#3617 - Jurisdiction Under Brussels I Regulation 1 Cases - Conflict of Laws

JURISDICTION UNDER BRUSSELS I REGULATION (PART 1)

Article 1

‘Civil and commercial matters’

Verein fur Konsumenteninformation v Henkel [2002]

C, Austrian consumer protection body (VFK), brought proceedings under Brussels Convention against D, a German national; C believed there were unfair contract terms in contracts concluded between D and Austrian nationals. Was argued that Brussels Convention did not apply, as the VFK was exercising a public law power – and Article 1 of BC states that Convention only applies to ‘civil and commercial matters’. Held:

• Actions between a public body and a private person only fall outside of BC insofar as public body is exercising public law functions.

• However this irrelevant anyway as VFK is a private body.

• In addition, subject matter of action is private.

• Contracts being challenged are creature of private law.

• Thus the action simply seeks to make relationships governed by private law subject to review under Convention.

• Therefore subject matter of proceedings is civil, and Brussels Convention applies.

Preservatrice Fonciere TIARD v Netherlands [2003]

Netherlands sought to enforce a guarantee which C, a private company, had made in favour of the Netherlands. C claimed Netherlands did not have jurisdiction, as the subject matter of proceedings was not ‘civil or commercial’ as per Article 1 of Brussels Convention. Held:

• A claim by State for breach of a private law obligation falls under Convention insofar as it does not entail an exercise of powers by State going beyond that existing under rules governing private law relations.

• Hence fact that guarantee was made in favour of State does not matter, provided it was freely given under relevant rules applicable to private contracts.

Bankruptcy

Ashurst v Pollard [2001]

D was a bankrupt; claimed that the Portuguese courts had exclusive jurisdiction over an application by his trustee in bankruptcy to sell D’s property in Portugal. C argued that

1. Article 1 applied, which stated that ‘bankruptcy proceedings’ are exempt from Convention’s provisions

2. Article 22 applied

Held:

• The application was not caught by Article 1 of the Convention.

• This because bankruptcy was not the ‘principal subject matter of proceedings’

• Rather the main subject of proceedings was the legality of application by trustee in bankruptcy to obtain permission to sell D’s property.

• D could not rely upon Article 22.

• D was not trying to claim he enjoyed rights in the property enforceable against the whole world

• But rather he was only trying to assert rights against the claimant.

• Therefore trustee’s application was a claim in personam

Arbitration

Marc Rich [1991]

Proceedings were undertaken for the appointment of an arbitrator. D alleged that arbitration clause was invalid, and that a dispute as to existence or validity of an arbitration clause fell within the Convention; and that as validity of arbitration clause was a preliminary issue to case, entire case fell within Convention. Held:

• In order to determine whether a dispute fall within Convention, is necessary to look solely at the subject-matter of dispute.

• Here, subject-matter of dispute falls outside Convention (as it is to do with arbitration)

  • thus as this is case, existence of a preliminary issue which possibly falls within Convention does not suffice to bring entire proceedings within Convention

• Can be inferred from this that if subject-matter of proceedings were within Convention, fact that D alleges proceedings have been brought in breach of arbitration agreement is irrelevant.

Van Uden [1998] (ECJ)

C initiated arbitration proceedings (as per clause in contract) against D for non-payment; however also applied for interim relief in Dutch courts on grounds that D was delaying appointment of arbitrators and non-payment by D was disrupting C’s cash flow. Held:

• For Article 31, subject matter of proceedings on merits are irrelevant.

  • i.e. is only the goal of the requested interim measures which is relevant for determining whether case falls under BIR

• I.e. provided subject-matter of interim measures sought fall in BIR, Art 31 may be invoked

Domicile

Haji-Ioannu v Frangos [1999]

Both C and D were domiciled in Monaco, a state which is non-party to the Brussels Regulation. C argued that as D was domiciled in a non-contracting State, UK courts could not refuse jurisdiction. Held:

• By application of Greek law, D was domiciled in Greece.

• Article 59 requires courts of England, when considering whether D is domiciled in another Member State, to apply law of that other State.

• Under Greek law, the place where someone practices business is considered a ‘special domicile’.

• Thus D had special domicile in Greece.

• Therefore D had to be sued in Greece as per Brussels Regulation Article 2.

Ministry of Defence of Iran v Faz Aviation Ltd [2008]

D was a Cypriot company, whose owner was domiciled in Cyprus. C sought to sue D in England, and C claimed that English courts did not have jurisdiction as D was not domiciled in England for purposes of BIR Article 59. Held:

• A company’s principal place of business is where it is controlled or managed.

• And NOT the place in which most of that company’s business is carried out.

• On facts, most of D’s business was carried out at D’s day-to-day office in London.

• However D’s business was carried on and controlled from Cyprus by D’s owner.

• Thus D was not ‘domiciled’ in England as per Article 59.

Special Jurisdiction

‘Matters Relating to a Contract’

‘Contract’

Jacob Handte [1992]

C bought some goods off retailer. C then sought to sue manufacturer of those goods, D. Under French law, is contractual relationship between manufacturer of goods and consumer, even if goods were not bought by consumer off manufacturer. Held:

• Matter is relating to a contract in situations where there is an obligation freely assumed by one party towards another.

• Thus here, as the obligation was not freely assumed by manufacturer, was not a matter relating to contract.

Kleinwort Benson v Glasgow City Council [1997]

C and D entered contract, which was later found to be void ab initio. C then sought to claim restitution for sums paid under contract. Held:

• As contract never existed, claim for sums paid under it is not matter relating to contract.

• Thus Article 5 does not apply.

Article 5(1)(a)

Obligation in Question

De Bloos SPRL v Bouyer SCA [1976]

• The ‘obligation in question’ is that which forms basis of the legal proceedings.

• and not any obligation under contract whatsoever.

• Thus obligation in question is the one, imposed by the contract upon D, breach of which was being relied upon by C to found an action in damages.

Tessili v Dunlop AG [1976]

Two parties entered into a contract for sale of goods. Seller, D, was alleged to have delivered goods in faulty condition. C, the buyer, launched action for debt for D’s breach of contract. Jurisdiction fell to be decided under Article 5(1). In particular, C claimed that it was necessary to regard the ‘obligation in question’ as a substitute obligation, namely to pay debt to the buyer, which had arisen from C’s alleged breach of contract. Held:

• To find ‘place of performance’, court must:

1. determine applicable law based upon conflicts rules; and

2. use the applicable law to determine place of performance of the obligation forming basis of legal proceedings

• Is not case that obligation for purposes of Article 5(1) can be a ‘substitute’ obligation.

• i.e. even if seller is now under obligation to pay compensation for breach, relevant obligation is still delivery of goods.

Union Transport plc v Continental Lines [1992]

• Where claim is based upon more than one obligation, jurisdiction determined by which is the principal obligation.

Leathertex v Bodotex [1999]

D entered commercial agency agreement with C. Under contract, D had obligation to give reasonable period of notice if he intended to terminate (to be performed in Belgium), as well as to pay commission under agency contract (to be performed in Italy). Dispute over which obligation was one which ‘characterised contract’ for purposes of Article 5(1). Held:

• Where there are two independent obligations of equal significance, jurisdiction falls to be determined under article 2.

• Therefore C may sue:

1. in both countries for relevant obligation breached in each country; or

2. in country of D’s domicile for both breaches taken together

• On facts, D’s obligation to give reasonable period of notice was of equal significance to obligation to pay commission under agency contract.

• Hence C had option of suing in either Belgium or Italy.

Place of Performance

Kenburn Waste Management v Bergmann [2002]

D, a German, had signed compromise agreement in return for dropping of lawsuit under terms of which D promised not to contact C, an English company. D did so however, and C brought action for breach of contract. Issue was what was place of performance of D’s obligation. Held:

• Where D is under obligation not to contract someone, place of performance of obligation in question is country of residence of person D must not contact.

• And NOT D’s country of residence.

Viskase Ltd v Paul Keifel [1999]

D, a German manufacturer, supplied 8 machines for use in C’s factory in England. Machines were faulty and C sued for breach of warranty (under which D had obligation to provide machines suitable for their purpose). Held:

• Where obligation is to supply machine fit for particular purpose, place of performance is where machine is delivered.

• And NOT where machine is intended to be used.

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