Posts Tagged Erfolgort

Universal Music: Szpunar AG suggests the Bier case-law does not apply to purely economic loss under Article 7(2) Brussels I Recast.


I have earlier reported on the referral in Universal Music, Case C-12/15. Szpunar AG opined today, 11 March (the English text of the Opinion is not yet available at the time I write this post) and suggests (at 37) that the Court not apply its Erfolgort /Handlungsort distinction per Case 21/76  Bier /Minnes de Potasse. He reminds the Court of Bier’s rationale: a special link between the Erfolgort and the case at hand, so as to make that place, the locus damni, the place where the damage arises, well suited to address the substantive issues raised by the claim. (He also reminds the Court, at 30, that the language of what is now Article 7(2) only refers to the harmful event; not in the slightest to damage).

In cases where the only damage that arises is purely economic damage, the locus damni is a pure coincidence (in the case of a corporation suffering damage: the seat of that corporation), bearing no relation to the facts of the case at all (lest it be entirely coincidental). The Advocate General skilfully distinguishes all relevant CJEU precedent and in succinct yet complete style comes to his conclusion.

The Court itself embraces its Bier ruling more emphatically than its AGs do (see the similar experience of Cruz Villalon AG in Hejduk).  That Universal Music is quite clearly distinguishable from other cases may sway it to follow the AG in the case at issue. However its fondness of Bier (judgment in 1976; it had been a hot summer that year) may I fear lead it to stick to its fundamental twin track of Erfolg /Handlungsort no matter the circumstances of the case.


European private international law, second ed. 2016, Chapter 2, Headings,

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Lazar: CJEU relates ‘ricochet’ losses to initial damage under Rome II.

Lazar v Allianz, Case C-350/14, was held on 10 December last. It addressed the issue of ‘ricochet’ damage in the Rome II Regulation on the law applicable to non-contractual obligations. Ricochet or ‘reflective’ or ‘indirect’ losses occur when someone suffers losses as a result of a tort directly causing damage to someone else.

The request has been made in a dispute between Mr Lazar, who resides in Romania, and the Italian insurance company Allianz SpA regarding compensation for material and non-material damage which Mr Lazar claims to have suffered in jure proprio by reason of the death of his daughter, a Romanian national who was resident in Italy, which occurred in Italy as a result of a road traffic accident caused by an unidentified vehicle. For Mr Lazar, it is more interesting for Italian law to be considered the lex causae.

The Opinion of Wahl AG neatly summarised the two opposing views: (at 40-41 of his Opinion):

According to the first view, (…) material and non-material damage suffered by the family members of a person who has died in another Member State does not necessarily constitute indirect consequences of the tort/delict for the purposes of Article 4(1) of the Rome II Regulation. It would follow in particular that, because it is based on an obligation that is distinct from the obligation as between the opposing party and the person who died in the accident, a claim for compensation in respect of material rights claimed by the close relatives of a person who has died as a result of a traffic accident which occurred in the State of the court seised must be assessed by reference to the law of the place in which the damage sustained by those relatives occurred, namely the place of their habitual residence, unless it can be demonstrated that, in accordance with Article 4(3) of the Rome II Regulation, it is clear from all the circumstances of the case that there are manifestly closer connections with another country.

According to the second view (…) the damage sustained, in their country of residence, by the close relatives of a person who has died in a road accident which occurred in the State of the court seised must be regarded as constituting indirect consequences of the damage suffered by the immediate victim of the accident. The term ‘country in which the damage occurs’ must be interpreted as referring to the place which caused the damage, which, in the main proceedings, is the place of the road accident.

He eventually opined in favour of the second view, taking inspiration ia from CJEU case-law on Article 7(2) of the Brussels I Recast (previously Article 5(3) Brussels I)- even though at 51 he cautioned against lifting interpretation from the jurisdictional Regulation for use in the applicable law Regulation. His main arguments were as follows:

(at 74) the interpretation whereby the general rule under which the expression ‘country in which the damage occurs’ in Article 4(1) of the Rome II Regulation extends to the place of the direct damage — in this case the place of the fatal collision — has the benefit of simplicity and objectivity where all the damage alleged actually originates from the same source.

(at 75) this is consistent with the foreseeability pursued by the drafting of the Rome II Regulation. In most cases, the person liable is able to anticipate the consequences in other countries of his conduct or of the conduct of persons for whom he is responsible. Similarly, the victim is generally informed of the legal context to which he was exposed or exposed his property. In other words, both the person liable and the victim were informed and took the necessary steps, in particular with regard to insurance, in connection with the applicable law in the country or countries in which damage might potentially occur.

(at 76) the general rule for determining the applicable law in the Rome II Regulation is characterised by neutrality. Taking the example of the material damage suffered by the survivors of a person who has died as a result of a traffic accident, it may be considered that the neutrality of the law would be jeopardised in so far as that damage is still located in the victim’s place of residence. (The AG notes that in other instances Rome II is not neutral: he refers in particular to Articles 6 (on acts of competition) and 7 (on environmental damage).

(at 77) such an interpretation is also consistent with the other idea underlying connecting factors in private international law, namely the idea of proximity, which is intended, as far as possible, to connect a situation to the law of the country with which it is most closely connected. Whilst the place of the accident is undeniably related to the other components of the liability, the domicile of the indirect victim is not necessarily so related. 

(at 79) the Rome II Regulation introduces corrective mechanisms which make it possible, in several respects, to avoid the apparent rigidity of the rule of the place in which the damage occurs.

Conclusion (at 83) The term ‘place in which the damage occurs’ must, further to the case-law on the Brussels Convention and the Brussels I Regulation, be understood as meaning the place of the occurrence of the event, in this case the road accident, which directly produced its harmful effects upon the person who is the immediate victim of that event.’

The Court itself, much more succinctly, agrees.

A singular event, therefore, leads to one applicable law, even if its ricochet effect causes damage elsewhere. That such damage is actionable separately (for it may create multiple obligations in tort) or even iure proprio does not impact that analysis.

A word of caution, however: the judgment only holds for singular events. More complex events, especially of a continuing kind, are much more likely to create direct harmful effects in a multitude of persons, potentially therefore also leading to more loci damni. The ricochet effect therefore is highly likely to echo again at Kirchberg.



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Universal: Dutch Supreme court (Hoge Raad) quizzes the ECJ on purely economic loss and the Brussels Regulation

(Thank you to Vincent Dogan and Freerk Vermeulen for flagging the case). In Universal, Case C-12/15, the Dutch Hoge Raad has asked the ECJ for assistance in determining whether and /or how Article 5(3) of the Brussels I Regulation (now Article 7(3) in the recast) needs to be applied to cases of purely economic loss (also known as purely financial loss).

Haven’t we seen that before? Yes, we have: in Zuid-Chemie, Case C-189/08, the same Hoge Raad asked essentially the same question, however the ECJ did not answer it, for there was also physical damage (with the same victim).

Universal Music International Holding BV is the mother company of among others a Czech group of companies, who acquired a target company in the Czech Republic. A calculation error by one of the lawyers advising the parties (Ouch. All us, lawyers, sympathise), led to Universal having to pay five times what it thought it was going to pay. Arbitration and settlement ensued. This included agreement that the holding company, plaintiff in the current proceedings, would pay the amount settled for. It duly did, from a Dutch bank account. It now sues the Czech lawyers who wrongly advised the Czech subsidiary and does so in The Netherlands, as the alleged Erfolgsort in its tortious relationship with these lawyers, is The Netherlands.

Questions referred, are whether purely economic loss sustained in the Erfolgort (and without direct loss, economic or otherwise, elsewhere) lead to jurisdiction for that Erfolgort; and if so, how one determines whether the damage is direct or indirect (‘follow-up’), and where that economic loss is to be located.

I have aired my unhappiness with the Erfolgort /Handlungsort distinction on this blog before. Most recently viz Hejduk. I blame Bier (the judgment. Not the (at least as it is spelled in Dutch) drink): extension of Article 5(3) seemed good in principle but led to a continuing need to massage the consequences. The court advisors to the Hoge Raad have sympathy for the view that Bier’s main justification for accepting jurisdiction for the Erfolgort (a close link with the case leading to suitability from the point of view of evidence and conduct of the proceedings) is not present in the case of purely economic loss, particularly where events for the remainder are entirely Handlungsort related. The ECJ may well follow this reasoning, although in doing so it might yet again create another layer of distinguishing in the Bier rule.


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