Posts Tagged Article 25
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.
Referring to Corman-Collins, the Court classifies concession agreements as being service contracts, which per Article 7(1) second indent, leaves to be determined the ‘place in
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.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206.
 EWHC 2598 (Comm) Kaifer Aislimientos, is a good illustration of the limits of Article 25 juncto recital 20’s lex fori prorogati rule.
Claimant argues that the Court has jurisdiction pursuant to Article 25 Brussels I Recast because the relevant contract contains an English exclusive jurisdiction clause and further contends that the relevant contract was concluded by AMS Mexico and/or AMS on behalf of AT1 and Ezion as undisclosed principals and that, as undisclosed principals, the contract – together with the jurisdiction agreement – was binding on AT1 and Ezion.
That is the only part of the judgment to feature the Brussels Regulation at all. Peter MacDonald Eggers DJ could have referred to CJEU precedent pro inspiratio, including Refcomp for instance. He could certainly also have referred to recital 20, and equally failed to do so.
In substance he applies the Brussels I Recast rule by applying lex fori prorogati (here: English law) to all but the formation of consent questions relevant to the validity of choice of court (here: under what circumstance undisclosed principals are subject to choice of court).
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.
Many thanks to Andrew Savage and Nick Payne for flagging  EWHC 1968 (Comm) Bestolov v Povarenkin a little while ago, and for sending me copy of the judgment at the time. Apologies for late reporting: frustratingly even at gavclaw we cannot always devote the amount of time to the blog we would wish. Dr Maganaris in the meantime also has summary here.
As readers no doubt are aware, the Brussels I Recast Regulation (Article 62) does not define ‘domicile’: it defers to national private international law on the issue. The Civil Jurisdiction and Judgments Order 2001 establishes that a person is domiciled in England for the purpose of the Brussels Regulation (recast) if: the person is “resident” in England; and (cumulatively) the person has a “substantial connection” to England. Bryan DJ takes us through the relevant (and often colourful) precedent and notes, importantly, at 28 that the consequence of the English rules is that the same person can be resident in two different jurisdictions at the same time. At 44, he summarises with a list of criteria, and decides on the facts of the case that Mr Povarenkin is indeed domiciled in England (the substantial connection test having been more easy to determine than that of residence).
Subsequently the High Court reviews at length whether there was a valid choice of court agreement under Article 25 of the Regulation – which at this jurisdictional stage of the proceedings Bryan DJ decides there was not (choice of law for the relevant contracts being English law, was justifiably not considered definitive in this respect), at least not clearly. Obiter, the judge reviews forum non conveniens, at lenght in fact (and in a very clear way with a keen eye on relevant precedent as well as court practice in England) however he holds both before and after the obiter that evidently given Owusu, forum non conveniens has no calling.
A well written judgment, the approach of which on domicile evidently goes beyond having relevance merely for the English courts: for under the Regulation, courts in other Member States, too, may have to consider whether parties are domiciled in an EU Member State other than their own including, for the time being, the United Kingdom.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.3, Heading 18.104.22.168.
Thank you Tom Whitton and Helen Kavanagh for flagging Algeco Scotsman PIK SA  EWHC 2236 (Ch). Algeco has COMI in Luxembourg. This was clear when the relevant scheme of arrangement (‘SAR’) was being discussed. To manage potential problems at the jurisdictional stage, Hildyard J at 22 lists the precautions the company and the majority of the lenders took:
‘Accepted by the relevant 75 per cent or more, was first, the amendment of the governing law clause in the PIK Loan Agreement to change the governing law from New York law to English law; secondly, the amendment of the jurisdiction clause to submit the parties to the non-exclusive jurisdiction to the courts of England; and thirdly, a waiver of any restrictions under the PIK loan agreement so as to permit the company to take all steps necessary to confirm or establish sufficient connection with England including, if appropriate, to take steps to ensure that its COMI is in England.’
When the unsuspected reader sees ‘COMI’ of course (s)he is forgiven for immediately pondering application of the EU’s Insolvency Regulation – quod certe non: for it is clear (ia as a result of schemes of arrangement not being included in relevant Annex) that SARs fall under company law. Hildyard J’s jurisdictional kick-off at 43 is telling: ‘Dealing first with jurisdiction, the primary question is whether this Luxembourg company, the subject of the scheme, is a qualifying company so to be subject to section 895 of the Companies Act’. Idem at 45.
At 47 the High Court then applies the jurisdictional test viz the Brussels I Recast Regulation arguendo: if it were to apply (which the English Courts have taken no definitive stance on), would an English court have jurisdiction? Yes, it is held: under Article 8 (anchor defendants) and under Article 25 (choice of court).
Yet this in my view is where recourse to SARS in the English courts continues to be exposed: loan agreements and facilities agreements now routinely adopt choice of court and law in favour of English courts and ditto law. Yet where they do not, or did not, the ‘willing’ creditors consent to a change in the agreement in favour of the English courts, with the unwilling creditors left behind. Whether this holds scrutiny under Rome I is far from certain. As for Article 8, its use here may be seen as a form of abuse, disciplined under the Regulation.
Hildyard J considers the case one of ‘good forum shopping’ (at 57-58), with reference to Apcoa which I review here. The concerns above continue in my view to highlight weaknesses in the construction, which so far have not led to any collapse of this restructuring tourism. At 58 the High Court emphasises that there are cases of inappropriate forum shopping in this context (one of that includes haste) yet the role of Rome I in this context has so far played little of a role.
It is noteworthy that in my view (and I so testified in re Apcoa) even a wrong view of the English courts on Rome I’s impact, would not suffice for jurisdictions outside of the UK to refuse to recognise the scheme under Brussels I – all with the huge Brexit caveat evidently.
(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.