Posts Tagged Brogsitter
Committeri v Club Med. The Court of Appeal parades CJEU precedent to distinguish contract from torts.
 EWCA Civ 1889 Committeri v Club Med , appeal against Dingeman J’s findings in  EHWC 1510 (QB) featured in a recent resit exam of mine, slightly later reporting therefore. Dingeman J’s analysis was confirmed by the Court of Appeal.
Mr Committeri lived and worked in London. He was injured when climbing an ice wall in Chamonix in France in 2011. He brought proceedings in England against Club Med and their insurers: they had provided the relevant travel and accommodation pursuant to a ‘team-building’ contract with the appellant’s employers, a Bank. The claim is pleaded by reference to that contract and Article L211-16 of the French Code de Tourisme (which imposes strict (safety) liability upon the providers of tourist accomodation: une obligation de résultat); contrary to English law which foresees in une obligation de moyens).
French law has considered that “proper performance of the contract” in a package holiday setting requires the absolute safety of the consumer, so that (unless the exceptions in the Code apply) when there is an injury on a package holiday the organiser will be liable.
The central issue is the proper characterisation of that claim. If it is a contractual claim then English law applies (the lex contractus agreed between the Bank and Club Med) and it is common ground that it will fail. If it is properly characterised as a non-contractual claim, French law applies and it is agreed that it will succeed.
At 52 Coulson LJ summarises the modus operandi per the European precedents as follows:
‘(a) The mere fact that a contracting party brings a civil liability claim against the other party does not by itself mean that the claim concerns “matters relating to a contract” but it will be sufficient if the conduct complained of may be considered a breach of contract (Brogsitter ) or if the purpose of the claim is to seek damages, the legal basis for which can reasonably be regarded as a breach of the rights and obligations set out in the contract (Brogsitter ).
(b) Only an obligation freely consented to by one person towards another and on which the claimant’s action is based is a ‘matter relating to contract’ (Ergo ).
(c) The classification of an obligation for the purposes of Rome I or Rome II depends on the (contractual or non-contractual) source of that obligation (Amazon, AG’s opinion ). A contractual obligation implies at the very least an actual and existing commitment (Amazon ).’
I would have added what I called Sharpston AG‘s ‘pedigree’ (one of my students seems to have mistakenly noted this down as ‘Paddy Pee’), ‘ancestry’, or ‘centre of gravity’ test in Ergo.
At 53: ‘On an application of all or any of those principles, it is clear that the pleaded strict liability claim can only be characterised as a contractual claim. …That contract is the source of the relevant obligations and imposed the necessary commitments. To put it another way, to use Judge Waksman’s words in AXA ( EWHC 3431 (Comm), the contract was not “a stepping stone to the ultimate liability of [the respondent but] the basis for the obligation actually relied upon…”.
A very useful reminder of the relevant precedents.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168.
Status updated: can a ‘relationship’ be a ‘contract’? CJEU says it’s complicated in Granarolo, and complements the Handte formula.
Update 4 October 2017 for the eventual judgment by the Cour de Cassastion see here: contractual relation upheld.
In C-196/15 Granarolo, extensive reference is made to Brogsitter, in which the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
Kokott AG Opined that there was no such contractual relationship in the case at hand: see my review of the Opinion. The Court held last week and was less categorical. It suggests a contractual relationship between the parties (which did not have a framework agreement in place: rather a long series of one-off contracts) should not be excluded: the long-standing business relationship which existed between the parties is characterised by the existence of obligations tacitly agreed between them, so that a relationship existed between them that can be classified as contractual (at 25).
What follows can be considered a CJEU addition to the rather byzantine double negative C-26/91 Handte formula: ‘matters relating to a contract is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’. In Granarolo at 26 the Court notes
The existence of a tacit relationship of that kind cannot, however, be presumed and must, therefore, be demonstrated. Furthermore, that demonstration must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.
These criteria obviously are quite specific to the question at hand yet it is the first time the Court, carefully, ventures to give indications of some kind of a European ius commune on the existence of ‘a contract’.
Whether any such contract then is a contract for the sale of goods or one for services, is not a call the Court wishes to make. It lists the various criteria it has hitherto deployed, with extensive reference in particular to C-9/12 Corman-Collins, and leaves the decision up to the national court.
Make a mental note of Granarolo. It may turn out to have been quite pivotal. Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124, Heading 126.96.36.199.9
In Brogsitter, the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
At the end of December, Kokott AG Opined in C-196/15 Granarolo (even now, early April, the English version was not yet available) effectively applying Brogsitter to the case at hand: an action for damages for the abrupt termination of an established business relationship for the supply of goods over several years to a retailer without a framework contract, nor an exclusivity agreement. Ms Kokott (at 17) points out that unlike Brogsitter, there is no forceful link with the contractual arrangements between parties which would be the foundation for jurisdiction on the basis of contractual (non) performance (which there would have been had there been a framework relation between the parties). Rather, the source for a claim between the parties is a statutory provision (it is not specifically identified: however presumable it relates to unfair commercial practices) that existing business relations cannot be abruptly halted without due cause.
Article 7(2) therefore should determine jurisdiction (and Article 4 of course: domicile of the defendant), not Article 7(1).
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52, Heading 184.108.40.206.9
I ask ergo I find out? Not necessarily so after judgment in Ergo Insurance and Gjensidige Baltic (distinguishing between contract and tort).
Is the relationship between two insurers, having covered liability for a towing vehicle cq a trailer, each subrogated in their insured’s rights and obligations, one of them currently exercising a claim against the other in partial recovery of the compensation due to the victim, non-contractual? That is the issue in Joined Cases C‑359/14 and C‑475/14 Ergo.
Like its AG, the CJEU dismisses a suggestion that Directive 2009/103 (relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability) includes a conflict of laws (applicable law) rule which is lex specialis vis-a-vis the Rome I Regulation. Indeed the Directive’s provisions do not indicate whatsoever that they can be stretched.
Then comes the core of the issue, the nature of the relationship underlying the claim. The AG had suggested this is contractual, using as I noted in my earlier posting, ‘centre of gravity’ (‘the centre of gravity of the obligation to indemnify is in the contractual obligation’); ‘rooted in’ (‘the recourse action by one insurer against the other…is rooted in the contracts of insurance’); and ‘intimately bound up’ (‘[the action] is intimately bound up with the two insurers’ contractual obligation‘). (at 62).
The Court did not repeat any of this terminology. It first suggests that the national court where the case is pending, needs to determine using Article 4 of Rome II (lex locus damni) whether the law so determined ‘provides for apportionment of the obligation to compensate for the damage’. This the AG had not expressly pondered, rather it may be implicit in her use of the conditional ‘where two or more insurers are jointly and severally liable’ ((only) used at 71 of her Opinion). Next, the Court holds, if there is such apportionment, the law applicable to the action for indemnity between the insurers of the tractor cq the trailer, needs to be determined using Article 7 of Rome I (which applies to insurance contracts).
The referring courts were looking I believe for more straightforward advice. Instead I fear the many conditions precedent expressed in the judgment may well leave plenty of room for counsel to further confuse these national courts. This arguably may have a knock-on effect given the repeated insistence by the CJEU that the provisions of Brussels I (Recast) on contract and tort, need to be applied in parallel with those of Rome I and II (not something I necessarily agree with but have come to accept as standing CJEU precedent).
Of tractors and trailers. Insurance contracts, subrogration, contracts and torts. Sharpston AG on the scope of Rome I and II.
First, a quick heads-up on precedent: the difference between ‘contract’ and tort’ in European private international law is crucial, as regular readers of this blog will have observed. Crucial, yet the concept is left undefined in the Brussels I (and Recast) Regulation (which has a different special jurisdictional rule for both), the Rome I Regulation on applicable law for contracts, and the Rome II Regulation on applicable law for torts. Undefined, for these foundational elements of private law are outside the reach of legal and political compromise in the legislative process. Yet courts of course do have to apply the rules and in doing so, have to distinguish between both.
The CJEU pushes an ‘autonomous’ EU definition of both concepts which in the past has led to the seminal findings in Jakob Handte (C-26/91) and Kalfelis. In Handte the Court held: the phrase ‘matters relating to a contract [ ] is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another.’ (the double negative exercised scholarship for some time). In Kalfelis the Court had earlier defined ‘tort’ as ‘all actions which seek to establish liability of a defendant and which are not related to a ‘contract’ within the meaning of Article 5(1).’ (5(1) has become 7(1) in the Recast).
Is the relationship between two insurers, having covered liability for a towing vehicle cq a trailer, each subrogated in their insured’s rights and obligations, one of them currently exercising a claim against the other in partial recovery of the compensation due to the victim, non-contractual?
Per Kalfelis, tort as a category is residual. Sharpston AG’s starting point in Joined Cases Ergo Insurance and AAS Gjensidige Baltic, Opinion issued yesterday, therefore is to examine whether the recourse action is essentially contractual in nature. In the negative, the action is non-contractual. The case is evidently made more complex by the underlying relationships between insurer and insured, and the presence of subrogration. In question is not therefore the relationship between the insurer and the victim: this is clearly non-contractual. The question is rather whether the action of one insurer against the other is contractual in nature, given the contractual relationship between insurer and insured, cq the non-contractual relationship between the insured and the victim.
Sharpston AG first gets two issues out of the way. Lithuania (both referred cases are pending in Lithuanian courts) is a signatory State to the Hague Convention on the law applicable to traffic accidents, which is left unaffected by Rome II by virtue of Article 28. However the Convention itself holds that it does not apply to recourse action and subrogation involving insurance companies. Further, a suggestion that Directive 2009/103 (relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability) includes a conflict of laws (applicable law) rule which is lex specialis vis-a-vis the Rome Regulation, was quickly dismissed. Indeed the Directive’s provisions do not indicate whatsoever that they can be stretched.
Then comes the core of the issue, the nature of the relationship underlying the claim. This, the AG suggests, is contractual. Relevant precedent referred to includes Brogsitter and OFAB. Essentially the AG puts forward an ancestry test: what is the ancestry of the action, without which the parties concerned would not be finding themselves pleading in a court of law?: she uses ‘centre of gravity’ (‘the centre of gravity of the obligation to indemnify is in the contractual obligation’); ‘rooted in’ (‘the recourse action by one insurer against the other…is rooted in the contracts of insurance’); and ‘intimately bound up’ (‘[the action] is intimately bound up with the two insurers’ contractual obligation‘). (at 62).
Incidentally, in para 20 of her Opinion the AG refers, in giving context, to the difference between Lithuanian and German law (the accidents both occurred in Germany) as regards the limitation periods for bringing a recourse action. In Rome II, limitation periods are included in Article 15 as being covered by the lex causae; ditto in Article 12 of Rome I. This pre-empts discussion on the matter for whether limitation periods are covered by lex fori (as a procedural issue) or the lex causae is otherwise not necessarily the same in all Member States.
If the CJEU confirms, preferably using the terminology of its AG, the tort /contract discussion in my view will have been helpfully clarified.
In particular, a contract for employment needs to be distinguished from a contract for the provision of services. ‘Contract of employment’ was addressed in the abstract by the CJEU in Shenavai, Case 266/85, where the Court identified a double requirement for it referred to the need for a contract to be qualified as a contract of employment: there must be durable relation between individual and company: a lasting bond, which brings the worker to some extent within the organisational framework of the business; and a link between the contract and the place where the activities are pursued, which determines the application of mandatory rules and collective agreements. However precedent value of Shenavai for the Brussels I and recast Regulation is necessarily incomplete, for at the time employees as a protected category did not yet exist in the Regulation and the Court’s findings on contracts of employment took place within the need to identify a ‘place of performance’ under the Brussels Convention’s special jurisdictional rule on contracts.
The Jenard and Möller report to the 1988 Lugano Convention suggested the relationship of subordination of the employee to the employer.
In Holterman the Court throws into the mix reference to its interpretation of secondary EU law on health and safety at work as well as European labour law, holding that ‘the essential feature of an employment relationship is that for a certain period of time one person performs services for and under the direction of another in return for which he receives remuneration’ (at 41).
Consequently the national courts now have quite a number of criteria which they need to apply in practice: it is not for the CJEU to do so in an individual case. In Holterman the Court does seem to suggest that once a worker finds himself qualified as an employee, for the purposes of the application of the Jurisdiction Regulation, that qualification will trump any other roles which that individual may play in the organisation (at 49: ‘the provisions of Chapter II, Section 5 (Articles 18 to 21) of Regulation No 44/2001 must be interpreted as meaning that they preclude the application of Article 5(1) and (3) of that regulation, provided that that person, in his capacity as director and manager, for a certain period of time performed services for and under the direction of that company in return for which he received remuneration, that being a matter for the referring court to determine.’).
In light of the deference to the factual assessment of the national court, the CJEU does complete the analysis with respect to (now) Article 7(1): if the contract is not one of employment, then the special jurisdictional rule of Article 7(1) needs to be applied. The director of a company, the Court holds, provides a service to the company within the meaning of Article 7(1)b. In the absence of any derogating stipulation in the articles of association of the company, or in any other document, it is for the referring court to determine the place where Mr Spies in fact, for the most part, carried out his activities in the performance of the contract, provided that the provision of services in that place is not contrary to the parties’ intentions as indicated by what was agreed. For that purpose, it is possible to take into consideration, in particular, the time spent in those places and the importance of the activities carried out there, it being a matter for the national court to determine whether it has jurisdiction in the light of the evidence submitted to it (at 64).
Finally, should national law also allow for an action in tort against the director of a company, the locus delicti commissi is the place where the director carries out his duties for the company (at 76). The locus damni is the place where the damage alleged by the company actually manifests itself; it cannot be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually taking place elsewhere (at 77-78).
All in all, a useful completion of the Shenavai criterion, and in the main a referral to the national court for factual analysis.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.
Defining ’employment’. CRUZ VILLALÓN AG in Holterman on applying Brussels I to defendant with dual director/employee capacity
CRUZ VILLALÓN AG Opined yesterday in C-47/14 Holterman (no EN version of the Opinion was available at the time of writing). What if a defendant is pursued both on the basis of his capacity as a director of the company, and for alleged failure properly to have carried out his duties as employee?
Applicant Holterman is incorporated in The Netherlands. Defendant is Mr Spies, a German national, domiciled in Germany. He was employed by applicant between 2001 and 2005/06, first as employee, subsequently also as director of Holterman’s establishments in Germany. Applicant alleges that defendant has caused damage as a result of improper fulfillment of his duties, indeed intentional recklessness, as director. Application is made at the court at Arnhem, where Spies successfully argues that the court has no jurisdiction on the basis that application has to be made of the protective category of ‘individual contracts of employment’.
Questions referred, were
1. Must the provisions of Section 5 of Chapter II (Articles 18-21) of Regulation (EC) No 44/2001 1 be interpreted as precluding the application by the courts of Article 5(1)(a) or of Article 5(3) of that Regulation in a case such as that at issue here, where the defendant is held liable by the company not only in his capacity as director of that company on the basis of the improper performance of his duties or on the basis of unlawful conduct, but quite apart from that capacity, is also held liable by that company on the basis of intent or deliberate recklessness in the execution of the contract of employment entered into between him and the company?
2 (a) If the answer to question 1 is in the negative, must the term ‘matters relating to a contract’ in Article 5(1)(a) of Regulation (EC) No 44/2001 then be interpreted as also applying to a case such as that at issue here, where a company holds a person liable in his capacity as director of that company on the basis of the breach of his obligation to properly perform his duties under company law?
(b) If the answer to question 2(a) is in the affirmative, must the term ‘place of performance of the obligation in question’ in Article 5(1)(a) of Regulation (EC) No 44/2001 then be interpreted as referring to the place where the director performed or should have performed his duties under company law, which, as a rule, will be the place where the company concerned has its central administration or its principal place of business, as referred to in Article 60(1)(b) and (c) of that Regulation?
3 (a) If the answer to question 1 is in the negative, must the term ‘matters relating to tort, delict or quasi-delict’ in Article 5(3) of Regulation (EC) No 44/2001 then be interpreted as also applying to a case such as that at issue here, where a company holds a person liable in his capacity as director of that company on the basis of the improper performance of his duties under company law or on the basis of unlawful conduct?
(b) If the answer to question 3(a) is in the affirmative, must the term ‘place where the harmful event occurred or may occur’ in Article 5(3) of Regulation (EC) No 44/2001 be interpreted as referring to the place where the director performed or should have performed his duties under company law, which, as a rule, will be the place where the company concerned has its central administration or its principal place of business, as referred to in Article 60(1)(b) and (c) of that Regulation?
Spies essentially argues that the employment section of the Regulation trumps concurrent jurisdiction on the basis of contract. ‘Contract of employment’ so far has not been addressed in the abstract by the ECJ, other than incompletely in Shenavai Case 266/85, where it referred to the need for a durable relation between individual and company. In particular of course, a contract for employment needs to be distinguished from a contract for the provision of services. The Advocate General takes inspiration from the protective intent of the employment contracts heading, to suggest that supervision and instruction, jointly summarised as ‘subordination’, are determining factors for positions of employment. Even higher management can find itself in such position, given that and provided its actions, notwithstanding a wide independent remit, are subject to control and direction of the companies’ bodies. Review of the company’s by-laws should reveal the existence of such control vis-a-vis higher management, read together with the terms and conditions of the contract of employment at issue (at 32). It is only, per Asscher, C‑107/94, if management itself through its shareholding, exercises control over those bodies, that the position of subordination disappears.
Once the national court, on the basis of ad hoc analysis, holds that there is a position of employment, the national court has to apply Brogsitter per analogia: namely whether the action concerned follows from an alleged improper fulfillment of that agreement (as opposed to an improper fulfillment of duties as a director).
In subsidiary fashion only, does the AG entertain the questions relating to Article 5(1) and 5(3) (now 7(1) and 7(2) respectively). Spies’ duties as a director (again, should the ECJ find against applicability of the employment section) have to be considered ‘contractual’ within the meaning of the Regulation. The place of performance of the obligation in the view of the AG needs to be determined using Article 7(1)b, ‘the place in a Member State where, under the contract, the services were provided or should have been provided;’. Using Car Trim and Wood Floor Solutions and quoting Stephanie Francq, the AG suggests the national court identify the location where the service was mainly provided.
The AG’s views on the employment heading, however, seem solid and I would be surprised were the ECJ to have to go into the subsidiary questions.