The scope of ‘civil and commercial’ in the Brussels I Regulation (compensation for expropriation under the Nazi regime), and application of joinder to non-EU based defendants: the ECJ in Sapir

The ECJ yesterday issued its ruling in Case C-645/11 Sapir. The issues under consideration were the application of the Brussels I Regulation to proceedings brought by a State (Berlin) against a group of defendants, some of whom were based outside the EU, some inside the EU but not in Germany, and only a limited number in Germany. The request for preliminary review has been made in proceedings between, on the one hand, Land Berlin and, on the other, Ms Sapir, Mr Busse, Ms Birgansky, Mr Rumney, Mr Ben-Zadok, Ms Brown and five other persons, concerning the repayment of an amount overpaid in error following an administrative procedure designed to provide compensation in respect of the loss of real property during persecution under the Nazi regime.

Jurisdiction against the non-German based defendants could only theoretically be established on the basis of Article 6(1) of the Regulation, which allows for plaintiff to identify an anchor defendant in one Member State, and drag other defendants not based there into those proceedings:

‘A person domiciled in a Member State may also be sued:

1.       where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; (…)

The first issue under consideration was the nature of the proceedings. There was a whiff of ‘public law’ surrounding the procedure, given its core foundation in administrative law procedures and the involvement of a public authority. However the ECJ, and Trstenjak AG with it, considered these not to be material to the nature of the proceedings: the request for repayment of part of the sum was made on the basis of a provision in German law (unjust enrichment) which was generally available and in which neither the public nature of plaintiff nor the substantial grounds on the basis of which compensation was granted, played any role: the basis and the detailed rules governing the bringing of the action were unrelated to the authority acting ius imperii.

The second issue concerned the defendants’ substantial argument against the claim of unjust enrichment: they argued that they are entitled to an amount which exceeds a share of the proceeds of sale as the amount realised through that sale failed to reach the market value of the property and that those additional compensation claims preclude the applicant’s claim of unjust enrichment.  The AG suggested a ‘close connection’ (and thus a possibility to invoke Article 6(1)), as the additional compensation claims lodged fit in perfectly with the identical situation of law and fact in the actions, which the ECJ requires for the application of Article 6(1). Identical legal basis is not required (in particular, one of the defendants, the lawyer representing a large part of the group, was being pursued on the basis of pure tort, rather than unjust enrichment). Only the German laws in question (the Vermögensgesetz and the Investitionsvorranggesetz) can provide the defendants with the legal basis to justify the excess amount they received, which also requires an assessment, for all of the defendants, in relation to the same factual and legal situation.

The third issue concerned the application of Article 6(1) to non-EU residents: this, the Court held, was not the case. Article 6(1) clearly refers expressly to defendants domiciled in the EU. In order to sue a co-defendant before the courts of a Member State on the basis of Article 6(1) , it is necessary that that person should be domiciled in another Member State.

In Case C-51/97 Réunion européenne, the ECJ had similarly (given the need to apply special jurisdictional rules restrictively) held that Article 6(1) cannot be applied to bring an action before the Court of a Member State against a defendant, domiciled in a different Member State, who could only be sued in that Member State by virtue of a joinder with a suit against a party not domiciled in any of the Member States.

The judgment in Sapic is not revolutionary, but useful.

Geert.

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