‘The Bundesgerichtshof was wrong to deny choice of court in favour of Virginia, on the basis of EU mandatory law.’ Discuss.

Such would be the title for a perfect exam question for an advanced conflict class. It would also kill the bird of making the point of German law and scholarship being particularly relevant to conflict of laws. In September 2012 (only just now brought to my attention), the Bundesgerichtshof denied a choice of court agreement in favour of the courts in Virginia. The agreement was part of a contract between a German agent and a principal from the US and co-incided with a choice of law clause, also in favour of the laws of Virginia. Under Virginian law, the agent would not have a right to indemnity, contrary to the commercial agents Directive, which was held in Ingmar to be part of EU mandatory law: that was enough for the German courts to refuse to accept the validity of the choice of court clause, and to accept jurisdiction for German courts on the basis effectively of a minimum presence rule (general jurisdiction over a defendant anywhere it maintains a registered branch or office).

Progress is to varying degree based on assimilation: I shall not therefore repeat the excellent analysis of Jennifer Antomo here.  Choice of court clauses in favour of non-EU courts are not covered by the Brussels I-Regulation. Yet when national courts refuse to acknowledge such choices and assume jurisdiction, the Rome I Regulation on applicable law for contracts, does come into play. In effect, the German court here refuses to acknowledge the clause on the basis of applicable law considerations, whence EU law is far from absent in the case. Some sort of judicial review with the ECJ might therefore have been warranted.

Geert.