EN Official Journal of the European Union C 319/1

Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters,

signed in Lugano on 30 October 2007

EXPLANATORY REPORT

by Professor Fausto Pocar

(Holder of the Chair of International Law at the University of Milan)

2009/C 319/01

CHAPTER I

GENERAL CONSIDERATIONS

1. Preliminary observations and history of the revision

1. The Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed by the contracting parties in Lugano on 30 October 2007 (‘the Lugano Convention’ or ‘the Convention’), is concluded between the European Community, the Kingdom of Denmark (1), the Republic of Iceland, the Kingdom of Norway and the Swiss Confederation. It replaces the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 16 September 1988 (‘the Lugano Convention of 1988’ or ‘the 1988 Convention’), which was concluded between the Member States of the European Community and certain Member States of the European Free Trade Association (EFTA) (2). The Lugano Convention of 1988 was a ‘parallel convention’ to the Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (‘the Brussels Convention’), which was concluded between the six original Member States of the European Community in application of Article 220 (now 293) of the EC Treaty, and was amended several times thereafter to extend its application to new States that had acceded to the Community (3). After 1988, several States that were parties to the Lugano Convention acceded to the European Community, and became parties to the Brussels Convention, so that they were now participating in the Lugano Convention in a different capacity (4). In 1997, when the work of revising the Lugano Convention began, the contracting parties were the fifteen States that were members of the European Community at that time and Iceland, Norway and Switzerland.

2. In 1997 the Council of the European Union initiated a simultaneous revision of the Brussels Convention and of the Lugano Convention of 1988, with the aim of fully harmonising the two Conventions and incorporating changes to resolve certain problems that had emerged in the course of the interpretation of the Conventions by the Court of Justice. It was felt that the two Conventions ought to be revised together in order, among other things, to keep them abreast of developments in international life and in technology, in particular with regard to electronic commerce; to expedite the enforcement of judgments, a need later underlined by Article 65 of the Treaty of Amsterdam of 2 October 1997 (5), which was not yet in force when the work began; to simplify aspects of jurisdiction and coordination between jurisdictions; to clarify points which were imprecise or which had been found problematic on application; and, finally, to adapt certain of the Conventions’ provisions to the case-law of the Court of Justice, though subsequently such adaptation has not always proved necessary.

3. At a meeting on 4 and 5 December 1997, the Council of the European Union set up an ad hoc working party of experts, composed of representatives of the Member States and representatives of the EFTA States that were parties to the Lugano Convention (Switzerland, Norway and Iceland); the working party was to examine amendments to the Brussels and Lugano Conventions that would be proposed by the Member States and by the European Commission, taking into account the case-law of the Court of Justice and certain decisions made by national courts referred to in Protocol 2 to the Lugano Convention of 1988, with the aim of drawing up a draft convention that would improve on the current texts and harmonise them. The working party’s terms of reference indicated the priorities to be followed, namely examination of the practical aspects of the two Conventions, modernisation of a number of provisions, correction of certain technical aspects, alignment with the Rome Convention of 19 June 1980, and finally certain aspects specific to the Lugano Convention that were regulated differently in the Brussels Convention; other proposals for revision could be considered once the articles given priority had been examined. The ad hoc working party, whose terms of reference were founded on Article 220 of the EC Treaty, conducted its work on the basis of proposals put forward by the Commission and of working papers submitted to it by the Council and by the State delegations, taking full account of the Court of Justice’s case-law and of the opinions expressed in legal literature and by academic associations (6). The working party held nine meetings, in Brussels; the meetings were chaired by the Finnish delegate Gustaf Möller, with the Swiss delegate Monique Jametti Greiner as deputy chair, while the Italian delegate Fausto Pocar acted as rapporteur. The European Commission was fully associated with the working party’s proceedings (7). At the last meeting, which took place from 19 to 23 April 1999, the working party reached general agreement on a revised text for the two Conventions, Brussels and Lugano (8).

4. On 1 May 1999, however, the Amsterdam Treaty entered into force; this gave the European Community new powers with regard to judicial cooperation in civil matters, and prevented the draft proposed by the ad hoc working party from becoming a new version of the Brussels Convention and, in parallel, of a new Lugano Convention. The draft was ‘frozen’ by the Council on 12 May 1999, pending presentation by the Commission, under Article 61 of the EC Treaty, of a draft Community act which would replace the Brussels Convention in the Community framework. At a meeting on 27 and 28 May 1999 the Council gave approval in principle to the agreement reached by the ad hoc working party.

5. On 14 July 1999, the Commission submitted to the Council a proposal for a Community regulation broadly based on the text drawn up by the ad hoc working party, with the adjustments made necessary by the new legal form that the instrument was to take, and with new provisions regarding consumers (9). This proposal was examined by the Council’s committee for civil law. On 22 December 2000 the Council approved the proposal as Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (‘the Brussels I Regulation’) (10). The Regulation, subsequently amended to include the new States joining the European Community, came into force on 1 March 2002, and replaced the Brussels Convention in relations between the Member States of the Community, with the exception of Denmark, which under Article 69 of the EC Treaty does not participate in acts adopted on the basis of Title IV. On 19 October 2005, in Brussels, the Community signed an Agreement with Denmark which provides for the application of the provisions of the Brussels I Regulation and their subsequent amendments to the relations between the Community and Denmark (11).

6. The new powers conferred on the European Community by the Amsterdam Treaty gave rise to the question whether the new Lugano Convention should be negotiated and concluded by the Community alone or by the Community together with the Member States. On 25 March 2002 the Commission submitted a recommendation for a Council decision authorising the Commission to open negotiations for the adoption of a convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, between the Community and Denmark, of the one part, and Iceland, Norway, Switzerland and Poland (which had not yet acceded to the Community), of the other, to replace the Lugano Convention of 16 September 1988 (12). Meeting on 14 and 15 October 2002, the Council authorised the Commission to begin negotiations for the adoption of a new Lugano Convention, but left open the question whether the conclusion of the new convention fell within the Community’s exclusive competence, or within the shared competence of the Community and the Member States. Attached to the Council’s decision were negotiating directives and a joint statement by the Council, the Commission and the Member States to the effect that the Council’s decision did not have any legal implications for the question of the respective responsibilities of the Community and the Member States. On that question the Council agreed to ask for the Court of Justice’s opinion in accordance with Article 300(6) of the EC Treaty.

7. On 7 March 2003, the Council submitted a request for an opinion to the Court of Justice, describing the purpose of the prospective agreement as being to align as far as possible the substantive provisions of the new agreement on those of the Brussels I Regulation, and formulating the following question: ‘Does the conclusion of the new Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, as described in paragraphs 8 to 12 of this memorandum, fall entirely within the sphere of exclusive competence of the Community or within the sphere of shared competence of the Community and the Member States?’ On 7 February 2006, the full Court delivered its opinion as follows: ‘The conclusion of the new Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, as described in paragraphs 8 to 12 of the request for an opinion, reproduced in paragraph 26 of this Opinion, falls entirely within the sphere of exclusive competence of the European Community’ (13).

8. Following the delivery of the Court’s opinion, a diplomatic conference took place in Lugano from 10 to 12 October 2006 to finalise the new Lugano Convention, with the participation of representatives from the European Community, Denmark, Iceland, Norway and Switzerland, and various Community institutions and Member States present as observers. The meeting was chaired by the Swiss delegate Monique Jametti Greiner, with Fausto Pocar as rapporteur; it considered all of the provisions diverging from the text on which the ad hoc working party had reached agreement in 1999 – on many of which informal negotiations had already taken place in the Standing Committee set up under Article 3 of Protocol 2 to the Lugano Convention of 1988 – and formally adopted the text of a new Convention. But it was not possible to reach agreement on all of the points under discussion, and some further negotiation was required, following which the text of the new Convention was initialled in Brussels on 28 March 2007, and signed by the contracting parties in Lugano on 30 October 2007.

2. Nature and purpose of this explanatory report

9. In the negotiating directives it approved at its meeting of 14 and 15 October 2002, authorising the Commission to begin negotiations for the adoption of a new Lugano Convention, the Council specified that an explanatory report should be drawn up on the revised Convention, as had been done for the Lugano Convention of 1988. The present explanatory report therefore follows on from the report that accompanied the Lugano Convention of 1988 (the ‘Jenard-Möller report’) (14). An advantage of such an explanatory report is that, in the system of the Convention, unlike the system of which the Brussels I Regulation forms part, there is no Court of Justice to resolve uncertainties of interpretation that may arise in cases before national courts, so that it is desirable that the courts should be provided with a point of reference to clarify the meaning of the Convention and facilitate uniform application, not least in view of the possibility that other countries might accede to the Convention in future.

10. Regarding the content, the Council’s negotiating directives indicated that the report was to cover all of the matters contemplated by the Convention and by its associated protocols. During the negotiations the delegations specified that the explanatory report should comment on all of the provisions of the Convention, and should give an account of the way that negotiations had actually progressed and of the growing case-law of the Court of Justice in relation to the parallel provisions of the Brussels Convention and the Brussels I Regulation. As has been explained, the new Lugano Convention is part of a long and complex process of development that has lasted several decades, beginning with the Brussels Convention concluded in 1968 between the six original Member States of the European Community and progressing in a series of subsequent acts, one of which is the Lugano Convention of 1988. The text of the Convention reflects this development, and many of its provisions reproduce clauses that had already appeared in previous instruments, sometimes with no change or with amendments that are only formal. Each of these instruments, with the exception of the Brussels I Regulation, is accompanied by an explanatory report that comments on the individual provisions. When a provision is not new, or when the amendments made are merely formal or linguistic in nature, it will be enough merely to refer back to the earlier explanatory reports. The present report therefore frequently refers, without repeating what was said there, to the reports on the Brussels Convention of 1968 (the ‘Jenard report’) (15), the Accession Convention of 1978 (the ‘Schlosser report’) (16), the Accession Convention of 1982 (the ‘Evrigenis-Kerameus report’) (17), the Accession Convention of 1989 (the ‘Almeida Cruz-Desantes Real-Jenard report’) (18), and the Jenard-Möller report, already mentioned, which accompanied the Lugano Convention of 1988. There is no report of this kind attached to the Brussels I Regulation, but an express explanation of its provisions can sometimes be found in the introductory recitals, to which reference will therefore be made wherever necessary.

11. The present explanatory report has to consider all of the provisions of the Lugano Convention in the light of the judicial precedents not only regarding the preceding Convention but also the Brussels I Regulation, whose content is substantially identical; but it should be borne in mind that the report is concerned only with the Lugano Convention, and does not in any way reflect the position of the States or of the Community with regard to the Brussels I Regulation. The absence of an explanatory report on the Brussels I Regulation does not mean that this report is intended to fill the supposed gap. In other words, the present report is not intended to offer clarification of the Regulation, or to give indications as to its interpretation or the application of the rules it lays down: its sole purpose is to explain the rules of the Lugano Convention as they stand after revision.

CHAPTER II

STRUCTURE AND SCOPE OF THE CONVENTION

1. Structure

12. The preamble states that the aim of the Convention is to strengthen in the territories of the contracting parties the legal protection of persons therein established, and for this purpose to determine the international jurisdiction of the courts, to facilitate the recognition of judgments, authentic instruments and court settlements, and to introduce an expeditious procedure for securing their enforcement. With this objective the Convention, taking into account the development of international and Community rules that has been described above, sets out to extend to the contracting parties the principles of the Brussels I Regulation, and substantially reproduces its provisions. The parallelism with the Brussels I Regulation is referred to once again in the introduction to Protocol 2 to the Convention, which stresses the substantial link that exists between the two acts despite the fact that they remain distinct from one another. The structure of the Convention is consequently based on the principles of the Regulation, which in their turn are those that formed the basis of the Brussels Convention. This Convention is thus a dual convention governing, within its field of application, direct jurisdiction of the courts in the States that are bound by the Convention, coordination between courts in the event of competing jurisdiction, conditions for the recognition of judgments, and a simplified procedure for their enforcement. On each of these points the text of the new Convention diverges from that of the 1988 Convention, either because it has been aligned on the Brussels I Regulation, or because specific provision has been made to take account of subsequent developments in the case-law of the Court of Justice or to regulate the relationship between the Convention and the Regulation.

13. Among the principles upon which the Convention is based, attention should be drawn to the principle that the rules it lays down on jurisdiction are comprehensive, meaning that the system of the Convention includes even the rules that regulate jurisdiction by referring a matter to the national law of the States bound by the Convention, as happens, with some exceptions, in the case where a defendant is domiciled in a country outside the Convention. In Opinion 1/03, already cited, the Court of Justice took the view that the clause assigning jurisdiction to the national courts in Article 4 of the Brussels I Regulation was an exercise of the Community’s powers, rather than a recognition that the Member States had powers that restricted the scope of the rules on jurisdiction in the Regulation. The rules on jurisdiction in the Convention are comprehensive, and the fact that a defendant is domiciled within or outside a State bound by the Convention is not a criterion delimiting the scope of the Convention in terms of jurisdiction (see also paragraph 37 below).

2. Material scope (Article 1(1) and (2))

14. The material scope of the Convention has not been changed in any way with respect to the Lugano Convention of 1988, and the new wording is identical to that of the Brussels Convention and the Brussels I Regulation. Like the previous texts, the new Convention is confined in its scope to proceedings and judgments regarding international legal relationships, including relationships that involve not two Contracting States, but one Contracting State and one non-contracting State (19); it applies automatically, whether or not it is invoked by the parties; and it applies only to civil and commercial matters, irrespective of the nature of the court. The Convention does not concern revenue, customs or administrative matters, but it may apply to disputes between public administrative authorities and individuals, in so far as the authorities have not acted in the exercise of their public powers (20). The Convention’s material scope is also delimited by means of a list of matters excluded from it, which has remained unchanged, and which is discussed more fully in the reports on earlier conventions (Jenard report, pages 10-13; Schlosser report, paragraphs 30-65; Evrigenis-Kerameus report, paragraphs 24-37).

15. The ad hoc working party discussed whether the material scope of the Convention should be widened by reducing the number of excluded matters. The Commission suggested that the Convention should include rights in property arising out of a matrimonial relationship, in view among other things of their connection with maintenance matters, which were already included in the Convention (21). But in view of the significant differences in national legislation, and the desirability of remaining within the context of a revision of the existing text, it was decided to postpone the possible inclusion of matrimonial property rights in the Convention to some future date. The working party also examined a proposal that the Convention should include social security: social security had originally been excluded because of the diversity of national systems, which make it sometimes a public and sometimes a private matter. The working party preferred not to try to explore further an issue on which no agreement had been reached at the time of the adoption of Regulation No 1408/71 (22), although it recognised that the matter was not totally excluded from the Convention, as might appear from the text of Article 1, since the Convention does cover legal proceedings brought by a social security body (for example) that is acting on behalf of one or more of its beneficiaries to sue a third party responsible for injury (see also the Schlosser report, paragraph 60). It also encompasses an action under a right of recourse by which a public body seeks from a person governed by private law recovery of sums paid by it by way of social assistance to the divorced spouse and the child of that person, provided that the basis and the detailed rules relating to the bringing of that action are governed by the rules of ordinary (private) law in regard to maintenance obligations. It does not cover, on the contrary, an action under a right of recourse that is founded on provisions by which the legislature conferred on the public body a prerogative that places that body in a legal situation which derogates from the ordinary law (23).

3. The parties subject to the obligations imposed by the Convention (Article 1(3))

16. The 1988 Convention, in defining the parties to whom the obligations imposed by the Convention were to apply, used the expression ‘Contracting States’. The Treaty of Amsterdam gave the Community exclusive power to conclude such a convention, which meant that the Convention would no longer be an agreement between the Member States of the European Community and other States, but would instead become an agreement in which the Community itself acted as the contracting party on behalf of its Member States (with the exception of Denmark); the expression ‘Contracting States’ is thus unsatisfactory, and it has therefore been replaced in Article 1(3) by the term ‘States bound by the Convention’, which is new as compared to the preceding Convention. The new formula designating the parties subject to the obligations imposed by the Convention is also based on the realisation that the application of the Convention, both in relation to jurisdiction and to the recognition and enforcement of judgments, is normally the responsibility of the Community’s Member States, rather than of the Community as such. A simple reference to the contracting parties to the Convention would not therefore be appropriate or sufficient to ensure the Convention’s correct implementation. With the new wording, paragraph 3 covers both the States that are contracting parties to the Convention – that is, the non-Community States of Iceland, Norway and Switzerland plus Denmark – and the Community Member States which are bound to apply the Convention in their respective national legal systems.

17. The provision specifies, however, that the expression may also mean the European Community as a party to the Convention in its own right, since certain of the Convention’s obligations may apply directly to the Community itself, or may concern the recognition and enforcement of judgments delivered by the Court of Justice or by other Community courts associated with it, such as the Court of First Instance or the Civil Service Tribunal. In the light of the discussion on Article 70(1)(c), it was finally agreed not to include regional economic integration organisations among the parties bound by the Convention’s obligations, although they may also become contracting parties.

4. The relationship between the Convention and the Brussels I Regulation (Article 64)

18. In consideration of the close links it has with the Brussels I Regulation, the Convention seeks to provide a precise delimitation of the scope of the two instruments, in a specific provision in Article 64. This article largely reproduces the contents of the provision in the 1988 Convention that governed the relationship between that Convention and the Brussels Convention (Article 54B) (24), taking account of developments in Community legislation in the meantime. As before, the first two paragraphs of the provision are essentially addressed to the courts of Member States of the Community bound by the Brussels I Regulation, which are the courts that may find themselves having to apply both instruments, since courts of States bound only by the Lugano Convention are obliged to apply the Lugano Convention in any event. Paragraph 3 is broader, since it is also addressed to courts in States that are bound only by the Lugano Convention. But the provision can offer clarification to any court, particularly on matters of lis pendens and related actions as well as the recognition of judgments.

19. Article 64(1) states that the Convention does not prejudice the application by European Community Member States of the Brussels I Regulation, the Brussels Convention and its Protocol of Interpretation of 1971, or the EC-Denmark Agreement (25). This means that the scope of these instruments remains unaltered, and is not in principle limited by the Lugano Convention. Thus the jurisdiction of the courts of States bound by the Brussels I Regulation or by the EC-Denmark Agreement continues to be exercised in accordance with the Regulation with regard to persons domiciled in the States referred to, and also with regard to persons domiciled in other States that are not party to the Lugano Convention. Likewise, any judgments delivered in one State bound by the Regulation must be recognised and enforced in accordance with the terms of the Regulation in any other State bound by the Regulation.

20. However, according to paragraph 2, the Lugano Convention is applicable in certain situations in any event, whether by the courts of a State bound both by the Brussels I Regulation and by the Lugano Convention, or by the courts of a State bound only by the Lugano Convention. In matters of jurisdiction, the Lugano Convention is to be applied in all cases, by the courts of any State bound by the Convention, including the courts of States bound by the Brussels I Regulation, if the defendant is domiciled in the territory of a State where the Convention applies and the Regulation does not. The same occurs when jurisdiction is conferred on the courts of such a State by Article 22 or Article 23 of the Convention, as these are exclusive jurisdictions which must always be respected. Furthermore, in relation to lis pendens and related actions regulated by Articles 27 and 28, the Lugano Convention is to be applied in all cases where the proceedings are brought in a State where the Convention applies and the Brussels I Regulation does not, as well as in a State where both the Convention and the Regulation apply. From the standpoint of the coordination of jurisdiction, therefore, the States bound by the Lugano Convention are treated as a single territory. Finally, in matters of the recognition and enforcement of judgments, the Lugano Convention is to be applied in all cases where either the State of origin or the State addressed does not apply the Brussels I Regulation. Consequently, the Convention applies when both States are parties to the Lugano Convention alone or when only one of the States is a party to the Convention and the other is bound by the Regulation.

21. The Convention also takes over the provision in paragraph 3 of the corresponding article in the 1988 Convention, under which the court seised, having jurisdiction under the Lugano Convention, may refuse to recognise or enforce a foreign judgment if the ground of jurisdiction on which the original court based its judgment differs from that resulting from the Convention, and recognition or enforcement is sought against a defendant domiciled in a State where the Convention applies but the Brussels I Regulation does not. This rule is not applicable when the judgment may otherwise be recognised or enforced under the law of the State addressed. The ad hoc working party discussed the advisability of retaining this rule, which is clearly inspired by a lack of confidence in the States bound by the Regulation among the States party to the Convention. But although the rule will most probably never be applied, and despite the solid mutual trust that exists between the States bound by the Convention, the rule may nevertheless provide a useful guarantee, given that the States bound by the Brussels I Regulation are free to amend their rules on jurisdiction through the Community procedures for the amendment of Community legislation, without the consent of the States that are party only to the Lugano Convention.

22. Finally, it should be pointed out that everything said so far about the relationship between the Lugano Convention and the Brussels I Regulation also applies, mutatis mutandis, to the relationship between the Lugano Convention and the Brussels Convention and between the Lugano Convention and the EC-Denmark Agreement.

CHAPTER III

JURISDICTION

1. General provisions

1. The general rule of jurisdiction (Article 2)

23. The general rule of jurisdiction in the new Convention is the same as it was in the 1988 Convention. It is based on the principle of actor sequitur forum rei, and remains anchored to the domicile of the defendant in a State bound by the Convention. It confirms that the defendant’s nationality plays no role in jurisdiction (for reasons explored in detail in the Jenard report, pp. 14 ff.). Persons domiciled in a State bound by the Convention must therefore be sued in the courts of that State, whether they are citizens of that State or not (paragraph 1). As paragraph 2 reaffirms, persons who do not have the citizenship of the State in which they are domiciled are subject to the same jurisdiction as citizens of that State. It should be noted that, as in the 1988 Convention, the general rule assigns jurisdiction to the State in whose territory the defendant is domiciled without prejudice to the determination of a specific court with jurisdiction in that State on the basis of the national law of that State.

24. In the light of the Commission proposal (26), the ad hoc working party re-examined the question whether rather than domicile it would be preferable to look to the habitual residence of the defendant, as is done in many conventions, in particular those drawn up within the framework of the Hague Conference on Private International Law, and in Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and the enforcement of judgments in matrimonial matters and the matters of parental responsibility (‘the Brussels II bis Regulation’) (27). The working party concluded that the criterion of domicile should be retained, for several reasons: because of the difficulties that would have been faced by some States, such as the United Kingdom, which had adopted a specific definition of domicile in their domestic law for the purposes of applying the Brussels and Lugano Conventions; because habitual residence was considered by some experts to be more appropriate to personal and family relationships rather than to those of a commercial nature; because habitual residence did not appear to be an appropriate connecting factor in the case of companies and legal persons; and because habitual residence would in any event have needed an independent definition, on which it might have been difficult to reach agreement.

25. The possibility that the place of habitual residence might have been added to the notion of domicile, as an alternative criterion for establishing jurisdiction, was also discarded, because it would have multiplied the possible jurisdictions in cases where domicile and habitual residence were located in two different States (28). It was also pointed out that the use of domicile as the principal criterion for establishing jurisdiction had not met with any particular difficulties in the practical application of the Brussels and Lugano Conventions, notwithstanding the different interpretations of domicile offered by national laws, at least in proceedings in which the defendant was a natural rather than a legal person.

a) The domicile of natural persons (Article 59)

26. The ad hoc working party considered the possibility of providing an independent definition of ‘domicile’ in the Convention, instead of referring the matter to national law, as had the Brussels Convention and the Lugano Convention of 1988. Some experts had suggested that a common definition of the domicile of natural persons might be based in particular on the length of time the defendant had been present in the State of the court before which the case was brought; but in view of the fact that the existing Conventions had been working well, the working party did not think it advisable to provide such a definition. While it recognised the potential benefits of a common definition, the working party preferred to leave to national laws the task of defining the meaning of domicile in terms of the length of time the defendant had been in the territory, if such a definition was found to be necessary. The provision of Article 59 is therefore unchanged from the corresponding provision of Article 52 of the 1988 Convention, and the domicile of natural persons continues to be determined by the domestic law of the State in which they are domiciled.

b) The domicile of companies and other legal persons (Article 60)

27. The case of companies and legal persons is different, since the determination of their ‘seat’, treated as its domicile for this purpose, was entrusted by Article 53 of the 1988 Convention to the rules of private international law of the State of the court hearing the case. Reference to the domestic rules on conflict of laws, which are based on widely varying criteria, has not given rise to many problems in practice, but it may nevertheless create difficulties in the future. The Commission therefore proposed the adoption of a common definition of domicile for companies, which would be the place of their central management or, failing that, their registered office (29), so that a company could be linked to one legal system on the basis of factual elements. The arrangement set out in the new Article 60 of the Convention takes account of the Commission’s proposal, but ensures that the courts of the States bound by the Convention have jurisdiction even if the company’s seat is not located in any State bound by the Convention, provided that the central administration is within one of those States, and vice versa. This solution thus goes further than the Commission’s proposal.

28. The new definition lists as alternatives the statutory seat, the central administration, or the principal place of business of the company or other legal person. The fact that these are listed as alternatives means that if just one of them is in a State bound by the Convention the company can be sued before the courts of that State, even if the others are in a State outside the Convention altogether or in another State bound by the Convention. In the latter case, under the system of the Convention, there will be competing jurisdictions, and the choice of the forum will be left to the plaintiff. This definition is open to a degree of forum shopping, which is also possible to some extent in relation to the domicile of natural persons. In justification it may be pointed out that if a company decides to keep its central administration in a place separate from its principal place of business, it chooses to expose itself to the risk of being sued in both places.

29. Above all, however, the definition answers the need for a connecting factor that will ensure that if a company is incorporated in a State bound by the Convention, or does business there, any dispute regarding its activities will fall within the jurisdiction of the States bound by the Convention, so that the plaintiff will not be deprived of a ‘Convention’ court. It also offers the plaintiff the possibility of suing in the courts of the place where the judgment will probably have to be enforced. None of the criteria considered would have answered these needs on its own. The statutory seat does offer a significant degree of certainty, since it is easy to identify, but it is often situated somewhere other than the location of the company’s assets, and does not lend itself to the enforcement of a judgment; it would, moreover, allow a company to have its central administration in a State bound by the Convention, or to carry on its principal business there, while having its statutory seat elsewhere, and thereby escape the jurisdiction of the States bound by the Convention. In turn, the central administration provides a link with a place that is useful for the purpose of enforcing judgment, but it is a factor internal to the company, often not immediately identifiable, which makes it harder to determine the court with jurisdiction; and if the central administration is located in a State outside the Convention, this criterion would not allow the company to be sued in a State bound by the Convention even if it had its statutory seat or its principal place of business there. Finally, the principal place of business is certainly easier to identify and verify, but if taken as the only connecting factor it would not allow jurisdiction to be exercised against a company which had its principal place of business outside the States bound by the Convention, even if that company had its statutory seat and central administration inside one of these States and conducted a significant amount of business there.

30. These considerations taken together underpin the choice of a broad definition that allows a company or other legal person to be summoned before a court in the State bound by the Convention with which it has a significant connection, in the shape of its central administration, its principal place of business, or its statutory seat. The concept of the ‘statutory seat’, however, is not an appropriate connecting factor for a company or legal person in the United Kingdom or Ireland, where the legal systems refer instead to the place where a company is entered in the register that exists for the purpose, or to the place in which it was incorporated. The registration criterion allows for the fact that the rule concerns not just companies or firms as such but also any body that is not a natural person, so that a registered office is of greater relevance than a ‘seat’ indicated in the founding documents. Article 60(2) therefore specifies that for purposes of those two countries the term ‘statutory seat’ means the registered office or, if there is no registration, the place of incorporation, or, if there is no place of incorporation, the place under the laws of which the formation took place. This last reference to the law applied to determine the place of formation that is treated as the statutory seat takes account in particular of the case of a partnership in Scottish law, where the only criterion looked at is the law under which the partnership was formed, regardless of the place of formation.

31. The working out of the concept of the domicile of companies and legal persons in Article 60 was also guided by the desirability of harmonising the general criterion of jurisdiction regarding companies with the connecting factors used in Article 48 of the EC Treaty for the purpose of recognising the right of establishment of companies or firms in the territory of the Community: Article 48 lists the ‘registered office’, the ‘central administration’ and the ‘principal place of business’ within the Community. Even if the need addressed by Article 48 is different – its purpose is to identify the companies or firms entitled to operate in all Member States - it appeared justified to use the same connecting factors to allow companies or firms to be sued in the courts of one of the States bound by the Convention. In other words, if one of the connecting factors referred to in Article 48 is enough to make a company a Community company, enjoying the advantages conferred by that status, it should be treated as a Community company for all purposes, and should therefore be subject to the civil jurisdiction of the Member States in which it operates and is entitled to operate.

32. The concept of domicile under consideration here relates to the forum generale of companies and legal persons, without prejudice to the definition of the domicile of a company for purposes of the forum speciale for particular categories of dispute, such as those which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons having their seat in a State bound by the Convention, or the validity of the decisions of their organs, which are the subject of Article 22(2) of the Convention (and which will be discussed below). For disputes relating to insurance contracts, consumer contracts and individual contracts of employment, Articles 9, 15 and 18 of the Convention make specific provision, unchanged from the 1988 Convention. Nor does the concept explained above affect jurisdiction in disputes arising out of the operations of a branch, agency or other establishment of a company, which are covered by Article 5(5) of the Convention (where the rules likewise remain unchanged).

33. The new text of the Convention also leaves unchanged the determination of the domicile of a trust, which it refers to the private international law of the court seised. While the application of this provision does not present particular problems in States whose legal systems recognise the trust as an institution, difficulties can arise in States in which this institution is unknown; in the absence of appropriate conflict rules for determining the domicile of trusts in the legal system of the court seised, the question may be made to depend on the law to which the trust is subject (Schlosser report, paragraphs 109-120).

2. The inapplicability of national rules on jurisdiction (Article 3)

34. As in the 1988 Convention, the general rule of jurisdiction founded on the domicile of the defendant may be departed from only in accordance with the rules of jurisdiction set out in the Convention, specifically in Sections 2 to 7 of Title II. This means that it is only by virtue of those rules that a person domiciled in a State bound by the Convention, whether a natural or legal person, can be sued in the courts of another State bound by the Convention. It should be observed that, though Article 3(1) refers in general terms to the ‘courts’ of another State bound by the Convention, this reference does not necessarily leave the internal jurisdiction of the courts of that State untouched: in many cases, the rules of jurisdiction set out in Title II have implications not only for the jurisdiction of a particular State, but also for the distribution of territorial jurisdiction among its courts, and may confer jurisdiction on a specific court.

35. As this is an exception to the general rule, the reference to the rules of jurisdiction set out in the Convention must be taken as definitive, and exclusive of any other national rules of jurisdiction, whether they are exorbitant or not (for example, a national rule of jurisdiction that refers to the defendant’s place of residence, if different from the domicile). The system of the Convention is based on the unification of the rules of jurisdiction, rather than the mere exclusion of exorbitant jurisdictions, even though the national rules whose application is excluded are in fact often of this nature.

36. In this context, Article 3(2), together with Annex I, to which it refers and in which national rules that cannot be invoked are listed (for the reasons for moving the list of national rules from Article 3 to an annex, see below, in the discussion of Article 77), is intended merely as a description and guide for operators indicating the main national rules whose application is not permitted. Paragraph 1 provides that proceedings cannot be brought in courts other than those referred to in Sections 2 to 7 of Title II, and it follows that any other criterion of jurisdiction is excluded, whether or not the rule that provides for it is listed in Annex I. Thus, it appears to be irrelevant that not all the linguistic versions of paragraph 2 reproduce the words ‘in particular’ that preceded the list of national rules in the 1988 Convention (30). The list in Annex I is exemplary only, and does not restrict the effect of paragraph 1, according to which all national rules that do not comply with the rules of the Convention must be considered inapplicable.

3. Defendant not domiciled in a State bound by the Convention (Article 4)

37. If the defendant is not domiciled in a State bound by the Convention, jurisdiction, according to the system of the Convention, is governed by national law, and this is confirmed in Article 4 of the new Convention. Here the Convention does not furnish its own rules of jurisdiction, but regulates the matter only indirectly, by referring it to the legal system of the State of the court seised. Thus the defendant’s domicile is also a criterion delimiting the scope of the rules in the Convention that govern jurisdiction directly and independently, but it is not a general criterion delimiting the regulation of jurisdiction by the Convention. The correctness of this understanding of the matter, which had already been asserted in the literature on the 1988 Convention, was confirmed by the Court of Justice in Opinion 1/03, where the Court, speaking of Regulation No 44/2001, said that ‘That regulation contains a set of rules forming a unified system which apply not only to relations between different Member States … but also to relations between a Member State and a non-member country’, and in particular that ‘Article 4(1) … must be interpreted as meaning that it forms part of the system implemented by that regulation, since it resolves the situation envisaged by reference to the legislation of the Member State before whose court the matter is brought’ (31).

38. This reference to the national law of the court seised also encounters a limit in the rules laid down directly by the Convention which apply irrespective of the defendant’s domicile. These are the rules on exclusive jurisdiction in Article 22 and the rules on the prorogation of jurisdiction in Article 23, which are now also mentioned in Article 4, though they already restricted the reference to national law in the past. Leaving these two provisions aside, the reference to national law means that where the defendant is domiciled in a State not bound by the Convention, the rules of jurisdiction listed in Annex I may be applied even if they constitute exorbitant jurisdiction. It is worth pointing out, lastly, that Article 4(2) confirms that foreign plaintiffs have the same entitlement as nationals of the State of the court seised to avail themselves of the rules of jurisdiction there in force, the only condition being that they be domiciled in that country (see the Jenard report, pp. 21-22).

2. Special jurisdiction

1. General

39. Alongside and as an alternative to the general rule of the domicile of the defendant in a State bound by the Convention, the Convention keeps unchanged the existing structure that provides for special jurisdictions which, at the plaintiff’s choice, allow the plaintiff to bring the action in another State bound by the Convention. These jurisdictions are governed by Articles 5 to 7 of the Convention (corresponding to Articles 5, 6 and 6A of the 1988 Convention). While the general rule hinges on a factor connecting the defendant to the court, the special rules recognise a link between the dispute itself and the court which may be called upon to hear it. These jurisdictions reflect a principle of the efficacious conduct of proceedings, and will be justified only when there is a sufficient connection in terms of the proceedings between the dispute and the court before which the matter is to be brought, from the point of view of the gathering of evidence or the conduct of the proceedings (32), or in order to secure better protection of the interests of the parties against which the proceedings are directed. Given the comprehensive system of jurisdiction in the Convention, these rules apply whether or not they correspond to jurisdictions provided for by the national laws of the States bound by the Convention (33).

40. In part, the special jurisdictions provided for by the 1988 Convention remain as they were, although the wording sometimes undergoes minor changes of a purely editorial nature. The changes considered in what follows, therefore, are those that go beyond purely editorial modification, those where an editorial modification in fact reflects a substantive issue, and those where the development of the case-law of the Court of Justice requires further comment. There is no significant change, and no need for further comment here over and above what was said in the reports on previous Conventions, regarding the rules on the jurisdiction of the courts of a State in which a trust is domiciled when a settlor, trustee or beneficiary of the trust is sued (Article 5(6), see the Schlosser report, paragraphs 109-120), or on the jurisdiction of a court arresting cargo or freight to hear disputes regarding the payment of remuneration for assistance or salvage, if it is claimed that the defendant has an interest in the cargo or freight and had such an interest at the time of the salvage (Article 5(7), see the Schlosser report, paragraphs 121-123).

41. The same can be said of the special rules conferring jurisdiction on the court in which the original claim is pending in the case of a counter-claim arising from the same contract or facts on which the original claim was based (Article 6(3), see the Jenard report, p. 28), or conferring jurisdiction in matters relating to a contract on the courts of the State bound by the Convention in which the property is situated, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property (Article 6(4), see the Jenard-Möller report, pp. 46-47, and the Almeida Cruz-Desantes Real-Jenard report, paragraph 24).

2. Contracts (Article 5(1))

42. Of the special jurisdictions provided for in Articles 5 to 7 which allow the plaintiff to bring an action in a State bound by the Convention other than the State of the domicile of the defendant that would be called for by the general rule, the one that has given rise to most discussion is certainly the jurisdiction in matters of contract. Article 5(1) of the Lugano Convention of 1988, like the corresponding provision in the Brussels Convention, permits a person domiciled in a State bound by the Convention to be sued in another State bound by the Convention ‘in matters relating to a contract, in the courts for the place of performance of the obligation in question’; it has been the source of a number of problems of interpretation, regarding the definition of ‘matters relating to a contract’, the determination of the obligation to be performed, and the determination of the place of performance. These problems have generated a large body of case-law of the Court of Justice, which has arrived at independent solutions or referred the matter back to national law as appropriate, without overcoming all the difficulties generated by the Convention.

43. On the definition of ‘matters relating to a contract’, the national laws of the Contracting States differ, and the Court has taken the approach that the concept is an independent one; it has not provided any general or abstract definition, but in individual cases has given pointers indicating when there is a contractual obligation and when there is not (34). The existence or validity of a contract is a matter relating to a contract (35). If an action relates both to breach of a contractual obligation and to non-contractual liability, there is no accessory jurisdiction: for the first claim jurisdiction is to be determined in accordance with Article 5(1), and for the second it is to be determined in accordance with Article 5(3), on liability arising out of a tort or delict, even if that might face the plaintiff with the prospect of separate actions before different courts (36), a prospect that can always be avoided by falling back on the general rule of the domicile of the defendant.

44. Concerning the determination of ‘the obligation in question’, Article 5(1) expressly allows a number of jurisdictions in respect of one and the same contract, preferring a genuine connection between the court and the specific dispute over a single method of treatment of the contract. The search for a fair balance between the two requirements – a genuine link with the dispute and the unity of the contract – has led the Court of Justice to hold that the expression ‘the obligation in question’ refers to the contractual obligation on which the action is based, the obligation on whose non-performance the plaintiff’s action relies, rather than to the obligation whose performance is expressly sought by the plaintiff (37). In the same way the Court has held that where several obligations arising out of one contract are relied upon in the application, the court before which the matter is brought can determine whether it has jurisdiction by referring to the principal obligation (38); the question whether obligations are accessory or equivalent is a question to be determined by the court hearing the case, ordinarily on the basis of the law applicable to the contract (39). Despite these judgments, it is still regularly the case that one contract will be subject to more than one jurisdiction, particularly when claims are based on obligations arising out of the same contract that are equal in rank (40). It has been pointed out that this situation is not always satisfactory, especially since an obligation to pay can be severed from the rest of the contract and the matter brought before the court of the place where that obligation is to be performed, which is often the forum of the plaintiff.

45. Regarding the determination of the place of performance of the obligation in question, though other solutions might have been possible – an independent solution, or a reference to the lex fori – the Court of Justice has opted for reference to the lex causae of the disputed obligation, determined according to the rules of conflict of laws of the court before which the matter is brought (41), even in cases where the parties themselves decide the place in a clause which is valid according to the law applicable to the contract (42). This interpretation, which did not initially offer any uniform solution to the lack of harmonisation of the rules of conflict of laws of the Contracting States, and which left open the possibility of forum shopping, was subsequently underpinned by the Rome Convention of 19 June 1980 on the law applicable to contractual obligations: although the Rome Convention uses a flexible, objective connecting factor, nevertheless the law applicable to the contract, and hence the place of performance of the obligations arising under it, can as a rule be foreseen by the parties. But reference to the applicable law, as a means of determining the place of performance of the obligation, leaves intact the considerable disparity between national laws on financial obligations, and does not solve the problem that when the obligation relied on before the court is the obligation of payment, the place of performance frequently coincides with the forum of the plaintiff, thus providing scope for forum shopping.

46. Notwithstanding the interpretation provided by the case-law, which has smoothed out some of the difficulties, the rules described above have been judged unsatisfactory by many, and numerous proposals have been put forward for their amendment by the Commission and by the Contracting States. The proposals are varied, but all move in the direction of reducing the role of the reference to the place of performance of the obligation, safeguarding the unity of jurisdiction over the contract at least to some extent, and making it easier to ascertain and foresee the place of performance which is to serve as the basis of jurisdiction in the case. The proposals and the debate to which they gave rise in the ad hoc working party are described below to the extent that may be useful for an understanding of the origins of the present text.

47. The most radical proposal, which also has authoritative support in the literature (43), was that the forum of performance of the obligation should be removed, so that contractual matters would be left to the ordinary forum of the defendant, or alternatively the jurisdiction chosen by the parties. This solution was rejected by the ad hoc working party on the grounds that the forum of the defendant may not be the most appropriate if inspections have to be carried out in the place where goods were to be delivered or services provided, and that the parties may fail to select a forum for their disputes. The working party therefore turned to other proposals that would retain a forum of the contract, while avoiding, or at least limiting, the difficulties of the existing text.

48. Among these was a proposal to refer to the place of enforcement of the obligation characteristic of the contract, the intention being to avoid the fragmentation of jurisdiction over the contract, and to prevent jurisdiction based on the obligation to make payment, unless, of course, the financial debt was the characteristic obligation of the contract. The proposal was not accepted, on several grounds: international contracts are often complex, and it is not always easy to identify the characteristic obligation; establishing the characteristic obligation requires an overall evaluation of the contract which is premature at the stage when jurisdiction is being determined; the determination of the place of performance of the characteristic obligation depends on the applicable law, so that it does not avoid the need to refer to the rules on conflict of laws; and, lastly, the characteristic obligation does not necessarily represent a sufficient connecting factor between the dispute and a particular court if the dispute turns on a different contractual obligation. It may be pointed out that it is one thing to determine the applicable law by seeking to define an overall contractual relationship in a homogeneous manner, even though some parts may be clearly less closely linked and jurisdiction may be fragmented, and quite another to define the connecting factor between a dispute and the court in the best position to decide it.

49. Having discarded the possibility of reference to the characteristic obligation of the contract, the ad hoc working party considered the possibility of restricting the scope of Article 5(1) to certain contracts only, more specifically to contracts of sale, as the Commission had proposed, with the place of performance being the place where the delivery was or should have been carried out, except in cases where the goods were delivered, or deliverable, to more than one place; this would deny any relevance to the obligation of payment (44). Against a restricted solution of this kind it was pointed out that a forum of the contract was desirable not only in the case of contracts of sale but also, and just as strongly, in the case of contracts for the provision of services. On the other hand it was in contracts of these kinds that the obligation to make payment was in most cases not the significant aspect on which jurisdiction could be based, except of course in the case of contracts for money services. After mature reflection, the ad hoc working party decided not to make any radical change to the existing text, but to adjust it so as to indicate, in the case of a contract of sale or a contract for the provision of services, which obligation was the one whose place of performance could provide a basis for a jurisdiction alternative to the forum of the defendant, and to exclude any reference to the place of payment under such contracts, while leaving the existing provision unchanged for all other contracts and for cases in which the specific rules described proved inapplicable (45).

50. Article 5(1)(a) of the new Convention takes over the corresponding provision of the 1988 Convention, conferring jurisdiction on the court of the place of performance of the obligation in question. The scope of the rule is not left entirely to the interpretation of whoever is called upon to apply it, as it was before: for the application of point (a), point (b) specifies that in the case of contracts for the sale of goods or the provision of services the place of performance of the obligation in question is to be the place - in a State bound by the Convention – where, under the contract, the goods were delivered or should have been delivered, or the services were provided or should have been provided. Thus point (b) identifies the obligation whose place of performance serves as a basis for establishing jurisdiction in respect of such contracts independently, irrespective of the obligation whose performance is the subject of the dispute. Without using the word, it adopts the principle of the characteristic obligation, and consequently excludes a reference to the obligation to make payment, even when that obligation is relied upon in the application. The ad hoc working party did not incorporate into the text the Commission’s initial proposal that point (b) should expressly exclude cases where under a contract of sale the goods were delivered, or deliverable, to more than one place. In such a case, if all the obligations to deliver are relied upon in the application at the same time, various solutions may be suggested in appropriate cases, without prejudice to any future interpretation this provision will be given by the Court of Justice, such as a reference to the principal place of delivery, a plaintiff’s choice as to the place of delivery where to bring his action entirely or limited to the partial delivery in that place, or even a reference to the place of performance of the monetary obligation, if that obligation is relied upon in the application. The Court of Justice has already pronounced on the parallel provision enshrined in Article 5(1)(b) of the Brussels I Regulation, and has ruled that, ‘where there are several places of delivery within a single Member State’, ‘the court having jurisdiction to hear all the actions based on the contract for the sale of goods is that in the area of the principal place of delivery, which must be determined on the basis of economic criteria. In the absence of determining factors for establishing the principal place of delivery, the plaintiff may sue the defendant in the court for the place of delivery of his choice’ (46). The questions that arise, and the solutions that may be the more appropriate ones, where there are several places of delivery in different Member States have been deliberately left open by the Court of Justice (47). It goes without saying that similar problems will also arise where there are several places of provision of services in different States.

51. For the determination of the place of performance, point (b) adopts a factual test intended to avoid recourse to private international law, stating that unless the parties have agreed otherwise the place of delivery of the goods or of provision of the services must be identified ‘under the contract’. It has to be pointed out that this provision applies ‘unless otherwise agreed’ by the parties; under these terms, party autonomy is explicitly preserved also as concerns the determination of the place of performance. The question remains open whether this provision may entirely prevent the rules of conflict of laws of the court hearing the dispute from coming into play where the parties have not indicated with sufficient precision the place of delivery or of provision of the service, and this may be established with the help of the law applicable to the contract, or where the subject of the dispute is in fact the place where the goods were delivered or should have been delivered, or the place where the services were provided or should have been provided. Point (b), then, acts as a special rule, limited to contracts of sale and contracts for the provision of services, for the application of the general principle of the place of performance of the obligation in question laid down in point (a). It does not apply to contracts that do not fall into either of those categories, and it does not apply even to those categories when the place of performance of the contract is in a State not bound by the Convention. Whenever point (b) is found to be inapplicable, point (a) applies; this is in fact stated in point (c), which clarifies and confirms a conclusion that could be drawn from points (a) and (b) even without it. In the case, for example, of a sales contract where the obligation to deliver the goods is to be performed in a State bound by the Convention, the place of performance of an obligation to make payment cannot be made the basis for establishing jurisdiction; but if the obligation of delivery is to be performed in a State not bound by the Convention, the plaintiff could invoke the place where payment was to be made, always supposing that that place was located in a State bound by the Convention, as point (a) would then be applicable, and it allows the specific obligation relied upon to be taken into account.

52. Regarding jurisdiction over individual contracts of employment, which figure in Article 5(1) of the 1988 Convention, several proposals for amendment were put forward; the ad hoc working party chose to deal with this matter separately in Title II (see below, in connection with Section 5).

3. Maintenance obligations (Article 5(2))

53. The first limb of the provision, in (a) and (b), remains unchanged with respect to the provision in the 1988 Convention, which in its turn was identical to the provision in the Brussels Convention following the Accession Convention of 1978. For commentary, therefore, please refer to the previous reports (Jenard report, pp. 24-25; Schlosser report, paragraphs 90-108).

54. The Court of Justice has considered this provision on a number of occasions, and has clarified several aspects. The Court has held that the concept of a maintenance obligation is to be interpreted broadly, to include any obligation designed to enable a person to provide for himself or herself, whether or not payments are periodic and whether or not the obligation is determined on the basis of resources and need. It may, therefore, consist of the payment of a lump sum, if the amount of the capital has been arrived at in order to guarantee a predetermined level of income, or the transfer of ownership of property intended to enable a person to provide for himself or herself. Where such a provision is designed to enable one spouse to provide for himself or herself, or if the needs and resources of each of the spouses are taken into consideration in the determination of its amount, the payment relates to a maintenance obligation, and not to rights in property arising out of a matrimonial relationship, which would be outside the scope of the Convention (48). If these characteristics of a maintenance obligation are present, the obligation is governed by Article 5(2), and falls within the scope of the Convention, even if it is ancillary to a proceeding, such as a divorce proceeding, which is itself excluded (49).

55. The concept of ‘maintenance creditor’ is an independent concept that has to be determined in the light of the purpose of the rules of the Convention, without reference to the national law of the court seised. Article 5(2) does not make it possible to distinguish between a person whose right to maintenance payments has been recognised and a person whose right has not yet been established, and the concept consequently covers not only a person whose right to maintenance has already been established by a previous judgment, but also a person who is applying for maintenance for the first time, irrespective of whether national law restricts the notion of maintenance creditor to persons in the first category (50). In the light of the Court’s case-law, the ad hoc working party felt that there was no need to change Article 5(2) by replacing the expression ‘maintenance creditor’ with the expression ‘applicant for maintenance’, as the Commission had suggested (51). The concept of ‘maintenance creditor’ does not include a public body that brings an action to recover sums it has paid to the maintenance creditor, to whose rights it is subrogated against the maintenance debtor, since in that case there is no need to deny the maintenance debtor the protection offered by the general rule in Article 2 of the Convention (52).

56. There is a new provision in point (c), which concerns matters relating to maintenance that are ancillary to proceedings concerning parental responsibility: it confers jurisdiction on the court which, according to its own law, has jurisdiction to entertain the proceedings concerning parental responsibility, unless that jurisdiction is based solely on the nationality of one of the parties. But it should be noted that this does not in any way modify the provision of Article 5(2) as it currently stands in the 1988 Convention and in the Brussels I Regulation (53). The aim of point (c) is only to ensure parallelism between European Community law and the Lugano Convention. Recital No 11 to the Brussels II bis Regulation (Council Regulation (EC) No 2201/2003 of 27 November 2003) (54), in particular, clarifies the meaning of the rule of jurisdiction for maintenance claims where the maintenance claims are ancillary to parental responsibility proceedings, stating that jurisdiction with regard to such claims should be determined on the basis of Article 5(2) of the Brussels I Regulation. In order to avoid any doubt in the Lugano Convention, it was thought opportune to insert a provision clarifying the issue.

4. Tort, delict and quasi-delict (Article 5(3))

57. In matters of ‘tort, delict or quasi-delict’, the jurisdiction of ‘the courts for the place where the harmful event occurred’, provided for in Article 5(3) of the 1988 Convention (and earlier in the Brussels Convention), has given rise to a large body of Court of Justice case-law, prompted in part by the Jenard report, which limited itself to saying that the committee of experts for which Mr Jenard served as rapporteur ‘did not think it should specify where the event which resulted in damage or injury occurred, or whether it is the place where the damage or injury was sustained. The Committee preferred to keep to a formula which has already been adopted by number of legal systems’ (55), leaving open the meaning to be to be ascribed to the formula itself. The question came before the Court of Justice, which held that the wording of Article 5(3) 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, and that the defendant could be sued, at the option of the plaintiff, in the courts of either of the two places (56). This interpretation does not choose between the different solutions accepted under national laws, which in order to determine where unlawful acts committed ‘remotely’ are deemed to have occurred base themselves sometimes on the theory of the place of the act and sometimes on the theory of the place of the result; it thus increases the scope for forum shopping. It should be noted, however, that reference exclusively to the place of the act would in many cases have removed any significance from this special jurisdiction for the place of the tort, given that the place of the act frequently coincides with the domicile of the defendant liable for the tort, while reference exclusively to the place where the damage occurred would in any event not have prevented a fragmentation of the legal action in many cases.

58. The Commission proposed that the case-law of the Court of Justice should be confirmed in the wording of Article 5(3), which should refer both to ‘the place where the event giving rise to the damage occurred’ and to ‘the place where the damage or part thereof was sustained’ (57). The ad hoc working party did not accept this proposal: it felt that to confirm clear and uncontested case-law in a legislative act was unnecessary, and perhaps dangerous, since the words used, if they were inserted into a legislative text, might lend themselves to new interpretations. Furthermore, from the standpoint of reference to the place where the damage occurred, the proposal to confer jurisdiction on the courts of ‘the place where the damage or part thereof was sustained’ had several drawbacks. It did not incorporate into the legislation the clarification supplied by the Court of Justice in judgments subsequent to the initial ruling. In these, the Court made clear that the place of the damage was the place where the event giving rise to the damage, and entailing tortious, delictual or quasi-delictual liability, directly produced its harmful effects upon the person who was the immediate victim of that event (58), and did not cover the place where the victim claimed to have suffered financial damage following upon initial damage arising and suffered by him in another Contracting State; so that it could not be construed so extensively as to encompass any place where the adverse consequences could be felt of an event which had already caused damage actually arising elsewhere (59). To codify part of the Court’s case-law, but not all of its later developments, might have raised doubts regarding the legislature’s intention as to the scope of the rule.

59. Furthermore, to confer jurisdiction on the court of ‘the place where the damage or part thereof was sustained’ would have meant that if there was damage in more than one State, the plaintiff could sue for the total damage in each of these States, which was contrary to the case-law of the Court: in a case of libel by a newspaper, the Court resolved the problem of plurality of damage caused by the same act by giving the courts of each of the States in which injury was suffered jurisdiction to rule on the harm caused in that State: the only courts with jurisdiction to rule on all the harm caused were those of the domicile of the defendant (60). It is true that the solutions offered by Court of Justice oblige plaintiffs who suffer damage in several States to bring multiple proceedings, and given the different laws that are applicable this may lead to contradictory rulings regarding the same causal act (61). Conferring jurisdiction over the entire damage on the court in each place where part of the damage occurred, on the other hand, would increase the scope for forum shopping and favour the plaintiff excessively. The ad hoc working party examined the alternative proposal that jurisdiction should be attributed to the court of the State in which the major part or a decisive part of the damage occurred. However, this solution was also eventually rejected, in view of the risk that a test of this nature might lead to frequent disputes regarding the determination of the major or decisive part of the damage, obliging the parties and the court to resolve questions of substance at the stage at which jurisdiction was being determined.

60. Having decided not to amend Article 5(3) in the manner proposed by the Commission, the ad hoc working party gave lengthy consideration to the possibility of clarifying the provision’s scope with regard to its applicablity not only to claims for injury that had already occurred, as a literal reading of the 1988 Convention might suggest, but also to claims based on the threat of injury in the future. The ad hoc working party had in mind in particular those cases in which an action brought by a public or private consumers’ organisation led to an injunction protecting the collective interests of consumers, since such an action concerned behaviour likely to cause harm, and would otherwise be outside the objective scope of Article 5(3). Actions of this nature are common practice in Scandinavian countries, and especially in Swedish law, and require uniform treatment in terms of jurisdiction and the enforcement of judgments in order to ensure that commercial operators who engage in fraudulent practices to the detriment of consumers in Member States of the Community – such as misleading marketing practices or unfair terms in standard contracts – are not beyond the reach of any action or remedy once their firm is based in a State other than the State where they are actually operating. The ad hoc working party noted that this situation was covered by Article 31, which allowed application to be made to a court for provisional or protective measures available under national law, because that rule applied even where the measures in practice had final effect (62). It also considered the protection extended to consumers by Community directives, such as Directive 93/13/EEC on unfair terms in consumer contracts, Article 7(1) and (2) of which oblige Member States to ensure that adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers, and specify that the means referred to must include provisions whereby persons or organisations, having a legitimate interest in protecting consumers, may take action according to the national law concerned, before the courts or before competent administrative bodies, for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms (63), or Directive 98/27/EC on injunctions for the protection of consumers’ interests, Article 2 of which obliges Member States to designate courts or administrative authorities competent to require the cessation or prohibition of any infringement of a series of Directives on consumer protection listed in the Annex, and, where appropriate, to order measures such as the publication of the decision or the publication of a corrective statement, with a view to eliminating the continuing effects of the infringement, and the payment of fines to ensure compliance with the decisions (64).

61. Notwithstanding the possibility of resorting to these various legal provisions, the ad hoc working party also took account of the fact that these directives contained no rules of jurisdiction and that their application in the various Member States might not be uniform, the possibility that doubts might arise as to whether certain actions for cessation under national law were covered, and, lastly, the fact that such actions might be brought in cases that did not concern consumer protection, for example where a plaintiff sought to prevent a defendant from infirnging the plaintiff’s intellectiual property rights; these considerations led the working party to include a specific provision in Article 5(3) conferring jurisdiction on the courts of the place of the harmful event in respect of threatened future harm as well. The amendment is intended to clarify the scope of the law, and not to change it substance, as the inclusion of actions for cessation can clearly be derived by interpretation from the previous wording (65). It should be remembered in this regard that the rationale for the special jurisdiction of the court of the place of a harmful event lies in the fact that that court is usually best placed to decide the case, owing to its proximity to the dispute and the ease with which evidence can be produced, and that this rationale applies not only to claims for compensation for damage already sustained but also to actions aimed at preventing damage from occurring. The Court of Justice subsequently took this view with regard to the Brussels Convention, though its reasoning was guided partly by the amendment made to Article 5(3) of the Brussels I Regulation, which was in the same terms as those now inserted into the Lugano Convention (66).

62. The provision conferring jurisdiction in respect of harmful events that may occur in the future means that they are governed by the findings of the Court of Justice allowing the plaintiff to bring proceedings either in the place where the action generating the harm is to be avoided or in the place where the harmful event itself is to be prevented. Determining the place where the harm ‘may occur’ is essentially a matter of fact, and thus a matter for the court hearing the case. In line with the approach taken by the Court of Justice, however, it must be the place where there is a danger of immediate damage, and not a place where there may be indirect financial damage. The existence of a danger that may justify the grant of an injuction depends on the law of the State in which the injunction is sought: the rule here merely regulates jurisdiction, and does not specify the injunctions that may be issued, so that their character and content, the conditions on which they may be granted, and the persons entitled to seek them are to be determined by the law of the court seised or by Community provisions aimed at harmonising the relevant national laws.

63. As mentioned earlier, the special jurisdiction to issue injunctions that is under consideration here is concerned only with claims relating to conduct likely to cause damage which is not a breach of a contractual obligation; in the case of a breach of a contractual obligation, a remedy may be sought, as an alternative to the forum of the defendant, in the forum of the contract, as provided in Article 5(1). It should be borne in mind that the concept of ‘tort, delict or quasi-delict’, like that of ‘matters relating to a contract’, is to be interpreted independently, primarily by looking at the system and scope of the Convention, and is not a question that is referred to national law. In particular, the Court of Justice has held that the concept of ‘matters relating to tort, delict or quasi-delict’ covers all actions which seek to establish the liability of a defendant and which are not related to a contract with an obligation freely assumed by one party towards another (67).

5. Actions arising out of a crime (Article 5(4))

64. The provision conferring jurisdiction on the criminal court to hear actions for compensation or recovery arising out of a crime has been retained in the new Convention. The ad hoc working party discussed whether this provision should remain in the same terms, or should be amended or even deleted. It would indeed have been deleted by a proposal that criminal courts should be able to hear civil actions only if civil courts of the same place could hear actions originating from the same crime under the Convention. The working party decided to retain the rule, in view of the usefulness of the special jurisdiction conferred on criminal courts where national law allowed civil actions to be brought in the context of a criminal trial, which did not necessarily coincide with the jurisdiction for the place of a tort under Article 5(3).

65. The proposal for the amendment of Article 5(4) was in part connected to a redrafting of the other provision regarding the bringing of civil actions within a criminal context, in Article II of Protocol 1 to the 1988 Convention, which allows persons domiciled in a Contracting State who are being prosecuted in the criminal courts of another Contracting State of which they are not nationals, for an offence which was not intentionally committed, to be defended by a lawyer without having to appear in person. If the court orders their appearance, and they fail to appear, a judgment in the civil action given in the criminal trial need not be recognised in the other States bound by the Convention (68). It was proposed, on the one hand, that this rule should be extended to include intentional offences, and on the other hand that it should be restricted, so that it would say only that if the criminal court was also hearing the civil action, the defendant was entitled to be represented with respect to the civil action without appearing in person, without the provison specifying the implications of this provision for the recognition of the judgment. These proposals were rejected, partly in order to avoid forceful interference in the criminal law of the States in a Convention dealing with civil and commercial matters.

66. Article II of the Protocol thus remained unchanged (69), and in view of the parallelism with the Brussels I Regulation was transferred to the text of the Convention, now becoming Article 61. However, it should be noted that the decision not to extend the rule to intentional offences has been tempered by the Court of Justice, which has held that Article II of the Protocol is not to be interpreted as preventing the court of the State in which enforcement is sought from taking account, in relation to the public policy clause in Article 34(1), of the fact that in an action for compensation founded on an intentional criminal offence the court of the State of origin refused to allow that person to have his defence presented unless he appeared in person (70). Which is the equivalent of saying that the provision in the present Article 61, which expressly refers to unintentional offences, applies to intentional ones as well, failing which recognition of judgments may be refused on the ground that they are contrary to public policy (71).

6. Company branch offices (Article 5(5))

67. The provision regulating the forum of a branch, agency or other establishment for disputes arising out of their operations has not undergone any modification. Article 5(5) confers special and terrritorial jurisdiction on the courts of the place where they are situated, with the aim of avoiding reference to national law. The concept of a branch, agency or other establishment is thus an independent one, which is common to the States bound by the Convention and ensures legal certainty. The Court of Justice has indicated that the concept of a branch, agency or other establishment implies a place of business which presents itself as the extension of a parent body, and has a management and is materially equipped to negotiate business with third parties, so that the latter know that they can establish a legal relationship with the parent body abroad without having to deal directly with it (72). These characteristics are present even where the place of business is run by a company independent of the parent from the point of view of national company law, which has the same name and identical management, and which negotiates and conducts business as an extension of the parent, because third parties must be able to rely on the appearance thus created (73). Protection of third parties in such a case requires that the appearance be deemed equivalent to the existence of a branch without legal independence. On the basis of the concept described, it falls to the court to verify the evidence for the existence of a genuine secondary establishment in the case before it.

68. The disputes that have arisen regarding branches, agencies and other establishments, for which this Article provides a special jurisdiction that may replace the ordinary forum of the defendant, have been concerned with contractual and extra-contractual rights and obligations related to the management of the establishment (rent, relationships with staff, etc.), contractual obligations which have been entered into by the establishment in the name of the parent company and which are to be performed in the State in which the place of business is situated, and non-contractual obligations arising out of the activities engaged in by the establishment in the place in which it is situated on behalf of the parent (74). Here too it is for the court before which the matter is brought to verify and classify the relationship relied upon, in the light of the concept of a dispute arising out of the operations of a branch, agency or other establishment as described here.

7. More than one defendant and action on a warranty or guarantee (Article 6(1) and(2))

69. Of the various situations where jurisdiction may be founded on a connection between the action brought and another action where jurisdiction is regulated by the Convention, the need has been felt for clarification of the case where there is more than one defendant, allowing the plaintiff to bring proceedings in the court of the domicile of any of them, as the effective scope of the provision has been considered uncertain. In the absence of any indication in the original text of the Brussels Convention, the Jenard report pointed out that jurisdiction that derived from the domicile of one of the defendants had been adopted because it made it possible to obviate the handing down in the Contracting States of judgments which were irreconcilable with one another, and was not justified where the application was brought solely with the object of ousting the jurisdiction of the courts of the State in which the defendant was domiciled (75). The Court of Justice has held that Article 6(1) requires that the actions brought by the plaintiff be related in such a way that dealing with them separately might result in irreconcilable judgments (76). The ad hoc working party considered it advisable to codify the case-law on this point, and to define what the relationship between the actions should be if it was to confer jurisdiction with respect to all the defendants on the courts of the domicile of one of them. It may be noted that the concept of relatedness accepted coincides with that in Article 28(3), although the premisses and purposes of that provision are different: it is aimed at coordinating the jurisdiction of the States bound by the Convention, rather than identifying the court or courts of one of those States that has jurisdiction.

70. Contrary to the view put forward by the Commission (77), the ad hoc working party did not believe it necessary to codify the other principle stated in the Jenard report, according to which jurisdiction is justified only if the claim does not have the exclusive purpose of removing one of the defendants from their proper court. It felt that the close relation that must exist between the claims, together with the requirement that the court before which the matter was brought be the court of the domicile of one of the defendants (78), was sufficient to avoid the misuse of the rule (79); this was not the case with an action on a warranty or guarantee or other third party proceedings regulated by Article 6(2), where the principle was expressly referred to in order to prevent a third party from being sued in an unsuitable court. It may be pointed out that where there is more than one defendant, jurisdiction is based objectively on the close link between the actions, which has to be shown by the plaintiff, whereas in the case of an action on a warranty or guarantee or other third party proceedings no such close link is required. In its place, ‘the related nature of the main action and the action on a warranty or guarantee’ (80) is enough, irrespective of the basis on which the court has jurisdiction in the original proceedings, and this makes it advisable that there should be a provision safeguarding the defendant’s right to be sued in the court which would be competent in his case, even though it places on the defendant himself the burden of proving that he has been removed from it.

71. Nor did the ad hoc working party consider it necessary to include a provision in Article 6(1) aimed at preventing the provision from being applied to defendants who have agreed a choice of forum clause with the plaintiff in accordance with Article 23 of the Convention. The Commission had made a proposal to this effect, but the exclusive jurisdiction provided for in Article 23 has precedence over any other jurisdiction regulated by the Convention, subject only to the provisions indicated in Article 23(5), so that there is no room for doubts of interpretation, and there is no reason to repeat the principle in a specific rule conferring jurisdiction. The fact that the report refers to such precedence only in the comment on Article 6(2) is no evidence to the contrary, as this rule of jurisdiction takes precedence over all the rules of jurisdiction in the Convention, with the exception of those listed in Article 23 itself. Of course this does not apply to a choice of forum clause to which the parties did not intend to give an exclusive character (for which see below, in connection with Article 23).

72. It should be noted, finally, that the pecularities in matters of actions on a warranty or guarantee of some States bound by the Convention, which had been made subject to a special rule under which Article 6(2) of the Brussels Convention was declared inapplicable, a rule repeated in Article V of Protocol 1 to the 1988 Convention, are treated in the same way once again in the new Convention, and specifically in Article II of Protocol 1. That Article provides that the jurisdiction specified in Articles 6(2) and 11 may not be fully resorted to in the States bound by the Convention referred to in Annex IX to the Convention (Germany, Austria, Hungary and Switzerland (81), while persons domiciled in another State bound by the Convention may be sued in the courts of those States pursuant to the rules on third party proceedings there provided for. But decisions taken in other States under Articles 6(2) and 11 will be recognised and enforced in the States concerned under the special provision in Title III of the Convention (for comment on the reasons for this special provision for some States, see the Jenard report, pp. 27-28; the Schlosser report, paragraph 135; and the Jenard-Möller report, paragraph 105) (82). Article II of Protocol 1 adds a new paragraph (paragraph 2) which provides that at the time of ratification the European Community may declare that proceedings referred to in Articles 6(2) and 11 may not be resorted to in some other Member States, and in that event is to provide information on the rules that are to apply instead (83). The inapplicability of Articles 6(2) and 11 in Germany, Austria and Hungary is also recognised in the Brussels I Regulation (Article 65).

3. Protective jurisdictions

1. Insurance (Articles 8 to 14)

73. In matters of insurance, the Convention maintains an independent and complete scheme, with the exception of a reference to Articles 4 and 5(5); Article 9(2) gives more extensive scope to the forum of a branch, agency or other establishment, which makes it possible to base jurisdiction on the existence of a branch, agency or other establishment even when the insurer is not domiciled in a State bound by the Convention. In order to protect the weaker party in an insurance relationship, the Convention keeps the previous structure, distinguishing between the position of the insurer on one side, and that of the policyholder, the insured or a beneficiary, on the other, and providing various criteria for jurisdiction depending on whether one or other assumes the position of plaintiff or defendant (see the Jenard report, pp. 30-33, and the Schlosser report, paragraphs 136-152).

74. Under the 1988 Convention, the insurer could be sued not only in the courts of the State of domicile – and other courts in particular cases – but also in the courts of the policyholder’s domicile, on an action brought by the policyholder; but the insurer could sue the policyholder, the insured or a beneficiary only in the courts of their State of domicile. This rule of jurisdiction gave a distinctive position to the policyholder, who enjoyed greater protection than the insured or the beneficiary: They could likewise be sued only in the courts of the State in which they were domiciled, but as plaintiffs they could not sue the insurer before the courts of their own domicile, which was a right reserved to the policyholder. The Jenard report explained that the distinction was motivated by the consideration that only the policyholder was in a business relationship with the insurer and that ‘it would be unreasonable to expect the insurer to appear in the court of the insured or of a beneficiary, since he will not necessarily know their exact domicile at the time when the cause of action arises’ (84). The ad hoc working party took the view that this argument no longer reflected the needs of the insurance business as it had developed in recent decades, with greater competition, new forms of insurance, and above all a higher level of legislative harmonisation as a result of the adoption of Community single market directives, which made it less difficult for an insurer to appear before a court of another country in the single market. Despite the development of European judicial cooperation, on the other hand, it is still quite difficult for a private person to sue a company in a different country, in the courts of the company’s State of domicile. These considerations have led to the removal of the distinction described, and the insertion of the insured and the beneficiary alongside the policyholder in Article 9(1)(b), thus putting them on an equal footing (85).

75. In addition to the entitlement given them to sue the insurer in the courts of their own domicile, policyholder, insured and beneficiary are protected by restricting the general principle that allows the parties to depart from the rules of jurisdiction of the Convention except in the case of exclusive jurisdiction. Article 13 states that an agreement on jurisdiction can be entered into only in specified and limited circumstances, which include that of an insurance contract covering one or more of the risks listed in Article 14, essentially connected with sea, air and combined transport of goods and passengers. This restriction on choice of forum clauses in contracts ensures a high level of protection, and applies to insurance contracts entered into not just by private consumers, but also by businesses and professionals. There was some doubt, however, whether such wide protection was justified with respect to commercial insurance contracts. The ad hoc working party, therefore, looked at the option of increasing the role of the freedom of the parties by distinguishing between insurance contracts concluded by consumers and contracts entered into in the course of industrial, commercial or professional activities, and allowing the latter a choice of forum. The preferred option, however, was that the contracts in respect of which the parties could be allowed greater freedom should be identified by reference not to the policyholder, but to the risks covered by the contract, with additional risks being added to those that already appeared in Article 12A of the 1988 Convention. This solution has the advantage that it does not modify the structure of the Convention, so that the section on insurance remains separate from the section on consumer contracts. Furthermore, it avoids any reference to a policyholder who is a consumer, so that it continues to offer protection not just to consumers but to individual entrepreneurs, to small and medium-sized enterprises, and to professionals who, even though they carry on an industrial, commercial or professional activity, deserve the same protection