Posts Tagged Granarolo

DES v Clarins. The law applicable to ending commercial agency: Granarolo (and Rome I’s /Rome Convention’s overriding mandatory law rules) applied by Paris Court of Appeal.

In RG 16/05579 DES v Clarins (I have a copy on file for those finding it difficult to get access) the Paris Court of Appeal on 19 September 2018 effectively applied the CJEU’s Granarolo judgment on jurisdiction, to issues of applicable law. Yet it leaves many questions unanswered and does not carry out a neat and tidy analysis at all.

The case was signalled to me by , who has complete analysis here in French as well as here in English.

Companies belonging to the Clarins group (of France and Luxemburg) were sued for breach of their business relationship with a French company that distributed Clarins cosmetics in Algeria through local companies there, and for the alleged sudden halt in negotiations to try and resuscitate their contractual relationship.

The Court of appeal first of all (p.16-17 of the PDF version of the judgment) summarily rejects objections to the anchoring of non-France based defendants onto Clarins, with domicile in département 92 – Hauts de Seine: claimants request damages from all defendants, on the basis of the same facts and the same legal basis. So as to avoid conflicting judgments the Court sees no reason at all not to join the cases.

In terms of applicable law, the Court refers to Granarolo to qualify the relationship as contractual (reference is made to a tacit contract), yet then skips the application of the cascade rules of the Rome Convention (which applied ratione temporis rather than Rome I) to simply jump straight to the qualification as the relevant French rules as lois de police. As Christophe points out, there are plentry of the Convention’s default categories which could have applied to the case. Skipping the cascade to go straight to the exception is not the right way to go about conflict of laws.

The Court similarly cuts plenty a corner by summarily qualifying the sudden stop to negotiations to resuscitate a previous contractual relationship as non-contractual and applying French law as lex loci damni per Rome II (p.18), particularly as Rome II has a specific rule for culpa in contrahendo.

I am assuming an appeal with the Supreme Court is underway.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9; Chapter 3, Heading 3.2.8, Heading 3.2.8.3).

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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 2.2.11.2, Heading 2.2.11.2.9

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Kokott AG applies Brogsitter in Granarolo: Tort following abrupt ending of business relations.

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).

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9

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