Nejvyšší soud České republiky; 2016-02-24; 30 Cdo 1860/2015
Decision by national courts in the field of European Union law — ECLI:CZ:NS:2016:30.CDO.1860.2015.1
Date: 2016-02-24
Subject matter: Judicial cooperation in civil matters
Origin: Czechia

82016CZ0224(51)_ENG_SUMJURE
JURE summary
JURE summary
This case concerned a debt of USD 1,077,063, arising from a credit agreement.
Both the defendant and the plaintiff are citizens of the Russian Federation. Both of them declared their domicile in Russia in the credit agreement. In this contract, the parties also negotiated that disputes will be decided by the court determined by the place of residence of the creditor. The Court of First Instance dismissed the case, because the Czech courts in its eyes did not have international jurisdiction. The appellate court changed the decision and ruled that the Czech courts had international jurisdiction. Its reasoning was that both parties have a permanent right of residence in the Czech Republic and that the contract was also signed in the Czech Republic. The court argued that under Czech law, parties may negotiate on the jurisdiction of a court only in commercial matters. The provision concerning jurisdiction was therefore invalid.
The defendant filed a cassation to the Nejvyšší soud (hereinafter “the Supreme Court”). It argued that it was necessary to differentiate the terms “place of residence” and “domicile”. The defendant was living in USA and is a citizen of USA. His declared place of residence is in Russia; however, no circumstances demonstate that he would stay in the Czech Republic.
The Supreme Court argued that the question of place of residence and domicile is irrelevant, as the lower courts did not base their decision on them, but on the nature of the contract. The Supreme Court, however, concluded that the lower courts failed to notice that this case had an international element. The appellate court had considered the possibility of negotiation on local jurisdiction, but the provision of a contract must be interpreted as a determination of international jurisdiction (even though this is generally ruled by the clause designating “the place of residence of the creditor”).
The lower courts however also failed to apply the Brussels I Regulation (1). Article 24 of this Regulation provides that a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule should not apply where an appearance was entered only to contest jurisdiction. This Article is preferential to all other provisions concerning international jurisdiction, including Article 23, allowing parties to negotiate on jurisdiction. The Supreme Court cited the opinions of the Court of Justice of European Union in cases C-112/13 (3) and C-111/09 (3). The Court of First Instance provided both parties with time in which to send their statements. The defendant used this right and send two statements, first on 17 March 2014, arguing on the merits of the case, and the second one dated 18 April 2014, also arguing on the merits and suggesting possible evidence. No objection to the supposed lack of international jurisdiction was made. Also, from the protocol of the proceedings, the defendant explicitly agreed with proceedings in the Czech Republic.
The Supreme Court therefore annulled all previous decisions and ruled that the proceedings should continue at the Court of First Instance, as the Czech courts had international jurisdiction.
(1) Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
(2) Judgment of the Court of Justice of 11 September 2014, A v B and Others, C-112/13, ECLI:EU:C:2014:2195.
(3) Judgment of the Court of Justice of 20 May 2010, Vienna Insurance Group v Michal Bilas, C-111/09, ECLI:EU:C:2010:290.