CELEX: 61977CC0150
Language: en
Date: 1978-05-31 00:00:00
Title: Opinion of Mr Advocate General Capotorti delivered on 31 May 1978. # Bertrand v Paul Ott KG. # Reference for a preliminary ruling: Cour de cassation - France. # Sale of goods on instalment credit terms. # Case 150/77.

OPINION OF MR ADVOCATE GENERAL CAPOTORTI
      DELIVERED ON 31 MAY 1978 (
            1
         )
      
         Mr President,
      
         Members of the Court,
      
               1. 
            
            
               In the case which concerns us today the Court is required to interpret the provisions of the Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of Judgments in Civil and Commercial Matters. The question put by the French Cour de Cassation, Civil Chamber, is as follows: ‘whether the sale of a machine which one company agrees to make to another company on the basis of a price to be paid by way of two equal bills of exchange payable at 60 and 90 days can be held to be a sale of goods on instalment credit terms within the meaning of Article 13 of the Brussels Convention’. I would emphasize the precise and circumscribed nature of that request: the answer thereto must determine the concept of ‘sale of goods on instalment credit terms’, to be found in the said Article 13, with reference to the stated case of the sale of machinery between two commercial undertakings. In accordance with my usual practice, I think it useful to give a brief summary of the facts. In February 1972 Bertrand, whose registered office is in France, purchased from the undertaking Paul Ott, whose registered office is in the Federal Republic of Germany, a machine tool which was duly sent to the purchaser and installed. In payment of the purchase price the purchaser issued two bills of exchange payable at 60 and 90 days, as stated above. However, Bertrand became partially insolvent; that prompted the vendor to bring proceedings against it before the Land-gericht Stuttgart, which court gave judgment against the defendant on 10 May 1974. One year later the Tribunal de Grande Instance, Le Mans, issued an order for enforcement of that judgment within the meaning of Article 31 of the Brussels Convention. On 20 May 1976 the Cour d'Appel, Angers, dismissing the appeal by Bertrand, confirmed that exequatur. Thereafter the dispute was brought before the Cour de Cassation; it is at that point that the question which I have restated to the Court has a risen
            
         
               2. 
            
            
               In their written observations the parties to the judgment on the merits commented at considerable length on the problem of the criteria to be adopted for the interpretation of the Brussels Convention, and more particularly of Article 13 thereof. The decision of this Court of 6 October 1976 in Case 12/76 Tessili v Dunlop ([1976] ECR 1473) was cited, amongst others. Indeed that decision, having stated that the Convention frequently uses words and legal concepts drawn from civil, commercial and procedural law, which are capable of a different meaning from one Member State to another, leaves open the choice between two methods of interpretation: such words and concepts may be considered either as independent and common to all the Member States or as implying a reference to the substantive law applicable in each case under the rules of conflict of laws of the court before which the matter is first brought. I would note, in this connexion, that the course followed in all successive case-law of the Court concerning the interpretation of the Brussels Convention has been clearly orientated towards attributing pre-eminence to the first of those choices, making every possible effort to give independent value to the concepts employed in the Convention, even when, at first sight, they display a marked relationship to the legal system of each Member State. The Court has constantly sought to identify a common nucleus of concepts incorporated into the Convention, even where the task appears rather arduous: this is demonstrated in particular by the judgment of 14 October 1976 in Case 29/76 LTU v Eurocontrol ([1976] ECR 1541) and of 22 October 1977 in Case 43/77 Industrial Diamond Supplies v Riva ([1977] ECR 2175). The reasons for this tendency are self-evident: uniformity of interpretation of the rules contained in the Convention provides the fullest guarantee of that ‘free movement of decisions’ which has justly been seen as once of the primary objectives of the Convention itself. In short, therefore, the method consisting in reference to the national system applicable on the basis of the private international law of the forum could now be said to be a residual method, that is to say, a method which is called upon only when the search for the independent meaning of a given concept within the context of the Convention has given a decidedly negative result.
               It goes without saying that, in order to determine independently the meaning of an expression taken from the Brussels Convention, it is necessary to have recourse to certain fundamental points of reference. These have also been indicated by the case-law of the Court, where it has identified the objectives and general system of the Convention as well as the general principles which may be inferred from the national legal systems (cf. the above-mentioned judgment of 14 October 1976 in Case 29/76 LTU v Eurocontrol). It is therefore with the aid of those criteria that the case in point should be examined.
            
         
               3. 
            
            
               I shall begin by assessing the position and function of Articles 13 to 15 (that is to say, Section 4 of Title II, composed precisely of those three articles) in the general system of the Convention. It is clear, in the first place, that the rule as to jurisdiction contained in Article 14 is in the nature of a special rule; it is sufficient to consider its content in relation to other articles of the Convention which are of wider scope. The first paragraph of the provision in question allows a seller on instalment credit terms to be sued in the courts of the State in which the buyer is domiciled, as well as in the place where the seller is domiciled, by way of exception from the general rule contained in Article 2. However, where the seller is suing the buyer proceedings may be brought, pursuant to the second paragraph of Article 14, only in the courts of the State in which the defendant is domiciled; that provision is in accordance with the criterion contained in Article 2 but excludes the application of other provisions, such as Article 5 (1) concerning jurisdiction in matters relating to contract and Article 6 (1) on the eventuality of a number of defendants. The special nature of Article 14 is, furthermore, confirmed by the limitations which Article 15 places on the possibility of a change of jurisdiction by agreement between the parties.
               This first conclusion must incline the interpreter to caution in determining the meaning of Articles 13 to 15; it is accepted that provisions creating exceptions are to be interpreted strictly. That caution should consist in the choice of an interpretation which to the greatest extent takes account of the ratio of Section 4 of Titel II, and gives the provisions therein contained a sphere of application exactly corresponding to that ration d'être. Concerning the ratio of Articles 13 to 15 there is no doubt; those provisions are designed to protect the weaker contracting party, that is, the purchaser in the case of the sale of goods on instalment credit terms and the borrower in the case of loans repayable by instalments expressly made to finance the sale of such goods. That appears clearly from the fact that the first paragraph of Article 14 permits such persons to choose between two jurisdictions, in order to bring proceedings against the seller or the lender, whereas in the second paragraph, which is concerned with the case of proceedings brought by the seller against the buyer or by the lender against the borrower, the general rule contained in Article 2 is confirmed and rendered exclusive. It should, moreover, be borne in mind that the report on the Convention — the so-called Jenard Report — perceives in the desire to protect certain categories of persons — buyers and borrowers — the central motivation of the provisions of Section 4 (in the same vein, cf. Weser, Convention Communautaire sur la Competence Judiciaire et l'Execution des Decisions, Brussels, 1975, p. 291).
               At this point, the interpretation of the concept ‘sale on instalment credit terms’ contained in Article 13 of the Convention cannot be undertaken without having regard to two criteria which emerge from the conclusions drawn so far: (a) a restrictive interpretation is to be preferred to a wider one; (b) the contract in question must have as its essential characteristic the fact that the parties are not on an equal footing in economic terms: the contract was entered into by a ‘weak’ party and a ‘strong’ party. In connexion with criterion (a), the sale on instalment credit terms cannot be identified for the purposes of the Convention solely on the basis of the means of payment, in the sense that any contract of sale in which settlement of the price is undertaken by two or more payments may be said to be a ‘sale on instalment credit terms’, in disregard of any other subjective or objective factors. I therefore believe that the Court should dismiss the arguments of Bertrand, claiming that the Community definition must be sufficiently wide to include the definitions contained in all the national Laws; this would lead to the result that the term ‘sale on instalment credit terms’ would have to be understood to refer to any credit sale in which the price is paid in successive amounts. On the other hand, in pursuance of criterion (b), we must move towards a concept of sale on instalment credit terms which is characterized typically by the economic inferiority of the buyer, such that it may be said that the latter was induced to purchase by the system of payment by instalments, in so far as payment in a lump sum would have been the cause of economic difficulties for him. In this connexion I would agree with the observation made in these proceedings by the Government of the United Kingdom, when it noted that it is illogical to regard all buyers who arrange for payment on deferred terms as being in need of protection, and that it is more sensible to speak of consumer protection. Indeed, the only method of identifying a category of buyers who may be said to be typically in a position of economic inferiority is to direct attention to the category of consumers, the protection of whom, as is well known, presents a general problem in Community law as well as in many national laws. Thus it is that the conclusions drawn with regard to the rôle of Articles 13 to 15 in the general system of the Brussels Convention lead to an interpretation of the concept of sale on instalment credit terms as a sale by a commercial undertaking (whether in production or marketing) to a consumer — and therefore as a sale of consumer goods — in respect of which payment is spread over a certain number of successive amounts.
            
         
               4. 
            
            
               I referred above to the importance of having recourse to the general principles which may be derived from the various laws of the Member States in order to determine independently the meaning of the expressions adopted within the Convention. It must therefore be asked whether such general principles exist in relation to the subject-matter with which we are concerned and, if so, what they provide.
               It cannot be said that the phenomenon of sale on instalment credit terms is regulated in a uniform manner in the Member States. It is clear that the national legislatures have considered that phenomenon from three different points of view: sometimes in the context of the ordinary rules relating to contract (as has occurred in Italy and in the Netherlands), at others in special laws adopted for the purpose of protecting persons buying on instalment credit terms (such laws are at present in force in nearly all the Member States), and, finally, more rarely in the context of restrictive laws, with the objective of avoiding the inflationary concequences which the device of payment on instalment credit terms may entail (such is the case in France, in Belgium, in the United Kingdom and, during a certain period, in Italy). It is clear that, as the point of view changes, the description of the phenomenon may also change; this is one reason why a uniform concept of sale on instalment credit terms does not exist in the laws of the Member States.
               By way ot a first approximation we may say that at one extreme there is the very broad concept, according to which it is necessary and sufficient that the purchase price of a good, which passes immeditely into the possession of the purchaser, is paid in two or more successive instalments; at the opposite extreme there are various restrictive concepts, the criteria for the definition of which are either subjective factors (status of the contracting parties) or objective factors (type, value and intended use of the article) or factors inherent in the price (minimum or maximum number of instalments, the total amount of the price, the maximum period for payment) or, finally, factors relating to the transfer of possession (clause relating to the retention oi possession until the total price has beer paid). Of course, beyond the field which may be traced by one or other oi those factors there is, purely and simply the sale by deferred payment in two or more instalments, which is not subject to any special rules: this type of commercial transaction is encountered very frequently, as was rightly noted by the undertaking Ott, in international trade, without its being identifiei without more ado — whether in practice or at law — with the sale on instalment credit terms.
               In a situation which displays such wide divergencies, it may appear pointless to seek principles which are common to the Member States. However, a common tendency may be identified in the field of laws adopted for the protection of buyers on instalment credit terms; and I would emphasize that it is logical and appropriate to approach the matter from this angle, since Articles 13 to 15 of the Brussels Convention are themselves, as we saw above, provisions whose objective is to redress the balance in favour of the buyer on instalment credit terms. The common tendency of which I am speaking consists in the exclusion of certain categories of buyers from the protective system in relation to sales on instalment credit terms. This may occur either directly, where that system is stated to be inapplicable where the purchase is made by traders, entrepreneurs or legal persons, or indirectly, with reference to purchases of industrial plant and purchases which are connected with the buyer's professional activity. This course is common to the laws of nearly all the Member States, with the exception of Denmark and Italy.
               I shall now turn to the problem which has to be resolved in this dispute. It seems to me that the above-mentioned tendency indicated by national laws, although it cannot be confused with the existence of common principles properly so-called, provides definite confirmation of the conclusions previously drawn by way of a systematic interpretation of the Convention. In short, as long as the buyer on instalment credit terms is a private consumer and the object of the purchase is a consumer good, special rules regarding sales on instalment credit terms are justified since in that situation on of the contracting parties is weaker and deserves special protection. Outside that context, there is no reason to extend the ‘protective’ rules relating to sales on instalment credit terms, and therefore the nomen juris itself of ‘sale on instalment credit terms’, within the meaning of Article 13 of the Convention, ceases to be applicable.
            
         
               5. 
            
            
               Mention should be made of two further circumstances which indicate how written Community law has been developing in the direction indicated. The first, and most important, is the following: the ad hoc Working Party on Adjustments to the Conventions under Article 220 of the EEC Treaty, in drafting the amendments to the Brussels Convention which were to accompany the accession of the United Kingdom, Ireland and Denmark, proposed modifications to Articles 13 to 15, and suggested, inter alia, that the sphere of application of Article 13 should be restricted to contracts entered into by a person for a purpose which could be considered extraneous to his professional or trade activity, thereafter to be referred to as the consumer. In consequence, in Articles 14 and 15 reference would no longer be made to the buyer or the borrower, but to the ‘consumer’ (working document No 5, revised version; Article 9a of the Accession Convention). It is clear that that draft cannot influence the interpretation of Article 13 which must now be provided; however, it seems to me interesting to be able to say that the solution suggested by myself coincides in this matter with the foreseeable course of development of the Brussels Convention. In the second place, I would recall that the draft proposal for a directive on consumer credit, drawn up by the Commission, places contracts for the sale of goods on deferred payment terms within the category of ‘consumer credit agreements’ and defines the consumer as a natural person who is not acting in pursuance of a commercial or professional activity. That means that Community action for the protection of the consumer impinges on the field of sales on instalment credit terms from an angle which coincides with the conception of that phenomenon accepted by the Brussels Convention.
            
         
               6. 
            
            
               In conclusion, it is my opinion that the question put by the French Cour de Cassation, Civil Chamber, in the case of Bertrand v Ott should be answered as follows by this Court: ‘The sale of a machine agreed between two companies on the basis of a price to be paid by way of two deferred bills of exchange cannot be held to be a sale of goods on instalment credit terms within the meaning of Article 13 of the Brussels Convention’.
            
         (
            1
         )	Translated from the Italian.