Court Amsterdam on the impact of the lex fori prorogati’s consumer laws for choice of court. A high net value Australian businessman sails away from Dutch jurisdiction.

I am catching up a little on recent case-law and am focussing it seems on the consumer section (see also yesterday’s post). This Court Amsterdam judgment published on 8 September caught my eye for it discusses choice of court, applicable law for the substantive validity of same, and ‘consumers’ in the context of buying yachts (now that I write that, in my exams I often have consumers buying yachts). Thank you Haco van der Houven van Oordt for signalling the case.

A purchase agreement for a yacht worth €5.4 million was signed in Singapore between buyer, an Australian living in Australia, and a Dutch shipyard. Seller’s GTCs mention

‘Article 17 – Settlement of disputes 1. Each agreement between [claimant] and the other party is subject exclusively to the laws of the Netherlands. 2. Any disputes which arise between the other party and [claimant], including disputes relating to the interpretation of these terms and conditions, will be put exclusively before the competent judicial body in Amsterdam.’

Pre-delivery was scheduled for December 2018 in Italy. Buyer changes his mind a week after signature, saying he will not be able to honour the agreed price. Vendor pursues the contractual penalty clause of 25% of the sale price. 

The judge finds the consent to choice of court to have been validly expressed on the basis of A25 BIa, under the classic Colzani formula. References to the GTCs had been properly made in the written contract. A duly diligent contracting party could and should have read these GTCs. Defendant’s argument that the choice of court clause in the GTCs should have been the subject of specific negotiation, is rejected [4.3.3].

As for the substantive validity of choice of court, the Dutch court (unlike eg the Belgian Supreme Court in Happy Flights) does add renvoi to the mix per recital 20 BIa. Dutch private international law (like the BE rules, nota bene) makes Rome I applicable to contracts even for the subject-matter excluded of its scope of application, among which choice of court agreements. Lex voluntatis therefore rules and the court holds that the choice of law for Dutch law for the contract as a whole, extends to choice of law for the forum clause [4.3.7].

The defendant finally alleges invalidity of the choice of court agreement on the basis of the lex fori prorogati’s rules on ‘potestative’ (unreasonably onerous) clauses. On this point, the defence succeeds: [4.3.9]: the defendant has to be qualified as a consumer under Dutch law, despite his high net value and the object of purchase, and the GTCs per article 6.236 n BW should have included a clause giving the consumer the option to opt for the default court with jurisdiction (which one that would be is not clear to me and the judgment does not specify it).

Seeing as the choice of court agreement is held to be invalid, that the defendant is domiciled in Australia, and in the absence of a relevant bilateral agreement between the two countries, Dutch residual rules are applied to assess alternative grounds for jurisdiction. There is no Dutch forum contractus, given delivery in Italy [4.5.1, with reference ia to CJEU Car Trim] and no other jurisdictional grounds have any traction.

Conclusion: no jurisdiction for the Dutch courts. The case is good material for the lex fori prorogati rule and for the realisation that even outside the context of the consumer title of Brussels Ia (defendant not being domiciled in the EU, that title was not triggered), consumer law plays an important role in choice of court.

Geert.

Jabir and others v. KiK Textilien und Non-Food GmbH. German court kicks supply chain CSR litigation into the long grass. Questions on Statutes of limitation under Rome II left out in the open.

Update 11 April 2019 for Essex Law School /Anil Yilmaz legal opinion on the relevant common law principle at stake, see Opinion prepared for the case here.

Jonas Poell, Julianne Hughes-Jennett, Peter Hood and Lucja Nowak reported and succinctly reviewed Case No. 7 O 95/15 Jabir and Others v Kik early January – the ‘next week’ promise in my Tweet below turned out a little longer.

Survivors of a fire in a Pakistani textile supplying factory are suing Germany-based KIK as the “main retailer” of the merchandise produced in the Pakistani premises. Jurisdiction evidently is easily established on the basis of Article 4 Brussels Ia.

As Burkhard Hess and Martina Mantovani note here, claimants are attempting to have KIK held liable for not having promoted and undertaken, in practice, the implementation of “adequate safety  measures” in the Pakistani factory (producing clothes), thus breaching an engagement  they undertook in a Code of Conduct applicable to its relationship with its contractual  counterpart.

Prof Hess and Ms Mantovani’s paper ‘Current developments in forum access: Comments on jurisdiction and forum non conveniens European Perspectives on Human Rights Litigation’ incidentally is an excellent stock taking on the issues surrounding mass tort (human rights) litigation.

The Dortmund court held that the case is time-barred under Pakistani law which was the lex causae per Rome II, Regulation 864/2007. Now, I have not had access to the full ruling (lest the 3 page ruling linked above is precisely that – which I am assuming it is not), so a little caveat here, however the court’s discussion of limitation periods is startlingly brief. Article 15 Rome II includes ‘the manner in which an obligation may be extinguished and rules of prescription and limitation’ in the scope of application of the lex causae’. Yet as the development inter alia of relevant English statute shows (discussed ia by Andrew Dickinson in his Rome II book with OUP), there are a multitude of issues surrounding statutes of limitation. One of them being Article 1(3) Rome II’s confirmation that evidence and procedure is not within its scope, another Article 26’s ordre public exception which certainly may have a calling here.

I have reported before on the difficult relationship between A1 and A15 in Spring v MOD and in PJSC Tatneft v Bogolyubov.

The court at Dortmund also rejects the argument that parties’ settlement negotiations before the claims were filed amount to choice of (German) law per Article 14(1). That would have triggered the 3 year German limitation period as opposed to the 2 year Pakistani one. Dr Jungkamp, the chamber president, argues that parties did not have any reflection on the Pakistani (or indeed German) limitation period in mind when they corresponded on the ex gratia out of court settlement, hence excluding the intention (animus contrahendi) required to speak of choice of law. I would suggest that is a bit of a succinct analysis to conclude absence of choice of law. Parties need not be aware of all implications of such choice for it to be validly made.

Appeal is possible and, I would suggest, warranted.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.7, Heading 4.8, Chapter 8, Heading 8.3.

 

 

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