Posts Tagged Gothaer
The ECJ has issued its ruling in Gothaer, the AG’s Opinion in which I reported earlier. The Court first of all confirmed that the term ‘judgment’ within the meaning of Article 32 of Regulation No 44/2001 covers a judgment by which a court of a Member State declines jurisdiction on the ground of an agreement on jurisdiction, even though that judgment is classified as a ‘procedural judgment’ by the law of the Member State addressed.
Moreover, the ECJ held that the court in the Member State in which enforcement is sought, is bound by the finding of the first court – made in the grounds of a judgment, which has since become final, declaring the action inadmissible – regarding the validity of that clause. To justify its finding, it refers in principle to the very definition of recognition as highlighted in the Report Jenard: recognition must ‘have the result of conferring on judgments the authority and effectiveness accorded to them in the State in which they were given’. Accordingly, a foreign judgment which has been recognised under Article 33 of Regulation No 44/2001 must in principle have the same effects in the State in which recognition is sought as it does in the State of origin. It further emphasizes the same arguments as flagged by the AG in coming to its finding.
On the peculiarity that in the case at issue, the choice of court clause points way from the EU, which raises the question what effect can be given to such clauses under the Jurisdiction Regulation, the court concedes that Article 23 does not apply, however, like the AG, it refers to the Lugano Convention, which contains a proviso very much like Article 23 JR. That to me is a bit of an awkward finding: whether the choice of court clause points to a Lugano State or not ought to be irrelevant. It would, through the recognition process, make choice of court in favour of Lugano States in some way less ‘not covered’ by the JR than those pointing to non-Lugano States (and by flagging Lugano, the Court leaves open the question of jurisdiction clauses in favour of non-Lugano States). A further argument made by the court in my view is more convincing, namely the ‘but for’ argument:To allow a court of the Member State in which recognition is sought to disregard, as devoid of effect, the jurisdiction clause which a court of the Member State of origin has held to be valid would run counter to that prohibition of a review as to the merits, particularly in circumstances where the latter might well have ruled, but for that clause, that it had jurisdiction. (at 38)
Indeed typically the action in the court of origin is taken by the recalcitrant party (i.e. the one acting in spite of a choice of court clause), trying to convince the court of origin that it has jurisdiction on the basis of another Article in the JR, Whence indeed but for the clause, that court would most likely have exercised jurisdiction. A finding of validity of the clause therefore is likely to have been seriously considered. Allowing a court in another Member State to nevertheless exercise jurisdiction and refusing recognition and enforcement, would make the JR nugatory. This is in my view no different where as a result (such as here) no court in the EU will be able to hear the case.
Plenty of recognition and enforcement issues to ponder in Case C-456/11 Gothaer.
Krones AG, a German company whose transport insurers are Gothaer and others, had sold a brewing installation to a Mexican undertaking. Krones engaged Samskip GmbH, the German subsidiary of Samskip Holding BV, a transport and logistics undertaking founded in Iceland and established in Rotterdam (Netherlands), to organise and perform the transport of that equipment from Belgium to Mexico under a bill of lading which contained a term conferring jurisdiction on the courts of Iceland. The consignee and Gothaer and Others brought proceedings against Samskip GmbH in the Belgian courts, alleging that the consignment had been damaged during transport.
The Antwerp Court of Appeal (the actual judgment has not been published, however I do have a copy should you be interested) declared, in the operative part of its judgment, that it had ‘no authority to hear and decide the case’ after finding, in the grounds of the judgment, that the term in the bill of lading conferring jurisdiction on the courts of Iceland was valid and that, while Gothaer and Others could sue as successors in title to Krones AG, they were bound by that term. Antwerp did not, incidentally, clarify whether it found the choice of court clause (again: away from the EU) to be covered by the Jurisdiction Regulation or not. The validity of the clause was not sub judice: only the applicability to the insurers was.
Krones AG and Gothaer and Others brought a fresh action for compensation before the German courts: on what grounds is not mentioned in the documents before the ECJ – one assumes Article 2’s general proviso for domicile of the defendant. The Landgericht Bremen (thanks go to Piotr Stenko for a copy of that judgment) stayed the proceedings and referred to the European Court of Justice, raising the question of the legal effects of the judgment given in Belgium.
Bremen’s questions (reformulated by the AG) essentially were
– whether the term ‘judgment’ within the meaning of Article 32 of Regulation No 44/2001 covers a judgment by which a court of a Member State declines jurisdiction on the ground of an agreement on jurisdiction, even though that judgment is classified as a ‘procedural judgment’ by the law of the Member State addressed.
– If the answer to the first two questions is in the affirmative, it has to be determined whether Articles 32 and 33 of Regulation No 44/2001 must be interpreted as meaning that the court before which recognition is pleaded of a judgment by which a court of an other Member State has declined jurisdiction on the basis of an agreement on jurisdiction is bound by the finding relating to the validity and scope of that agreement which appears in the grounds of the judgment.
Article 32 prima facie is a definitional article (as an aside, I have often found it poor legislative technique not to include all definitions in one of the very first articles of the Regulation but rather scattered throughout ). However given that courts of other Member States have no or very little room for manoeuvre not to recognise and enforce ‘judgments’ given in other Member States, what exactly a ‘judgment’ is, evidently is very relevant.
In Gothaer Bot AG summarises the Court’s case law into three criteria: organic, procedural (closely related to organic), and substantive. Most definitely an attractive way to appreciate Article 32 JR.
The first criterion is organic. The judgment must emanate from a court or tribunal, that is to say, a body which acted independently of the other institutions of the State and impartially. (…) The second criterion, which cannot be separated from the first, is procedural. It requires that the rights of the defence were observed in the procedure which led up to the adoption of the judgment.(…) The third criterion is substantive. The judgment is characterised by the exercise of a power of assessment by the judicial body from which it emanates. That criterion means that a distinction must be drawn depending on whether the authority has a decision-making role or restricts itself to a more passive function, consisting for example in receiving the intentions of the parties to the proceedings. (…)’ (at 36 ff)
Consequently, in the AG’s view, a judgment by a court in a Member State, finding that it does not have jurisdiction because of a choice of forum clause pointing away from the EU (in the case at issue: Iceland), is a ‘judgment’ within the meaning of Article 32 JR.
The AG then refers to the usual suspects to underline the consequences of that finding: the principle of mutual trust per Gasser and Turner; the strict lis alibi pendens rule; the high degree of predictability built into the Regulation. Consequently (at 53 of the Opinion) the Regulation in the AG’s view includes among judgments that are capable of being recognised judgments by which the court first seised has ruled on its jurisdiction, whether it has declared itself to have jurisdiction or, on the contrary, has declined jurisdiction.
This is clear, the AG suggests where the court declares that it has jurisdiction. However Bot AG suggests it also ought to be the case where the court declines jurisdiction. The court asked to recognise and enforce the judgment, in doing so in cases of the first court refusing recognition, in the AG’s reasoning regains its freedom to review its own jurisdiction under the Regulation. The AG in this respect refers to the need to help avoid negative conflicts: ie one where no court is happy to entertain the claim. As the AG writes at 58, ‘A conflict of that kind could arise if the court second seised refused to acknowledge the judgment previously given and declined jurisdiction on the ground that the court first seised had jurisdiction.‘
However in the case at issue, of course, the ‘negativity’ of the conflict is such only between EU courts: an Icelandic court may be happy to (indeed feel itself obliged to) take the case, on the basis of the choice of court clause. I researched whether the Icelandic courts have actually done so – and failed to find a record (although that may be due to my dodgy Icelandic). It is likely though that had they actually done so, traces of that would have surfaced in the Opinion.
This is where the answer to the third question becomes relevant: is the court asked to recognise, bound by the substantial reasons of the court which issued the judgment, as to the rejection of jurisdiction? The AG acknowledges that choice of court in favour of a non-EU court is not covered by Article 23 JR – however the AG refers to a similar proviso in the Lugano Convention to justify essentially the extension of the means and motives of the JR to the facts at issue, This is where I disagree with the Opinion: Iceland may be a party to the Lugano Convention – however jurisdiction of an Icelandic court in casu was not established by virtue of the Lugano Convention. Both parties to the contract at issue were domiciled in the EU and employed the JR’s room for court of choice agreements, to agree forum in favour of an Icelandic court.
Agreements granting jurisdiction to a court outside of the EU, are not covered by Article 23. Whether the courts of an EU Member State on that occasion are entitled to decline jurisdiction in favour of the non-EU court, is unclear. In Owusu, the Court of Justice does not answer this question as it was not asked by the High Court. Léger AG does refer to the issue once or twice in his opinion in Owusu however does not really entertain it – as the question was not sub judice. However it would seem fair to say that under the Owuso approach, the ECJ almost certainly would argue that the courts of an EU Member State, where they have jurisdiction under an alternative ground in the Regulation, have to exercise that jurisdiction. The question is not properly answered by the Commission proposal for review, neither is it in my view by the AG in Gothaer. It is to be expected however that the Court given its flavour for judicial economy, will not even go as far as the AG in pondering so many issues.