The CJEU in Ellmes Property Services. Forum contractus in the case of real estate co-ownership with echoes of De Bloos.

The CJEU held yesterday in C‑433/19 Ellmes Property Services.

On the application of Article 24(1) Brussels Ia rights in rem it confirms Szpunar AG’s Opinion which I discussed here: the erga omnes character or not of the rights relied upon needs to be confirmed by the referring court, for A24(1) to be engaged.

I suggested the forum contractus analysis was the more exciting one. The Advocate General advised it be determined by the Italian judge following the conflicts method per CJEU 12/76 Tessili v Dunlop, with little help from European harmonisation seeing i.a. as the initial co-ownership agreement dates back to 1978.

The Court held at 39 that the fact that a downstream co-owner was not a party to the co-ownership agreement concluded by the initial co-owners has no effect on there being a contract per A7(1)(a)  BIa, per Ordre des avocats du barreau de Dinant and Kerr. 

Unlike the AG, however, the CJEU does not hold that the Tessili Dunlop looking over the fence test is required. It comes seemingly uncomplicated to the conclusion of the locus rei sitae as the forum contractus. At 44, yet linking it to the intention of the contractual obligations:

It seems that that obligation is thus intended to ensure the peaceful enjoyment of the property subject to co-ownership by the owner of that property. Subject to verification by the referring court, that obligation relates to the actual use of such property and must be performed in the place in which it is situated.

This may however harbour more uncertainty than first meets the eye. The CJEU here seems to suggest the original contractually designed ‘peaceful enjoyment by the owner’ , which indicates the contractual performance as being one of ‘actual use’ as determining the forum contractus.  A claim relating to a more immaterial use of the property, such as arguably letting the property for financial gain, or indeed an intention to divest the property, would in this perception not necessarily be linked to the locus rei sitae – which brings one back to the discussion entertained by the AG: depending on who brings which claim and how that claim is formulated (an echo from De Bloos, whose usefulness is currently sub judice in Wikingerhof), forum contractus will vary.

Geert.

(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.6.1 (cited by the AG) and Heading 2.2.11.1.

(Third edition forthcoming February 2021).