61978C0033
OPINION OF MR ADVOCATE GENERAL MAYRAS
DELIVERED ON 11 OCTOBER 1978 (
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Mr President
Members of the Court,
I —
Etablissements Somafer, Uckange, Lorraine, submitted a tender pursuant to an invitation to tender by the Ministry of the Interior of the Saarland to carry out certain demolition work on the perimeter of the Rochling-Burbach factories.
Since the security measures proposed by the French undertaking appeared inadequate the German company Saar-Ferngas, whose gas mains were in the immediate vicinity of the intended demolition work, considered it necessary itself to take additional protective measures of which it notified Établissements Somafer on 16 January 1974.
After duly informing the Gewerbeaufsichtsamt of the Saarland, whose functions correspond to those of the Ponts et Chaussees and of the Service des Mines in France, Etablissements Somafer on 29 January 1974 obtained a licence to carry out the work from the Mayor of Volklingen.
On 29 October 1974 the German company with a view to obtaining compensation sent its bill to Etablissements Somafer in respect of the costs incurred.
The representative (Vertretung) for the Federal Republic at Beckingen in the Saar of the main establishment (Hauptverwaltung) Uckange contended that the claim was barred. Saar-Ferngas therefore brought an action against Etablissements Somafer before the local court of the ‘representative’ in the Federal Republic, the Landgericht Saarbriicken. Let me observe incidentally that in France actions relating to administrative contracts and damages for public works come within the jurisdiction of the administrative courts.
The part played by the representative at Beckingen in the discussions conducted between the Ministry of the Interior on the one hand and Etablissements Somafer on the other is disputed by the parties and it is to settle this question that the Oberlandesgericht Saarbriicken has referred the matter to you.
Before starting to consider the questions which have been referred to you it is appropriate to remember that Saar-Ferngas brought the case before the Landgericht Saarbriicken at first instance on the basis that Etablissements Somafer had a branch at Beckingen within the meaning of German law (Article 21 of the German Code of Civil Procedure) and further on the basis that that court was that of the ‘place of performance of the obligation in question’ within the meaning of Article 5 (1) of the Brussels Convention of 1968.
The court of first instance accepted neither of these arguments but regarded itself as having jurisdiction under Article 5 (5) of the Convention because in its view this goes further than German national law: it recognizes that a connexion with the operation of a branch or agency can give jurisdiction to the courts for the place in which the branch or agency is situated. The court considered that Somafer had at Beckingen at least an agency within the meaning of Article 5 (5) of the Convention; it used its office in that area to deal with third parties or in any event it gave Saar-Ferngas the impression that that office was such an agency. In doing this the court relied on criteria of German law but it considers that they could equally be relevant in the application of Article 5 (5) of the Convention.
The Saarland undertaking adopted this argument on the appeal. It therefore dropped the claim that it put forward in the alternative at first instance based on Article 23 of the German Code of Civil Procedure. That article which constitutes an excessive rule of national law on jurisdiction provides that in the absence of any other court having jurisdiction in German territory actions relating to property brought against a person not resident within national territory come within the jurisdiction of the court of the place where the goods or objects in question are situate; this however can no longer be relied upon in view of Article 3 of the Convention of 1968.
II —
The first question basically asks whether the concepts of ‘branch, agency or other establishment’ must be interpreted by reference to national law or on the contrary independently.
1.
In favour of reference to national law for determining place of the court having jurisdiction it may be said that in general there is every advantage in applying the law of the State before whose courts the matter comes or the law applicable to the main action: it is important for questions of jurisdiction to be resolved speedily. It is always easier for a court to apply its own law; further almost all the criteria for jurisdiction referred to in the Convention are connected with concepts which are found used in the national law of the Member States for purposes other than the determination of junsdiction.
As regards the concepts of domicile of natural persons or the seat of companies or legal persons, in respect of which after all the concepts of Article 5 (5) represent only a breakdown or subclass, the Convention refers expressly to the application of the internal law of the court seized of the matter (first paragraph of Article 52) or its rules of private international law (Article 53).
An independent interpretation of the concepts referred to in Article 5 (5) would not, strictly, be in accord with ‘the simplication of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals’ which is the objective assigned to the Convention by Article 220 of the EEC Treaty; on the contrary it would have been more expeditious for Saar-Ferngas to bring the action against Somafer before the court of the place where the head office of that undertaking is situate to obtain a judgment against it which would have been directly enforceable in France.
Moreover it may be doubted whether the authors of the Convention intended to give a common and independent definition of the branch, agency or establishment. Such a definition would risk being overtaken by the development of the national laws and case-law. The very fact that they used the word ‘other’, which is a type of ‘residuary’ class to cover all other cases, would confirm that they have not sought to give a precise definition at least to the concept of establishment. Such an objective which would come within the sphere of uniform legislation would be alien to the Convention.
Finally the Court decided in the judgment of 6 October 1976, Tessili ([1976] ECR 1473) in connexion with the interpretation of the Convention in general that in certain circumstances the words and concepts used by the Convention (that case was concerned with the concept used in Article 5 of ‘place of performance of the obligation in question’) must be regarded as referring to the substantive rules of the law applicable under the rules of conflict of laws of the court before which the matter is first brought.
2.
In favour of the independent nature of the words in Article 5 (5) the following considerations on the other hand may be put:
Even if the national law of the court before which the matter is brought or if the private international law applicable to the main action make jurisdiction dependent on criteria more or less identical to those referred to in Article 5 (5) of the Convention, it is not likely that the current interpretation of those criteria by the national court is appropriate to cases falling under the Convention.
In the judgment in De Bloos of 6 October 1976 ([1976] ECR 1497) the Court itself began to interpret the concepts referred to in Article 5 (5) uniformly and independently in seeking to define the concept of ‘branch’. This precedent does not appear to me completely decisive in itself for the definition — not a full one — given in that judgment is purely negative and was arrived at in relation to the internal relationship between the grantee and grantor of an exclusive sales concession.
A little later on 14 October 1976 the Court in the case of the Lufttransportunternehmen ([1976] ECR 1541) ruled that the concept ‘civil and commercial matters’ used in Article 1 of the Convention cannot be interpreted solely in the light of the division of jurisdiction between the various types of courts existing in certain Member States and that the concept in question must therefore be regarded 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.
On 14 July 1977 in Joined Cases Bavaria Fluggesellschaft Schwabe and Germania Bedarfsluftfahrt ([1977] ECR 1517) the Court ruled that this interpretation was based on the desire to ensure in relation to Community law that the Contracting States and parties concerned have equal and uniform rights and duties under the Brussels Convention and that the principle of legal certainty in the Community legal system and the objectives of the Convention in accordance with Article 220 of the EEC Treaty, which is at its origin, require in all Member States a uniform application of the legal concepts and legal classifications developed by the Court in the context of the Convention.
In the case of Industrial Diamond Supplies the Court ruled on 22 November 1977 ([1977] ECR 2175) that if the concept of ‘ordinary appeal’ were interpreted by reference to a national system, whether the legal system of the State in which the judgment was given or that of the State in which recognition or enforcement is sought, it would in certain cases be impossible to classify a specific appeal with the required degree of certainty for the purposes of Articles 30 and 38 of the Convention and that the interpretation of the concept of ‘ordinary appeal’ may usefully be sought only within the framework of the convention itself.
The Court adopted the same attitude in the judgment of 21 June 1978 in Case 150/77 Bertrand v Ott [1978] ECR 1431 in relation to the ‘sale of goods on instalment credit terms’.
On the basis of these precedents I think that the jurisdiction for disputes ‘arising out of the operation of a branch, agency or other establishment’ must be determined independently, that is to say having regard to the objectives and the scheme of the Convention of 1968 and the general principles of the national legal systems.
This ‘independent’ interpretation must be based on the laws and case-law of the Member States which are parties to the Convention as regards the consequences, from the point of view of the forum, of the concepts of branch, agency or other establishment and on the national case-law on the forum for subsidiary establishments of legal persons provided for in certain bilateral Conventions entered into between Member States before the Brussels Convention.
These bilateral Conventions recognize the criterion of attachment either on the basis of direct jurisdiction or on the basis of indirect jurisdiction by means of choice of domicile. It might be said that the Brussels Convention has ‘codified’ and multinationalized the bilateral provisions without in so doing unifying the case-law of the various States relating to their application.
The immediate predecessor of Article 5 (5) of the Brussels Convention thus appears to be Article 4 (1) (d) of the German-Netherlands Convention of 30 August 1962 which reads:
‘The courts of the State where the decision has been given are recognized as having jurisdiction for the purposes of the present Convention:
… if in the State where the decision has been given the defendant has been served at his place of business or at a branch in relation to disputes arising out of the operation of the said establishment or branch’.
It must be observed that Article 5 (5) of the Brussels Convention provides a criterion of connexion on the basis of direct jurisdiction for the purposes of recognition and enforcement and a presumption of choice of domicile.
Still following this line of reasoning I shall invite you to answer Question 1 (b) also in the negative for recourse in a case before a national court to the law applicable in the main action would finally lead to reference to national laws which are probably different.
III —
In the event of jurisdiction relating to the operations of a branch, agency or other establishment having to be determined independently, the national court wishes to know by its second question what criteria of interpretation should be applied to the expressions ‘branch’ and ‘agency’ with reference to capacity to take independent decisions (inter alia to enter into contracts) and also to the extent of the outward manifestation. It must be observed that the question does not mention ‘establishment’, but it appears to me necessary to consider it.
Two observations will guide me in this endeavour. First of all whatever the connexion chosen, the concepts referred to in Section 2 of the Convention (‘special jurisdiction’) and in particular Article 5 (5) must be interpreted strictly because the fact must not be lost sight of that there is another general criterion for jurisdiction, namely the defendant's domicile (Article 2). This rule is contained in the judgment in Bier of 30 November 1976 ([1976] ECR 1735).
In the second place it is generally difficult to determine the characteristics of an establishment or agency to which the rule of jurisdiction in Article 5 (5) applies. Although the definition of a branch may be relatively precise, the concepts of agency or establishment are very often tinged with questions of fact which in national case-law are generally left to the exclusive decision of the court trying the main action. Even if it is decided that the concepts of Article 5 (5) are independent, it inevitably follows that in order to define them it is necessary to clarify questions of fact and this is a task for the national court.
1.
The question concerns the concept of ‘operations’ as much, if not more than, that of a branch, agency or other establishment. It must therefore be a question of a dispute involving the operations of one of these entities and not of a dispute in relation to what comes simply under the activity of the parent company or is tied up with it. In other words it is necessary for the foreign trading company to operate in the Federal Republic and it is necessary for the entity in question to be able to develop its own activity there distinct from that of the parent company without nevertheless being a legal person.
The Convention reveals a remarkable absence of precision: it refers not only to branch or agency, which never have legal personality, although they are governed by fairly precise legal regulations, at least the branch is, but also to ‘other establishment’. The common aspect of the concepts to which Article 5 (5) refers is therefore of entities not having legal personality; it should be observed in particular that the subsidiary of an undertaking is not referred to for the good reason that such a subsidiary has legal personality and may therefore be brought before the courts where it is established.
Consequently it is necessary for the company to have a sufficient industrial or commercial outward manifestation abroad for there to be operations. Certain criteria contained in the convention on the Mutual Recognition of Companies and Bodies Corporate of 29 February 1968 could be applied by way of analogy, with the necessary adjustments, although this Convention has a different objective and has not yet entered into force: in order to obtain recognition it is necessary (Article 3) for the company or body corporate to have a genuine connexion with the economy of one of the territories to which the Convention applies; the company or body corporate in question must show that it has in fact exercised its activity for a reasonable period in the Contracting State under whose law it was incorporated (Article 4).
2.
Although the entity referred to in Article 5 (5) must have a certain independence in taking decisions and although in particular it must have power to carry out operations on behalf of and binding the parent company, it must nevertheless be subject to the latter's control and direction.
The Court propounded this principle in the judgment in De Bloos which has already been cited:
‘One of the essential characteristics of the concepts of branch or agency is the fact of being subject to the direction and control of the parent body’ (paragraph 20).
This criterion was extended to the establishment:
‘it is clear from both the object and the wording of this provision that the spirit of the Convention requires that the concept of “establishment” appearing in the same article shall be based on the same essential characteristics as a branch or agency’ (paragraph 21).
However it cannot automatically be inferred a contrario that in its relations with third parties every ‘representation’ which is bound by instructions emanating from the parent company can be described only as a branch or agency.
The delicate question of burden of proof arises here: on whom is the burden to show the existence of such control and direction by the parent company? Is it necessary to require that such control and direction should be based on the internal articles of the parent company and of the subordinate entity so that the latter is legally able to bind the former or does it suffice that in the eyes of third parties the branch, agency or other establishment acts as though it had power even if in law it has exceeded its powers? The answer to this question thus merges with consideration of the third question raised by the national court.
IV —
I think that having regard to the special nature of the jurisdiction under Article 5 (5) appearances should be disregarded and the realities considered and it is for third parties who wish to rely on this exception to adduce evidence that the entity which they wish to bring before the court was in fact subject to the control and direction of the parent company and that in particular the operation giving rise to the dispute was within the competence of the branch or agency and that there was sufficient connexion with that operation.
In the present case it is for the Saarland company to show that the Saarland manager of the office of the Lorraine company was not a simple executive or technical agent but had the power and status to conclude the operation and that discussions were conducted by this representative and not by the head office.
In this respect it may be useful to refer to a provision of the Franco-German Treaty on the Saar of 26 October 1956, although that provision gave only indirect jurisdiction and is no longer in force. It is Article 46 of the Treaty which provided:
‘Where a French national has in the Saar or a citizen of the Saar has in France an establishment or branch of an industrial, commercial or other nature they may, in respect of contracts concluded directly by such establishment or branch, be brought before the courts of the country where the establishment or branch is situate’.
In these circumstances I think the argument based on appearances to which the Court refers in its last question should be rejected. I do not know how far such a doctrine is recognized in German law in respect of simple establishments and even if it is accepted that the question of the ‘practical effects’ of appearances is not something peculiar to such law, it appears to me doubtful whether it is part of the legal system of all the Member States which are parties to the Convention. Above all, if such a criterion was resorted to it would open the door to all interpretations and would renationalize, in a manner of speaking, a term which the premises require should be independent. I think there is support for this view too in the case-law of the Court according to which acts giving rise to inferences by one party to a contract cannot take the place of the express extension of jurisdiction required by Article 17 of the Convention (Case 24/76 Estasis [1976] ECR 1831 and Case 25/76 Segoura [1976] ECR 1851).
My opinion is that the Court should hold that in civil and commercial matters for the purposes of Article 5 (5) of the Brussels Convention of 1968 it is sufficient that the entity which is referred to therein has entered directly into the contract out of which the claim arises.
(
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)	Translated from the French.