Source: https://gavclaw.com/tag/article-71/
Timestamp: 2019-04-19 08:46:10+00:00

Document:
flightright. The extensive CJEU notion of ‘contract’. Mumbles on effet utile and residual private international law.
First of all that the special jurisdictional rules of the Brussels I Recast do not apply to defendants domiciled outside of the EU.
That was as such an obvious finding: these suits are subject to residual national rules on jurisdiction. However the Court makes a point, at 54, to emphasise that in accordance with the principle of effectiveness (effet utile), rules under national law cannot make it impossible or excessively difficult to exercise the rights conferred by EU law. Here: the rights of passengers under the flight delay compensation rules, Regulation 261/2004. Is that CJEU shorthand for suggesting that if a Member State were not to allow claimants based in the EU, to claim compensation against third-country defendants, it would contravene EU law?
Second, where an operating air carrier which has no contract with the passenger performs obligations under Regulation 261/2004, it is to be regarded as doing so on behalf of the person having a contract with that passenger. (At 64) that carrier must be regarded as fulfilling the freely consented obligations (a reference to the Handte formula) vis-à-vis the contracting partner of the passengers concerned. Those obligations arise under the contract for carriage by air. Consequently, an application for compensation for the long delay of a flight carried out by an operating air carrier such as (here) Air Nostrum, with which the passengers concerned do not have contractual relations, must be considered to have been introduced in respect of contracts for carriage by air concluded between those passengers and the carrier with whom they bought tickets. (Per the first bullet-point above, provided that carrier does have domicile in the EU).
Of note is that this finding of a jurisdictional trigger under the rule of contracts (7(1), does not necessarily imply that at the substantive level, the court with jurisdiction will eventually decide that there is a contract on the basis of the lex causae.
Finally, to determine per Article 7(1)b second -, the court of ‘the place in a Member State where, under the contract, the goods were delivered or should have been delivered’, a contract for carriage by air, such as the contracts at issue in the cases in the main proceedings consisting of a single booking for the entire journey, establishes the obligation, for an air carrier, to carry a passenger from a point A to a point C. Such a carriage operation constitutes a service of which one of the principal places of provision is at point C. That finding is not called into question by the fact that the operating operates only the carriage on a flight which does not finish at the place of arrival of the second leg of a connecting flight in so far as the contract for carriage by air relating to the connecting flight covers the carriage of those passengers to the place of arrival of the second leg.
Saey Home: The CJEU on choice of court and invoices, and place of performance of concession contracts.
C‑64/17 Saey Home, is yet another illustration of, mercifully for us conflicts lawyers, even fairly sophisticated businesses often fail properly to conclude commercial agreements. Here: what is said to be a semi-exclusive concession agreement, was concluded verbally only.
Saey Home & Garden is a company with its registered office in Kortrijk (Belgium), which specialises in the manufacture and sale, inter alia, of kitchen equipment and utensils bearing the trademark ‘Barbecook’. That company does not have a branch or establishment in Spain. Lusavouga has its registered office in Cacia, Aveiro (Portugal). Its premises are in Portugal. Its network covers Spain, inter alia, where it has no branch or establishment. Parties to the main proceedings concluded a commercial concession agreement concerning the exclusive promotion and distribution (with the exception of one client) in Spain.
First up, has choice of court in favour of the courts at Kortrijk (referred to by its French synonym Courtrai, but then without the ‘r’ in referral documents and by the CJEU) been validly made if this choice was only included in the general terms and conditions included in the invoices? Hoszig (where a jurisdiction clause is stipulated in the general conditions, such a clause is lawful where the text of the contract signed by both parties itself contains an express reference to general conditions which include a jurisdiction clause) and Leventis (the purpose of the requirements as to form imposed by Article 25(1) is to ensure that consensus between the parties is in fact established) are the most recent CJEU precedent referred to. Both of them build on standing CJEU principle: one must not be overly formalistic when assessing the existence of agreement, but one must be certain that such agreement exists. While it is up to the national court to assess this in fact, the Court does indicate it is unlikely to be the case when no written agreement has been made (neither initially nor subsequently confirming an earlier verbal agreement) and all one has are the invoices.
Choice of court being unlikely, next up is the application of Article 7(1) to determine which court has jurisdiction to hear an application for damages relating to the termination of a commercial concession agreement concluded between two companies, each established and operating in a different Member State, for the marketing of goods on the domestic market of a third Member State in which neither of those companies has a branch or establishment.
a Member State where, under the contract, the services were provided or should have been provided;’. Note: the place in a Member State. Not different places. Per Wood Floor Solutions, when there are several places of performance of the obligation characteristic of a contract for the supply of services the ‘place of performance’ must be understood as the place with the closest linking factor, which, as a general rule, will be at the place of the main provision of services. This place of ‘main provision’ follows from the provisions of the contract and, in the absence of such provision, of the actual performance of that contract and, where it cannot be determined on that basis, the place where the agent is domiciled (still per Wood Floor Solutions). This specific determination is left to the referring court.
One imagines different national courts may have treated all of this as acte clair – except perhaps for the peculiarity of Spain being a Member State where neither of the parties has either domicile or branch.
Aristou v Tesco Personal Finance. Article 7(1) and (2) entertain the Cypriot courts.
Thank you Andreas Christofides for flagging Aristou v Tesco Personal Finance, a case which engaged Article 7(2) and, I presume, Article 7(1) Brussels I Recast: forum delicti cq forum contractus. I tried to obtain copy of judgment but failed. It might not have helped me much anyway for I assume it was drafted in Greek.
For the facts of the case please refer to the link above. From Andreas’ description of the case I am assuming the Cypriot court firstly must have decided there was a contract between claimant and the UK bank, per Handte; that this was a service contract; and that per 7(1)b second indent, that service was provided in the UK. And that for the application of Article 7(2) both locus delicti commissi and locus damni were also the UK. (The court may in doing so have referred to Universal Music: not just location of the bank account in the UK but other factors, too).
Any Greek readers, in possession of the judgment: please correct if need be.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.7; Heading 2.2.11.1.b.
Aspen Underwriting: When the domicile ship has sailed, litigation splinters. And distinguishing between contract and tort.
Update 21 November 2018 the Court of Appeal confirmed today:  EWCA Civ 2590.
Aspen Underwriting v Kairos Shipping et al  EWHC 1904 illustrates the splintering of claims which may well occur when plaintiff chooses to ignore Brussels I’s core jurisdictional rule of domicile of the defendant. Evidently such splintering often is the strategic intention of a plaintiff and even if it does inconvenience them, having part of the claims settled by one court rather than another may still be its overall preference. The case however also highlights important crossed wires between the common law and EU law on the qualification of ‘tort’, and the relation between Rome II and Brussels I (Recast).
The vessel ATLANTIK CONFIDENCE sank in the Gulf of Aden in 2013. It had earlier been held in a limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners. In the current action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy (“the Policy”) in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel’s mortgagees, Credit Europe Bank NV, the Third Defendant (“the Bank”).
The Bank is domiciled in the Netherlands. and maintains that under the Brussels Regulation the High Court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that the High Court does have such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on the court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England.
Teare J rejected the first and second argument on the basis of analysis of the settlement. He then looks into Article 7(2) Brussels I Recast. The insurance heading of the Regulation does not apply as the relations concern those between two professional parties (at 72 the High Court refers to C-347/08 Voralberger; the CJEU confirmed later in C-521/14 Sovag).
Whether the claim of misrepresentation leading to the settlement, is one in tort or one in contract depends on how closely one finds it to be connected to the contract at issue (the Settlement). Plaintiff suggests that where such misrepresentations induce a contract, in this case the Settlement Agreement, the resulting claims are not matters relating to tort within the autonomous meaning of Article 7(2) but are matters relating to a contract within Article 7(1).
Oddly no reference here is made to relevant CJEU precedent including recently Granarolo and Kareda.
Of note finally is that Kleinwort Benson was issued post Kalfelis but prior to Rome II, which contains a specific heading on unjust enrichment. Notwithstanding its clear non-contractual nature (‘non-contractual’ being the generic title of Rome II which therefore encompasses more than just torts), it is not generally considered a tort: this continues to create issues in the application of Rome II.
A good case to illustrate the lasting challenges in distinguishing contracts from torts.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.
Choice of court in bond prospectus. The CJEU in Profit Investment Sim.
The CJEU has in my view taken the sensible approach in C-366/13 Profit Investment Sim, on (among others) whether choice of court included in a bond prospectus, binds not just the original transactional parties but also the buyers of such bonds on the secondary markets or via intermediaries. (An issue which many of us pondered in Kolassa but which was not sub judice there).
Parties at issue were Commerzbank (formerly Dresdner), the bond issuer; Redi, financial intermediary licensed by the UK FSA and subscriber of all relevant bonds on the primary market; and Profit, an Italian company, who bought part of the bonds of Redi, on the secondary market. Dresdner’s prospectus contains choice of court in favour of the English courts.
First, on the issue of the jurisdiction clause. The referring court asks, in essence, whether Article 23(1)(a) and (c) of Regulation 44/2001 (both now part of Article 25) must be interpreted as meaning that a jurisdiction clause, such as that at issue in the main proceedings, satisfies the formal requirements laid down in Article 23(1)(a) [‘in writing or evidenced in writing’] where (i) it is contained in a prospectus produced by the bond issuer concerning the issue of bonds, (ii) it is enforceable against third parties who acquire those bonds through a financial intermediary and (iii), in the event that the first two parts of the second question are answered in the negative, it corresponds to a usage in the field of international trade or commerce for the purpose of Article 23(1)(c).
Choice of court in the prospectus and the impact on the primary market.
The Court first of all holds that the ‘formal requirement’ of (now Article 25 a (a) ”in writing or evidenced in writing’ for the issue of choice of court between Dresdner and Redi is only met (along the lines of Colzani Case 24/76) if the contract signed by the parties upon the issue of the bonds on the primary market expressly mentions the acceptance of the clause by Redi, or contains an express reference to the prospectus. The latter in particular is quite likely.
Choice of court in the prospectus and enforceability against third parties acquiring through a financial intermediary.
Next, the Court (at 30) holds that the same two alternatives apply for the relationship between Redi and Profit. Here the court refers to Refcomp and distinguishes it, basically by pointing to the specific examples of bills of lading and choice of court in shareholders registries, cases in which the CJEU had previously accepted transferability of choice of court to third parties, in specific circumstances. (Please refer to both the Refcomp judgment and to current judgment (at 33 ff) for detail).
The Court consequently held (at 37) that choice of court contained in a prospectus produced by the bond issuer concerning the issue of bonds may be relied on against a third party who acquired those bonds from a financial intermediary if it is established, which it is for the referring court to verify, that (i) that clause is valid in the relationship between the issuer and the financial intermediary, (ii) the third party, by acquiring those bonds on the secondary market, succeeded to the financial intermediary’s rights and obligations attached to those bonds under the applicable national law, and (iii) the third party had the opportunity to acquaint himself with the prospectus containing that clause. (Emphasis added).
The emphasis I added is quite important: the CJEU does not hold that such succession is somehow part of an EU Ius Commune.
Finally, if the answer to the first two questions is negative, is there usage in international trade or commercial custom between the parties?
This, the Court holds, has to be determined by the national court. The CJEU (at 48) recalls its earlier case-law in particular C-106/95 MSG: actual or presumed awareness of a usage on the part of the parties may be made out, in particular, by showing either that the parties had previously had commercial or trade relations between themselves or with other parties operating in the sector in question, or that, in that sector, a particular course of conduct is sufficiently well known because it is generally and regularly followed when a particular type of contract is concluded, so that it may be regarded as being an established practice.
The Court does though give a few more practical things which the national court needs to look out for: at 49. In order to determine, in the main proceedings, whether the insertion into the prospectus of a jurisdiction clause constitutes a usage in the sector in which the parties operate, of which those parties were aware or ought to have been aware, the referring court must take into account, inter alia, the fact that that prospectus was approved in advance by the Irish Stock Exchange and made available to the public on the latter’s website, which does not seem to have been contested by Profit in the proceedings on the merits. In addition, the referring court must take account of the fact that it is undisputed that Profit is a company active in the field of financial investments as well as of any commercial relationships it may have had in the past with the other parties to the main proceedings. The national court must also verify whether the issue of bonds on the market is, in that sector, generally and regularly accompanied by a prospectus containing a jurisdiction clause and whether that practice is sufficiently well known to be regarded as ‘established’.
Lest one forgets, the Court’s judgment is also relevant for a more general query on the nature of (now) Article 7(1): must the action seeking the annulment of a contract and the restitution of the amounts paid on the basis of a document the nullity of which is established, be regarded as ‘matters relating to a contract’ (the existence of which plaintiff seeks to dispute)? Yes, it does: if only (at 54) to ensure that Article 7(1) cannot simply be torpedoed by one party claiming that there is no contract.
(The judgment also reviews the conditions of application of (now) Article 8(1), with respect to ‘irreconcilability’ of judgments).
This judgment is quite relevant in yet again the CJEU having to defer to national law on the issue of transferability (see the emphasis I added, above). The Court very clearly does not wish to overplay its hand in trying to force a European Ius Commune in private law, via the use of private international law.

References: CJEU 
 CJEU 
 CJEU 
 CJEU 
 CJEU 
 EWCA 
 CJEU 
 CJEU 
 CJEU 
 CJEU 
 CJEU 
 CJEU 
 CJEU 
 CJEU