which he had paid to that company. On 17 March 2008, that Court issued an enforceable payment order against that company for € 9,566 plus interest.

On 13 April 2008, the debtor company filed an application before the District Court, Ravensburg, Germany for insolvency proceedings to be opened. On 4 August 2008, the Amtsgericht Ravensberg opened insolvency proceedings against the debtor company. On 17 March 2009, the bank holding the debtor company’s bank accounts that had been attached paid Mr Lutz a sum. Prior to that date, the then liquidator had, by a letter of 10 March 2009, given notice to that bank that he reserved the right to challenge, in connection with the insolvency, any payment made in favour of the debtor company’s creditors. By a letter of 3 June 2009, the then liquidator informed Mr Lutz that he was challenging the enforcement which had been authorised on 20 May 2008 by the Bezirksgericht Bregenz, and also the payment made on 17 March 2009.

On 23 October 2009, Ms Bäuerle, acting as liquidator of the debtor 388

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company, brought an action against Mr Lutz seeking to have the transaction set aside and recovery of the total sum paid to him on 17 March 2009. The Ravensburg Regional Court upheld the action brought by Ms Bäuerle. Mr Lutz lodged an appeal against the decision of the Regional Court but his appeal was unsuccessful. He then appealed on a point of law to the Federal Court of Justice, continuing to seek the dismissal of that action.

The referring Court considers that the outcome of the appeal depends on the interpretation of Article 1338 of Regulation 1346/2000, on the assumption that that provision is applicable to the facts in the main proceedings. Article 4(2)(m)39 of that regulation provides that the law of the Member State within the territory of which the insolvency proceedings are opened determines the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors. However, under Article 13 of that regulation, that provision does not apply where the person who benefited from an act detrimental to all the creditors provides proof that the said act is subject to the law of a Member State other than that of the State of the opening of proceedings and that that law does not allow any means of challenging that act in the relevant case. In that regard, the referring Court observes that, in the dispute in the main proceedings, according to the applicable lex fori concursus, the right to attach the credit balance on the debtor company’s bank accounts became legally invalid on the date when the insolvency proceedings against that company were opened, since that attachment was authorised and effected after the application to open those proceedings. The

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Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that: the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and, that law does not allow any means of challenging that act be governed solely by the law of the Member State within the in the relevant case.

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Save as otherwise provided in this Regulation, the law applicable to insolvency

proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened, hereafter referred to as the ‘State of the opening of proceedings’

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referring Court states that the subsequent payment of the attached sum from the balance on the bank accounts is therefore also invalid.

The referring Court adds that, according to Mr Lutz, who relies on Article 13 of Regulation 1346/2000, the payment at issue in the main proceedings can no longer be challenged under the law applicable to that payment, namely Austrian law as there is a limitation of a period of one year, from the date when the insolvency proceedings were opened, for commencing an action to set aside.

The referring Court notes that that period was not respected in the case in the main proceedings. The referring Court observes that, by contrast, under German law, the limitation period for bringing an action to set a transaction aside is three years and that, in the case in the main proceedings, that period was respected.

Various questions were asked in this case. First of all, if it was possible for Article 13 of Regulation 1346/2000 be applicable if the payment challenged by the insolvency administrator of a sum attached before the opening of the insolvency proceedings was made only after the opening of the proceedings. In addition, if the defence to such question would also apply to limitation periods or other timebars relating to actions to set aside transactions under the law which governs the dispute concerning the contested legal transaction.

Furthermore, if there are any relevant procedural requirements for asserting a claim also to be determined according to the ‘lex causae’ or by the ‘lex fori concursus.’

Another question related to the applicability of Article 13 of Regulation 1346/2000 to a payment made to a creditor after the opening of insolvency proceedings in respect of a debtor, on the basis of a right to attach established before the opening of those proceedings. Those questions are however based on two premises which should be examined first. The referring Court observes that, whilst Article 5(1)40 of Regulation 1346/2000 provides that the opening

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1. The opening of insolvency proceedings shall not affect the rights in rem of creditors or third parties in respect of an asset, after delivery of the asset, shall not consti-

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of insolvency proceedings is not to affect the rights in rem of creditors in respect of assets belonging to a debtor while Article 5(4) of that regulation shows that that no actions should preclude voidness, voidability or unenforceability’. The referring Court therefore considers implicitly, first, that the right to attach bank accounts by virtue of enforcement constitutes a ‘right in rem’ capable of being protected under Article 5(1) of Regulation 1346/2000.

Secondly, that Court considers that the protection thus granted may however be overridden, pursuant to Article 5(4) in the situations and in accordance with the procedures laid down by the ‘lex fori concursus.’

Therefore, that Court states that, since the right to attach the credit balance on the bank accounts at issue in the main proceedings arose only after the filing, of the application to open insolvency proceedings against the debtor company, that right became legally invalid, under Austrian Law from the opening of those proceedings, as did the payment to Mr Lutz of the attached sum from the balance on that company’s bank accounts, which took place on 17 March 2009.

With regard to the categorisation of a right to attach the credit balance on bank accounts as a ‘right in rem’, it should be noted that Article 5(2) 0 mentions, among the ‘rights in rem’ referred to in Article 5(1) of that regulation, the exclusive right to have a claim met. tute tangible or intangible, moveable or immoveable assets—both specific assets and collections of indefinite assets as a whole prevent the purchaser from acquiring title where at the time of which change from time to time — belonging to the debtor which are situated within the territory of a Member State at the time of the opening of proceedings.

2. ‘The rights referred to in paragraph 1 shall in particular mean: (a) the right to dispose of assets or have them disposed of and to obtain satisfaction from the proceeds of or income from those assets, in particular by virtue of a lien or a mortgage;(b) the exclusive right to have a claim met, in particular a right guaranteed by a lien in respect of the claim or by assignment of the claim by way of a guarantee; (c) the right to demand the assets from, and/or to require restitution by, anyone having possession or use of them contrary to the wishes of the party so entitled; (d) a right in rem to the beneficial use of assets.’

3.

‘The right, recorded in a public register and enforceable against third parties, under which a right in rem within the meaning of paragraph 1 may be obtained, shall be considered a right in rem.’

4. ‘Paragraph 1 shall not preclude actions for voidness, voidability or unenforceability as referred to in Article 4(2)(m).’

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Consequently, the right resulting from the attachment of the bank accounts at issue in the main proceedings was in fact capable of constituting a right in rem within the meaning of Article 5(1), provided that under Austrian law that right was exclusive in relation to the other creditors of the debtor company, which is a matter for the referring Court to ascertain. In addition, so far as concerns the question whether the right resulting from the attachment of the bank accounts at issue in the main proceedings, on the assumption that it constitutes a ‘right in rem’ within the meaning of Article 5(1) of automatically became legally invalid as a result of the opening of insolvency proceedings against the debtor company. It was observed in Article 5(4) of Regulation 1346/2000, to ‘actions’ for voidness, voidability or unenforceability does not indicate that the scope of that provision is limited solely to Court actions.

That provision should be read in conjunction with Article 4(2) (m) of that regulation, which refers generally to the rules relating to voidness, voidability or unenforceability and not solely to the actions for voidness, voidability or unenforceability. Consequently, in order to determine whether the voidness, voidability or unenforceability of an act may result from legal action, from another legal measure or even from the effect of law, reference should be made to the competent ‘lex fori concursus’ for determining, in accordance with Article 4(2)(m) the rules relating to voidness, voidability or unenforceability. It should be added that, whereas Article 4(2)(m) of Regulation 1346/2000 provides that the ‘lex fori concursus’ determines the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors, Article 13 of that regulation, to which Mr Lutz refers, allows an exception to that rule, since it ruled out the application of Article 4(2)(m) of that regulation and applies the law governing the act challenged by the liquidator, when certain conditions are satisfied.

By its first question, the referring Court asks, in essence, whether Article 13 of Regulation 1346/2000 must be interpreted as applying to a situation in which a payment, challenged by an insolvency administrator, of a sum of money attached before the opening of the 392

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insolvency proceedings was made only after the opening of those proceedings. First of all, the wording of Article 13 does not contain any restriction limiting its scope according to the date on which the detrimental act concerned takes place. However, Article 13 does provide for an exception to the general rule, in Article 4(1) of Regulation 1346/2000, that the law applicable to insolvency proceedings and their effects is to be the ‘lex fori concursus’. That exception, which, as stated in recital 2441 of that regulation, aims to protect legitimate expectations and the certainty of transactions in Member States other than that in which proceedings are opened, must be interpreted strictly, and its scope cannot go beyond what is necessary to achieve that objective.

To interpret Article 13 of Regulation 1346/2000 as also applying to acts which took place after the opening of insolvency proceedings would go beyond what is necessary to protect legitimate expectations and the certainty of transactions in Member States other than that in which proceedings are opened. As from the opening of insolvency proceedings, the creditors of the debtor concerned are able to predict the effects of the application of the ‘lex fori concursus’ on the legal relations which they maintain with that debtor.

It must therefore be held that Article 13 of Regulation 1346/2000 is not, in principle, applicable to acts which take place after the opening of insolvency proceedings. It should be noted that the transaction challenged by the action at issue in the main proceedings where in the present case, the payment made on 17 March 2009 in favour of Mr Lutz could have taken place on the basis of a right in rem, namely a right to attach the credit balance on the debtor company’s bank accounts. Since that right to attach was established before the opening of the insolvency proceedings against the debtor company,

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‹Automatic recognition of insolvency proceedings to which the law of the opening State normally applies may interfere with the rules under which transactions are carried out in other Member States. To protect legitimate expectations and the certainty of transactions in Member States other than that in which proceedings are opened, provisions should be made for a number of exceptions to the general rule.’

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that act could benefit from special protection.

As stated in recital 25 of Regulation 1346/2000, the legislature intended to provide for a special reference diverging from the ‘lex fori concursus’ in the case of rights in rem, since these rights are of considerable importance for the granting of credit. According to the same recital, the proprietor of a right in rem accrued before the opening of the insolvency proceedings should therefore be able to continue to assert, after that opening, his right to segregation or separate settlement of the collateral security. In order to achieve that objective, Article 5(1) of Regulation 1346/2000 states that the opening of insolvency proceedings shall not affect the rights in rem falling within the scope of that provision. Obviously, that rule seeks, to enable the creditor to assert, effectively and even after the opening of insolvency proceedings, a right in rem established before the opening of those proceedings. However, in order to enable a creditor to assert his right in rem effectively, that creditor must be able to exercise that right after the opening of the insolvency proceedings, in principle under the ‘lex causae’. The special feature of Article 5 of Regulation 1346/2000 is thus that it seeks to protect not only acts completed before the opening of the insolvability proceedings but also, and above all, acts taking place after the opening of those proceedings. It should be added in that regard that, although Article 20(1) of that regulation states that a creditor who, after the opening of the insolvency proceedings, has obtained total or partial satisfaction of his claim on the assets belonging to the debtor situated within the territory of a Member State other than the State of the opening of proceedings is to return what he has obtained to the liquidator, that same provision states that the creditor’s obligation to return is ‘subject’, inter alia, to Article 5 of that regulation.

Therefore, Article 20(1) of that regulation is not relevant in the case in the main proceedings. Consequently, since Article 5 of Regulation 1346/2000 covers, inter alia, acts carried out after the opening of 394

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insolvency proceedings found in present judgment, according to which Article 1342 of that regulation does not, in principle, apply to acts which took place after the opening of those insolvency proceedings, cannot be applied to the situation in which a creditor exercises a right in rem falling within Article 5(1) of that regulation.

Accordingly, although Article 5(4) of Regulation 1346/2000, read in conjunction with Article 4(2)(m) of that regulation, permits the bringing of an action for voidness, voidability or unenforceability of an act which has as its object the exercise of a right in rem after the opening of insolvency proceedings, those provisions must be interpreted, in order to ensure the effectiveness of Article 5(1) of that regulation, as not precluding the creditor from relying on Article 13 of that regulation in order to claim that the act concerned is subject to the law of a Member State other than that of the State of the opening of proceedings and that that law does not allow any means of challenging that act in the relevant case. In those circumstances, the answer to the first question is that Article 13 of Regulation 1346/2000 must be interpreted as applying to a situation in which a payment, challenged by an insolvency administrator, of a sum of money attached before the opening of the insolvency proceedings was made only after the opening of those proceedings.

By its second question, the referring Court asks, in essence, whether Article 13 of Regulation 1346/2000 must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the ‘lex causae.’ Article 13 draws no distinction between limitation periods and other time-bars relating to actions to set aside transactions. Secondly, whilst Article 12(1)(d) of the Rome I Regulation states that prescription and limitation of actions are governed by the law applicable to a contract, it must be held that those provisions do

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‘In relation to detrimental acts Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that: the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and that law does not allow any means of challenging that act in the relevant case.’

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not apply to actions to set transactions aside falling within Articles 4 and 13 of Regulation 1346/2000. Those articles constitute a lex specialis’ in relation to the Rome I Regulation and must be interpreted in the light of the objectives pursued by Regulation 1346/2000.

So Article 13 of draws no distinction between substantive and procedural provisions and does not contain, in particular, any criterion for identifying periods of a procedural nature, the classification of a period as procedural or substantive should necessarily be made under the ‘lex causae’. However, if Article 13 were to be interpreted as meaning that periods classified by the ‘lex causae’ as procedural periods are excluded from the scope of that article, that interpretation would lead to arbitrary discrimination according to the legal-theory models adopted by the Member States. I n addition, and irrespective of whether it is for the ‘lex fori concursus’ or the ‘lex causae’ to ascertain whether a period is of a procedural or substantive nature, that interpretation would clearly prevent a uniform application of Article 13. In those circumstances, Article 13 of Regulation must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the ‘lex causae.’

By its third question, the referring Court asks, in essence, whether the relevant procedural requirements for the exercise of an action to set a transaction aside are to be determined according to the ‘lex causae’ or the ‘lex fori concursus’. In that regard, it must be noted, first of all, that nothing in the wording of Article 13 indicates that procedural requirements are excluded from the scope of that provision. In addition, formal rules may be substantive or procedural in nature. Consequently, with regard more particularly to Austrian law, the obligation, laid down to bring an action to set a transaction aside within one year after the opening of insolvency proceedings may be regarded not only as aiming to facilitate proof of compliance with that period, but also as a substantive condition for bringing such an action.

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However, it follows from the considerations of the present judgment, which are capable of being applied to the examination Article 13 where it draws no distinction between substantive and procedural provisions. In addition, the procedural conditions to which actions for voidness, voidability or unenforceability of an act are subject may also seek to protect public interests, such as the interest in ensuring adequate publicity of those actions with a view to protecting the legitimate expectations not only of the persons against whom those actions are brought but also of the third-party purchasers of goods which are the subject of those actions.

As is apparent from recital 24 of Regulation 1346/2000, the objective of the exceptions to the application of the ‘lex fori concursus’, including the exception laid down in Article 13 of that regulation, is precisely to protect legitimate expectations and the certainty of transactions in Member States other than that in which the insolvency proceedings are opened. It is apparent that the provisions of the Rome I Regulation do not apply to the case in the main proceedings, the classification of a given requirement as a procedural requirement, and also the determination of the objectives pursued by that requirement, should therefore be matters for the ‘lex causae’.

To interpret Article 13 as meaning that requirements classified as procedural requirements by the ‘lex causae’ must be excluded from the scope of that article would again lead to arbitrary discrimination on the basis of the legal-theory models adopted by the Member States and would prevent a uniform application of that article. In the light of the foregoing, the answer to the third question is that the relevant procedural requirements for the exercise of an action to set a transaction aside are to be determined, for the purposes of the application of Article 13, according to the ‘lex causae’.

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Judgement On those grounds, the Court First Chamber thereby ruled that Article 13 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as applying to a situation in which a payment, challenged by an insolvency administrator, of a sum of money attached before the opening of the insolvency proceedings was made only after the opening of those proceedings.

Article 13 must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the law governing the act challenged by the liquidator. The relevant procedural requirements for the exercise of an action to set a transaction aside are to be determined, for the purposes of the application of Article 13, according to the law governing the act challenged by the liquidator.

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C-649/13

Comité d’entreprise de Nortel Networks SA and Others vs Cosme Rogeau, liquidator of Nortel Networks SA and Cosme Rogeau, liquidator of Nortel Networks SA v Alan Robert Bloom and Others 11 June, 2015

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Facts This request for a preliminary ruling concerns the interpretation of Articles 2(g)43, 3(2)44 and 2745 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings. The Nortel group was a provider of technical solutions for telecommunications networks.

Nortel Networks Limited (‘NNL’), established in Mississauga (Canada), held the majority of the Nortel group’s worldwide subsidiaries, including NNSA, established in Yvelines (France). Almost all the intellectual property resulting from the research and development activities of the Nortel group’s specialist subsidiaries was registered, mainly in North America, in the name of NNL, which granted those subsidiaries, including NNSA, free exclusive licences to exploit the group’s intellectual property. Those subsidiaries were also to retain beneficial ownership of that intellectual property, in a proportion based on their respective contributions. An intra-group agreement, known as the ‘Master R&D Agreement’ (‘the MRDA’), organised the legal relationships between NNL and those subsidiaries.

Since the Nortel group was experiencing serious financial difficulties in 2008, its executives decided to arrange for the opening of

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‘For the purposes of this Regulation: ‹the Member State in which assets are situated› shall mean, in the case of: tangible property, the Member State within the territory of which the property is situated, property and rights ownership of or entitlement to which must be entered in a public register, the Member State under the authority of which the register is kept, claims, the Member State within the territory of which the third party required to meet them has the centre of his main interests, as determined in Article 3(1);›

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‘Where the centre of a debtor’s main interests is situated within the territory of a Member State, the Courts of another Member State shall have jurisdiction to open insolvency proceedings against that debtor only if he possesses an establishment within the territory of that other Member State. The effects of those proceedings shall be restricted to the assets of the debtor situated in the territory of the latter Member State.’

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‘The opening of the proceedings referred to in Article 3(1) by a Court of a Member State and which is recognised in another Member State (main proceedings) shall permit the opening in that other Member State, a Court of which has jurisdiction pursuant to Article 3(2), of secondary insolvency proceedings without the debtor’s insolvency being examined in that other State. These latter proceedings must be among the proceedings listed in Annex B. Their effects shall be restricted to the assets of the debtor situated within the territory of that other Member State.’

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insolvency proceedings simultaneously in Canada, the United States and the European Union. By order in 2009, the High Court of Justice of England and Wales, Chancery Division, opened main insolvency proceedings under English law in respect of all the companies in the Nortel group established in the European Union, including NNSA, pursuant to Article 3(1)46 of Regulation 1346/2000. A joint application was lodged by NNSA and the joint administrators, by the judgment in 2009 the referring Court opened the secondary proceedings in respect of NNSA. Industrial actions where later brought and NNSA was brought to an end by a memorandum of agreement settling the action That agreement provided for the making of a severance payment, of which one part was payable immediately and another part, known as a deferred severance which was to be paid, once operations had ceased, out of the available funds arising from the sale of assets, after payment of the costs resulting from continuance of NNSA’s activities during the main and secondary proceedings and of the administration expenses.

A protocol was later signed by the persons responsible for the two sets of proceedings coordinating the main and secondary proceedings under which, in particular, the administration expenses had to be paid in full, in priority, wherever the assets sold were situated. So, to secure a better price for the Nortel group’s assets, the administrators and liquidators in the various insolvency proceedings throughout the world agreed to sell those assets on a global basis. Under an agreement entitled ‘Interim Funding and Settlement Agreement’ between NNL and a number of subsidiaries in the Nortel group, those subsidiaries would at the appropriate time waive their industrial and intellectual property rights.

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‘The Courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.’

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On the other hand, the rights which the subsidiaries enjoyed under licences would be preserved until the liquidation and disposal operations were completed, and their rights as beneficial owners of the intellectual property concerned would be preserved. After this, the proceeds from sale of the Nortel group’s assets would be placed in escrow accounts also known as lock box, with credit institutions established in the United States and none of the sums paid into the lockbox could be distributed without an agreement concluded by all the relevant entities in the group. A report was drawn up in the context of the secondary proceedings showed a credit balance of EUR 38,980,313 in the bank accounts of NNSA, and it was accordingly possible to consider making a first disbursement.

However, after being given notice to proceed by the works council of NNSA, it was informed by letter such act would not be given into effect to the terms of the memorandum settling the action as a cashflow forecast showed a deficit of nearly EUR 6 million, in particular because of several requests for payment from the joint administrators in respect, inter alia, of the costs resulting from continuance of the activities of the Nortel group during the proceedings and from the sale of certain assets.

Contesting that state of affairs, the works council of NNSA and former NNSA employees brought an action before the Commercial Court, Versailles, France, seeking, first, a declaration that the secondary proceedings give them an exclusive and direct right over the share of the overall proceeds from the sale of the Nortel group’s assets that falls to NNSA and, second, an order requiring Mr Rogeau, as Court-appointed liquidator, to make immediate disbursement and in particular show the funds available to NNSA. Subsequently, Mr Rogeau summoned the joint administrators as third parties before the referring Court. However, they requested the referring Court, in particular, to decline international jurisdiction, in favour of the High Court of Justice of England and Wales, Chancery Division.

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Court, in particular, to decline jurisdiction to rule on the assets and rights which were not situated in France for the purposes of Article 2(g) of Regulation when the judgment opening the secondary proceedings was delivered. The referring Court states that, in order to rule on the claims before it, it will have to rule first on its jurisdiction to determine the scope of the effects of the secondary proceedings. It also considers that it will be required to determine whether the effects of secondary proceedings may extend to the debtor’s assets situated outside the European Union.

Judgement When these circumstances arose the Commercial Court of Versailles asked questions to the Court where one of the most important related to the Courts of the States by which there is are secondary proceedings and have been opened. It was asked if such States would have exclusive jurisdiction or concurrent jurisdiction with the Courts of the State in which the main proceedings have been opened, to rule on the determination of the debtor’s assets falling within the scope of the effects of the secondary proceedings in accordance with Articles 2(g), 3(2) and 27 of Regulation 1346/2000.

Also, they questioned what law would be applicable in such proceedings, if it would be the law of the main proceedings or of the secondary proceedings.

The question referred may be divided into two parts and examined separately. The first part of the question relates to the allocation of international jurisdiction between the Court hearing the main proceedings and the Court hearing the secondary proceedings, while the second part is intended to identify the law applicable when determining the debtor’s assets that fall within the scope of the effects of the secondary proceedings.

In the first part of its question the Court asks whether Articles 3(2) 403

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and 27 have to be interpreted as meaning that the Courts of the Member State in which secondary insolvency proceedings have been opened have exclusive jurisdiction, or concurrent jurisdiction with the Courts of the Member State in which the main insolvency proceedings have been opened, to rule on the determination of the debtor’s assets falling within the scope of the effects of those secondary proceedings.

First of all, whether the referring Court’s jurisdiction in that context is governed by Regulation 1346/2000 or by Regulation 44/200147 and determine whether, on the basis of the provisions of the applicable regulation, the jurisdiction of that Court is established in a case such as that at issue before it. Finally, the question whether such jurisdiction must be regarded as exclusive or concurrent will be examined.

The disputes before the referring Court fall within the context of the application of a large number of agreements concluded by or between the parties before it. In a dispute concerning the interpretation of one or more of those agreements, jurisdiction to rule on that dispute may be governed by the provisions of Regulation 44/2001, even though that dispute is between the liquidators in two sets of insolvency proceedings, one main and the other secondary, each of which falls within Regulation 1346/200048. So both must be interpreted in such a way as to avoid any overlap between the rules of law that those instruments lay down and any legal provision. The Court has also held that the scope of Regulation 1346/2000 must not be interpreted broadly, and actions which derive directly from insolvency proceedings and are closely connected with them are excluded from the scope of Regulation 44/2001.

A decisive criterion was adopted so to identify the area within which an action falls not the procedural context of that action, but its legal basis. According to that approach, it must be determined whether the right or the obligation which forms the basis of the action has its source in the ordinary rules of civil and commercial law or in derogating

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Council Regualtion (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters

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rules specific to insolvency proceedings. In the present instance, while it is for the referring Court to assess the content of the various agreements concluded by the parties to the proceedings before it, it is nevertheless apparent that the rights or obligations on which the actions before the referring Court are founded derive directly from insolvency proceedings, are closely connected with them and have their source in rules specific to insolvency proceedings.

The outcome of the disputes before the referring Court depends, in particular, on how the proceeds from the sale of NNSA’s assets are allocated between the main proceedings and the secondary proceedings where those proceeds will in essence have to be allocated by applying Regulation 1346/2000. The rights or obligations on which the actions before the referring Court are founded therefore have their source in Articles 3(2) and 27 of Regulation 1346/2000, so that that regulation is applicable. As regards the jurisdiction of the Court which has opened secondary insolvency proceedings to rule on the determination of the debtor’s assets falling within the scope of the effects of those proceedings, it is settled case-law that Article 3(1) must be interpreted as conferring international jurisdiction to hear and determine related actions on the Member State within the territory of which the insolvency proceedings have been opened.

Whilst the Court, until now, has acknowledged only that international jurisdiction to rule on a related action is enjoyed by the Member State whose Courts have jurisdiction under Article 3(1), Article 3(2) of that regulation must be interpreted in parallel to such regulation.

Article 3(2) is regarded as conferring international jurisdiction to hear and determine related actions on the Courts of the Member State within the territory of which secondary insolvency proceedings have been opened, insofar as those actions relate to the debtor’s assets that are situated within the territory of that State.

It is observed that Article 25(1) of Regulation 1346/2000 imposes an obligation on the Member States to recognise and enforce judgments concerning the course and closure of insolvency proceedings that are 405

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handed down both by Courts which have jurisdiction under Article 3(1) of that regulation and by those whose jurisdiction is founded on Article 3(2). While Article 25(1) states that judgments deriving directly from the insolvency proceedings and which are closely linked with them. On the other hand, Article 27 of Regulation 1346/2000, consists, in the protection of local interests even though such proceedings may also pursue other objectives. A related action, such as that before the referring Court, seeking a declaration that specified assets fall within secondary insolvency proceedings is designed specifically to protect those interests. That protection and, therefore, the practical effect, in particular, of such article would be weakened if that related action could not be brought before the Courts of the Member State within the territory of which the secondary proceedings have been opened.

It must therefore be concluded that the Courts of the Member State in which secondary insolvency proceedings have been opened have jurisdiction to rule on the determination of the debtor’s assets falling within the scope of the effects of those proceedings.

Finally, the issue whether the Courts of the Member State in which secondary insolvency proceedings have been opened have exclusive, or concurrent, jurisdiction to rule on the determination of the debtor’s assets falling within the scope of the effects of those proceedings, it should be noted that the Court’s case-law acknowledging the jurisdiction of Courts, under Article 3(1) of Regulation 1346/2000, to rule on related actions is founded principally on the practical effect of that regulation. Consequently, for the purpose of determining whether international jurisdiction to rule on related actions is exclusive or concurrent, and therefore of establishing the scope of both Article 3(1) and Article 3(2), the practical effect of those provisions should likewise be ensured. Thus, as regards an action seeking a declaration that certain assets of the debtor fall within the scope of the effects of the secondary insolvency proceedings, such as the actions before the referring Court, it must be stated that the action quite obviously has a direct effect on the interests administered in the main insolvency proceedings, since the declaration sought would necessarily mean

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that the assets at issue do not fall within those proceedings.

However, it was observed, that the Courts of the Member State in which the main proceedings have been opened also have jurisdiction to rule on related actions and therefore to determine the scope of the effects of the latter proceedings. Accordingly, exclusive jurisdiction of the Courts of the Member State in which secondary insolvency proceedings have been opened to rule on the determination of the debtor’s assets falling within the scope of the effects of those proceedings would deprive Article 3(1) of its practical effect insofar as that provision confers international jurisdiction to rule on related actions and, therefore, cannot be upheld. However, Article 25(1) of Regulation 1346/2000 will enable the risk of concurrent judgments to be avoided, by requiring any Court before which a related action, such as those before the referring Court, has been brought to recognise an earlier judgment delivered by another Court with jurisdiction under Article 3(1) or, as the case may be, Article 3(2) of that regulation.

In the light of all the foregoing considerations, the Courts of the Member State in which secondary insolvency proceedings have been opened have jurisdiction, concurrently with the Courts of the Member State in which the main proceedings have been opened, to rule on the determination of the debtor’s assets falling within the scope of the effects of those secondary proceedings. Also, the effects of secondary insolvency proceedings are restricted, to the assets of the debtor which, on the date of the opening of the insolvency proceedings, were situated within the territory of the Member State in which the secondary proceedings were opened. It should also be noted that it is apparent from recitals 649 and 2350 in the preamble to

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In accordance with the principle of proportionality this Having regard to the opinion of the Economic and Social Regulation should be confined to provisions governing Committee(2), jurisdiction for opening insolvency proceedings and judgments which are delivered directly on the basis of the insolvency proceedings and are closely connected with Whereas: such proceedings. In addition, this Regulation should contain provisions regarding the recognition of those judgments and the applicable law which also satisfy that principle.

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The costs of the publication and registration provided for in Articles 21 and 22 shall be regarded as costs and expenses incurred in the proceedings.

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Regulation 1346/2000, first, that that regulation sets out uniform rules on conflict of laws which replace national rules of private international law and, second, that that replacement is limited, in accordance with the principle of proportionality, to the field of application of the rules laid down by that regulation.

Thus, the regulation does not preclude, in principle, all application, in the context of a related action, such as those before the referring Court, of the legislation of the Member State of the Court before which that action is pending, relating to the private international law of that State, insofar as Regulation 1346/2000 does not contain a uniform rule governing the situation at issue. However, in relation to whether, for the purposes of applying Regulation 1346/2000, assets must be regarded as situated within the territory of a Member State on the date of the opening of the insolvency proceedings, that regulation does lay down uniform rules, excluding, to that extent, any recourse to national law. It is apparent from Article 2(g) of Regulation 1346/2000 that, for the purposes of that regulation, the Member State in which assets are situated is, in the case of tangible property, the Member State within the territory of which the property is situated, in the case of property and rights ownership of or entitlement to which must be entered in a public register, the Member State under the authority of which the register is kept and, finally, in the case of claims, the Member State within the territory of which the third party required to meet them has the centre of his main interests, as determined in Article 3(1) of that regulation.

Despite the complexity of the legal situation at issue before the referring Court, that rule must enable the referring Court to determine the location of the property, rights or claims concerned.

It should be added in this connection that, although Article 2(g) of Regulation 1346/2000 refers expressly only to property, rights and claims situated in a Member State, that provides no ground for inferring that that provision is not applicable if the property, right or claim in question must be regarded as situated in a third State.

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In order to identify the assets falling within secondary insolvency proceedings, it is sufficient to establish whether, on the date of the opening of the insolvency proceedings, the assets were situated, within the meaning of Article 2(g) of Regulation 1346/2000, within the territory of the Member State in which those proceedings were opened, and it is not relevant in that regard to determine, as the case may be, in what other State those assets were situated at a subsequent stage. Consequently, as regards the disputes before it, the referring Court will have the task of establishing, first, whether the assets at issue, which do not appear capable of being regarded as tangible property, are property or rights ownership of or entitlement to which must be entered in a public register, or whether they must be regarded as being claims.

Next, that Court will have the task of determining, respectively, whether the Member State under the authority of which the register is kept is the Member State in which the secondary insolvency proceedings have been opened, namely the French Republic, or whether, as the case may be, the Member State within the territory of which the third party required to meet the claims has the centre of his main interests is the French Republic. It is only if one of those checks has a positive outcome that the assets at issue will fall within the secondary insolvency proceedings opened in France.

In this case the debtor’s assets that fall within the scope of the effects of secondary insolvency proceedings must be determined in accordance with Article 2(g) of Regulation 1346/2000.

On those grounds, the Court First Chamber states that:

Articles 3(2) and 27 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as meaning that the Courts of the Member State in which secondary insolvency proceedings have been opened have jurisdiction, concurrently with the Courts of the Member State in which the main proceedings 409

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have been opened, to rule on the determination of the debtor’s assets falling within the scope of the effects of those secondary proceedings. The debtor’s assets that fall within the scope of the effects of secondary insolvency proceedings must be determined in accordance with Article 2(g) of Regulation 1346/2000.

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C-223/14

Tecom Mican SL and José Arias Domínguez 11 November, 2015

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Facts A request was made so to invoke a preliminary ruling under article 267 TFEU which states that:

The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union; Where such a question is raised before any Court or tribunal of a Member State, that Court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a Court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that Court or tribunal shall bring the matter before the Court. If such a question is raised in a case pending before a Court or tribunal of a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay.

Such request was made by the Court of First Instance No 7, Las Palmas de Gran Canaria in Spain. The issue arose because of the interpretation of Article 16 of Regulation (EC) No 1393/2007 of the European Parliament51. Such request was brough by a commercial agent, Tecom Mican SL (‘Tecom’) against a judicial officer’s say by which the decision was ruled against. For one to understand how the dispute first one is to examine the company MAN Diesel and who was the company Tecom.

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‘Extrajudicial documents may be transmitted for service in another Member State in

accordance with the provisions of this Regulation.’

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The MAN Diesel company was established under German law while the other was established under Spanish law. An agency contract was concluded in November 2009. In 2012, MAN Diesel terminated that contract and after the contract was terminated the company Tecom asked the judicial officer of the Court of First instance referred to above to effect service of a letter of demand on MAN Diesel, through the competent German authority, seeking payment both of an amount to which Tecom considered it was entitled by way of goodwill indemnity and of sums due for accrued and unpaid commission, or, in the alternative, disclosure of MAN Diesel’s accounts.

Such letter further said that the same demand had already been addressed to MAN Diesel in a previous letter of demand certified for official purposes by a Spanish notary. This letter was not accepted by the judicial officer in 2013 and it was refused mainly because legal proceedings had been brought requiring the judicial assistance sought to be granted. Tecom wanted the refusal to be refused and so brought an application.

It stated that, according to the judgment52 Article 1653 doesn’t need any legal proceedings to have been brought for service to be effected of an extrajudicial document such as the one at issue in the main proceedings. Later on another letter was served on MAN Diesel through a Spanish notary, seeking payment of accrued and unpaid commission and of goodwill indemnity in order to comply with the limitation period of one year from the termination of the contract for bringing an action for such an indemnity.

The judicial officer dismissed the application for review and confirmed the refusal decision, stating that it was not possible to consider every private document as an ‘extrajudicial document’. He decided that only extrajudicial documents which, by their nature or formal character, produce certain legal effects fall within the scope of the regulation. Tecom applied for judicial review of that order, claiming

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Roda Golf & Beach Resort (C14/08, EU:C:2009:395), Regulation (EC) No 1393/2007

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that a strictly private document may be served as an ‘extrajudicial document’, within the meaning of Article 16. According to the Spanish Court as referred to above pointed out that, ‘extrajudicial document’ is undoubtedly an independent concept of EU law and may manifest itself both in the context of and in the absence of legal proceedings as stated in the aforementioned judgment. Unfortunately, the Court had no means of determining whether a document that was neither issued nor drafted by a public authority or official could be considered to be ‘extrajudicial’.

Judgement The Court of First Instance No 7, Las Palmas de Gran Canaria asked questions to the Court of Justice. It was asked by the Court to verify if a private document according to article 16 was considered to be an ‘extrajudicial document’ when it is issued by a non-judicial authority or an official. Furthermore, if it would need to have particular requirements to be considered extrajudicial.

Also, it was questioned if an EU citizen would be able to request the procedure stated by article 16 in relation to a private document which would have those characteristics and meet those requirements if one has already exhausted the measures through another nonjudicial public authority. Furthermore, it was asked to examine the cooperation such article has in cross-border implications and also the relation to the proper functioning of the internal market and how it is to be understood.

By looking at the first and second consideration one is to examine them together. The Court held, that the concept of an ‘extrajudicial document’ must be given a broad definition and cannot be limited to documents that are connected to legal proceedings alone it may include documents drawn up by notaries54.

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As verified by the case of Roda Golf & Beach Resort (C14/08, EU:C:2009:395),

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In the absence of legal proceedings, such a concept includes only documents drawn up or certified by a public authority or official, or whether it also encompasses private documents. The regulation mentioned above aims to improve and expedite the transmission of judicial and extrajudicial documents in civil or commercial matters for service between the Member States, in order to reinforce the proper functioning of the internal market. There is no guidance on the reflections on ‘extrajudicial document’, so it is necessary to consider other relevant material and, in particular, in the context of developments in the field of judicial cooperation in civil matters. Back in 1997 the Convention did not define the concept of an ‘extrajudicial document’ but there was an explanatory report on that convention which stated such concept and may be taken to cover documents drawn up by a public officer.

Furthermore, although there was no precise and uniform decision of the concept of ‘extrajudicial documents’ in Regulation 1348/2000, Article 17(b) of such regulation expressed that the Commission was merely entrusted with the task of drawing up, in concert with the Member States.

There was also a glossary mentioning the acts which may be served where it is clear that, under the supervision of the Commission, the Member States had in various ways defined the documents which they considered could be served pursuant to that regulation including in the category of extrajudicial documents. The Advocate General stated not only documents emanating from a public authority or official, but also private documents of specific importance within a given legal system are considered to be extra judicial documents.

He further expressed that ‘extrajudicial document’, within the meaning of Article 16 of Regulation 1393/2007, must be interpreted as encompassing both documents drawn up or certified by a public authority or official and private documents of which the formal transmission to an addressee residing abroad is necessary for the purposes of exercising, proving or safeguarding a right or a claim in 415

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civil or commercial law. This contributes to the strengthening of the field of cooperation in civil or commercial matters, proper functioning of the internal market and in establishing progressively an area of freedom, security and justice in the European Union.

When it comes to the examination of the third question it is, first, necessary to examine the case in which an applicant has effected an earlier service under detailed rules not provided for in Regulation 1393/2007. In that regard, suffice it to note that the wording of Article 1(1) of such Regulation makes clear that that regulation is applicable in civil and commercial matters.

It has already been held that such Regulation provides for only two situations in which the service of a document between Member States falls outside its scope and cannot be carried out by the means put in place by it, namely, first, where the permanent or habitual residence of the addressee is unknown and, second, where that person has appointed an authorised representative in the Member State where the judicial proceedings are taking place.

The Advocate General has noted, that such Regulation 1393/2007 does not provide for any other exception to the use of the means laid down for the transmission of an extrajudicial document between Membe States in the case where an applicant has already effected an initial service of the same document through a means of transmission other than that laid down by the regulation. As regards to the consequences related to the case in which an applicant effects an earlier service pursuant to the detailed rules laid down by such Regulation, by virtue of Article 16 thereof, it lays down various means of transmission applicable to the service of extrajudicial documents exhaustively.

Such as in Article 2 provides that the service of judicial documents is, in principle, to be effected between the transmitting agencies and the receiving agencies designated by the Member States. In addition, Section 2 of such regulation it provides for other means of transmission,

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such as transmission by consular or diplomatic channels.

There is no hierarchy between the various means of transmission that it put in place. In order to ensure an expedient cross-border transmission of the relevant documents this Regulation doesn’t entrust the transmitting or receiving agencies, nor the diplomatic or consular agents, the judicial officers, officials or other competent persons of the Member State addressed with the task of determining whether the reasons for which an applicant may wish to effect service of a document through the means of transmission laid down are appropriate or relevant.

An applicant is perfectly entitled not only to choose any of the means of transmission laid down by such Regulation when it comes to ‘extrajudicial documents’ but he could resort, simultaneously or successively, to two or more of the methods of service which he deems the most suitable or appropriate in the light of the circumstances of the case.

The service of an extrajudicial document pursuant to one of the means laid down would remain valid, even where an earlier transmission of that document has already been effected by a means other than those laid down in the regulation. Basically, the answer to the third question is that Regulation 1393/2007 must be interpreted as meaning that service of an extrajudicial document, pursuant to the detailed rules laid down by that regulation, can be effected even where the applicant has already effected an earlier service of that document through a means of transmission not provided for in the regulation, or through another of the means of transmission put in place by it.

The fourth question relates to Article 16 and if it has to be interpreted as meaning that, for the purposes of that article, it is necessary to ascertain, on a case-by-case basis, whether the service of an extrajudicial document has cross-border implications and is necessary for the proper functioning of the internal market. In regards cross417

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border implications, it is enough to say that Regulation 1393/2007 is a measure precisely within the area of judicial cooperation in civil matters that have cross-border implications. Thus, Article 1(1) of such Regulation expressly states that, subject to the areas excluded, it applies in civil and commercial matters where a judicial or extrajudicial document has to be transmitted from one Member State to another for service there.

As a result, since the cross-border implications of the transmission of a judicial document or, as in the present case, of an extrajudicial document constitute an objective condition for the applicability of such Regulation, such implications must be considered to be satisfied where the service of such a document falls within the scope of that regulation.

Also, it must be effected in accordance with the system established by the regulation. In the regards to the proper functioning of the internal market, it is common ground that that element constitutes the primary objective of the system of service. It has to be considered that once the conditions for the application of those means of transmission are satisfied, the service of such documents necessarily contributes to the proper functioning of the internal market.

So, Article 16 of Regulation 1393/2007 must be interpreted as meaning that, where the conditions of that article are satisfied, it is not necessary to ascertain, on a case-by-case basis, whether the service of an extrajudicial document has cross-border implications and is necessary for the proper functioning of the internal market.

On this examination the Court (First Chamber) states that Article 16 of such Regulation on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters must be interpreted as meaning that the concept of an ‘extrajudicial document’ referred to in that article encompasses not only documents drawn up or certified by a public authority or official but also private documents of which the formal transmission to an addressee residing abroad is

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necessary for the purposes of exercising, proving or safeguarding a right or a claim in civil or commercial law.

This Regulation has to be interpreted as meaning that service of an extrajudicial document, pursuant to the detailed rules laid down by that regulation, can be effected even where the applicant has already effected an earlier service of that document through a means of transmission not provided for in the regulation, or through another of the means of transmission put in place by it. While Article 16 must be interpreted as meaning that, where the conditions of that article are satisfied, it is not necessary to ascertain, on a case-by-case basis, whether the service of an extrajudicial document has cross-border implications and is necessary for the proper functioning of the internal market.

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C-135/15

Republik Griechenland vs Grigorios Nikiforidis 18 October, 2016

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Facts The claimant of the case is Nikiforidis, a Greek national employed as a teacher in Germany in a school run by the Hellenic Republic.

Nikiforidis had a contract of employment commencing in 1996. The contract fell within German jurisdiction and the salary was established according to German standards.

Due to the economic crisis, the European Council issued a decision which impacted the Hellenic public wage system. Accordingly, numerous legal amendments were made by the Greeks so as to reduce the public deficit in the country. Consequently, Nikiforidis suffered a two-year temporary reduction in his gross salary. The claimant argued that even though he was a public administration employee within the Hellenic Republic, his employment relationship fell within German jurisdiction, and the loss in salary is therefore inconsistent with German legislation prohibiting such reductions.

Judgement This preliminary reference sought to establish the applicability of the Greek amendments, and by inference, the parameters of applicability of a third State on a contract governed by another jurisdiction. In this context, the Court had to determine whether the Greek legal framework had any significance on the contract which was expressly governed by German law.

The Court primarily interpreted relevant provisions within the EU legal framework, highlighting the law of forum for a particular contract and the extent to which a mandatory provision of the law, whether within that forum or not, is applicable. In doing so, the Court specified that the Greek legal amendments may affect contracts which were closely connected to the Greek financial crisis, regardless of the contract’s law of forum, due to the element of public interest.

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The Court interpreted the laws on recognition and enforcement of civil and commercial judgements related to contractual obligation pursuant to the Rome I and Rome II Regulations in connection with the conflict of law ruled adopted by these legal instruments, amongst others.

Specifically, the reference clarifies whether Article 9(3) of the Rome I Regulation is to be interpreted restrictively, only allowing overriding mandatory provisions of the State of forum or performance of contract to apply, or whether it is to be interpreted loosely as to allow indirect regard to overriding mandatory provisions of another Member State.

This was requested in light of the principle of sincere cooperation within legal purposes and legal applicability.

The Court confirms that since in employment contracts, the applicable contract may be freely chosen by the parties, then the provision is to be interpreted strictly, as to restrict disturbance to the conflict of law system caused by hinderance to the application of overriding mandatory provisions other than those of the law of forum.

Therefore, the Court of the State of forum has no competence to apply overriding mandatory provisions other than those of the State of forum or of contractual performance itself.

Due to this, the Greek overriding mandatory provisions requiring a deduction in income may not apply to Mr Nikiforidis. However, the German Courts may take the Greek overriding mandatory provisions into account if these are contemplated and consistent with the German legal framework. Moreover, the Court confirmed the applicability of the Rome I Regulation on the contract, seeing as even though this did not affect contracts drawn up prior to 2009, the contract was significantly amended beyond that date. Therefore, the contract fell within the scope of the Regulation.

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C-191/15

Verein für Konsumenteninformation vs Amazon EU Sàrl 28 July, 2016

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Facts Amazon EU Sàrl (‘Amazon’), a company incorporated in Luxembourg, owned and took advantage of the website Amazon.de. This website conducted sales with Austrian consumers where it additionally concluded electronic contracts with its customers. Amazon did not have a branch nor a registered office in Austria.

The standard conditions made use of authorised Amazon to utilise personal information provided by the customers when purchasing as well as information like customer reviews. It also declared that the contractual governing law is of Luxembourg.

An Austrian consumer protection organisation, Verein für Konsumenteninformation (‘VKI’), brought an action before the Austrian Court for an injunction to stop the use of the standard conditions.

However, the Austrian Court experienced certain procedural difficulties when it came to seeing which law applied in this situation.

This is because Amazon only had a registered office in Luxembourg yet concluded contracts with its customers from numerous Member States.

Moreover, it was still uncertain if the ‘fact that an action for an injunction concerned the use of unfair terms in a contract could lead to a conclusion that the case itself referred to contractual obligations’.

This put forward the important question of whether the applicable law should be set up in accordance with Regulation 593/2008 on the law applicable to contractual obligations (Rome I) or Regulation 864/2007 which relates to non-contractual obligations (Rome II).

Judgement The Court of Justice of the European Union pointed out that the law which applies to non-contractual obligations, which resulted from

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the ‘use of unfair terms’, should be set up on Article 6(1) Rome II. This provision states that ‘applicable law is the law of the country where competitive relations or the collective interests of consumers are, or are likely to be affected’.

The Court also observed that in the situation of injunctions for the safeguarding of the interests of consumers, put forward by consumer organisations, it would be the consumers’ law where the claimant would represent their interests. The Court was further critical about the possibility of avoiding the Article 6(1) rule through a reference to Article 4(3) Rome II. Moreover, the Court addressed two more questions. For the first, the Court stated that ‘a choice of law clause included in general terms and conditions can be considered unfair’ if it guides the consumer into error by presenting him with the idea that for the contract it is only the law of that Member State which is applicable.

Therefore, with this point, the trader should let the consumer know about the consequences of Article 6(2) Rome I which concerns the fact that the ‘that the consumer cannot be deprived of the protection afforded to him by mandatory provisions of the law of his habitual residence’.

With regard to the other question, the Court shared the opinion of the Advocate General and stated that ‘while the fact that the undertaking responsible for the data processing’ does not have a branch nor a registered office in a Member State, doesn’t prevent it from having a place of business there within the wording of Article 4(1)(a) of Directive 95/46, a place of business ‘cannot exist merely because the undertaking’s website is accessible there’.

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C-54/16

Vinyls Italia SpA vs Mediterranea di Navigazione SpA 08 June, 2017

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Facts Vinyls Italia SpA (‘Vinyls Italia’) and Mediterranea di Navigazione SpA (‘Mediterranea’) are two registered Italian companies. In order to transport chemical substances, Vinyls Italia, together with Mediterranea, concluded a maritime charter contract for a vessel sailing under the flag of Italy.

Before this contract, Vinyls Italia made two payments to Meditteranea which amounted to €447,740.27 in total. A few months after these payments were made, Vinyls Italia was placed under extraordinary administration, which later changed into insolvency.

Subsequently, Vinyls Italia challenged these payments in accordance with Article 67(2) of the Italian Law on insolvency where they requested that these payments made to Mediterranea be declared void and order them to give them back the €447,740.27 amount with interest. They further stated that the payments made to Mediterranea were carried out at a time when its insolvency was already made public.

However, as defense, Mediterranea requested the application of Article 13 declaring that the payments were made in accordance with the maritime charter contract where both companies chose to be subject to English law. Under this law, it is not possible to challenge the payments which Vinyls Italia had made and therefore with this, Mediterranea submitted its proof.

The Tribunale Ordinario di Venezia pointed out that Mediterranea was out of time when raising their Article 13 defence. Eventually, the national Court referred the case to the Court of Justice with a number of questions. ‘One question concerned the correct interpretation of Article 13 of the EC Regulation on Insolvency. The remaining substantive questions concerned the interplay of the EC Regulation on Insolvency with the Rome Convention and Regulation (EC) 593/2008 (Rome I Regulation).’

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Judgement With regard to the question concerning the interpretation of Article 13 of the EC Regulation on Insolvency, through the Nike European Operations Netherlands BV v Sportland Oy Case the Court held that the provision had to be interpreted narrowly.

When it came to the interplay of the EC Regulation on Insolvency with the Rome Convention and the Rome I Regulation, the Court noted that when considering the dates of the contract and its extension, it was the Rome Convention that applied and not the Rome I Regulation.

It further noted that due to ‘Article 2 of the First Protocol to the Rome Convention, the Italian Court had not had jurisdiction to refer questions on the Rome Convention to it’. Therefore, the Court of Justice declared that it would make reference to the Rome I Regulation provisions, however ‘only insofar as such a reference makes it possible to clarify the scope of Article 13’.

Moreover, the Court decided that Article 13 of the EC Regulation on Insolvency was to be understood without referring to Article 3(3) of the Rome I Regulation. The reason for this is that when the EC Regulation on Insolvency became operative, Article 3(3) of the Rome Convention was in effect. However, in the EC Regulation on Insolvency, there wasn’t a provision for the case where two parties in a particular Member State decide to ‘subject their contract to the laws of another Member State’.

The Court of Justice further stated that one is not able to depend on EU law ‘for abusive or fraudulent ends’. The Court made reference to an earlier decision, Kratzer v R+V Allgemeine Versicherung AG, where it expressed that it was essential to ‘show an objective and a subjective element’ in order to prove that EU law was dependent on for abusive or fraudulent ends.

When it came to the subjective element, it was evident that in

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the Vinyls Italia case, both companies ‘artificially’ decided that the contract be under English law to avoid Italian law being applicable in a situation of insolvency. The Court then pointed out that it is the referring Court, in this case the Italian Court, which ensures that EU law is not being used in an abusive manner.

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ases in Private International Law is an overview of CJEU judgments that touched upon matters of relevance to Private International Law. These judgments are presented in a chronological order, in a simple yet effective style, consisting of a brief description of the case followed by practical observations.

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