Posts Tagged gtcs
Saey Home: The CJEU on choice of court and invoices, and place of performance of concession contracts.
C‑64/17 Saey Home, is yet another illustration of, mercifully for us conflicts lawyers, even fairly sophisticated businesses often fail properly to conclude commercial agreements. Here: what is said to be a semi-exclusive concession agreement, was concluded verbally only.
Saey Home & Garden is a company with its registered office in Kortrijk (Belgium), which specialises in the manufacture and sale, inter alia, of kitchen equipment and utensils bearing the trademark ‘Barbecook’. That company does not have a branch or establishment in Spain. Lusavouga has its registered office in Cacia, Aveiro (Portugal). Its premises are in Portugal. Its network covers Spain, inter alia, where it has no branch or establishment. Parties to the main proceedings concluded a commercial concession agreement concerning the exclusive promotion and distribution (with the exception of one client) in Spain.
First up, has choice of court in favour of the courts at Kortrijk (referred to by its French synonym Courtrai, but then without the ‘r’ in referral documents and by the CJEU) been validly made if this choice was only included in the general terms and conditions included in the invoices? Hoszig (where a jurisdiction clause is stipulated in the general conditions, such a clause is lawful where the text of the contract signed by both parties itself contains an express reference to general conditions which include a jurisdiction clause) and Leventis (the purpose of the requirements as to form imposed by Article 25(1) is to ensure that consensus between the parties is in fact established) are the most recent CJEU precedent referred to. Both of them build on standing CJEU principle: one must not be overly formalistic when assessing the existence of agreement, but one must be certain that such agreement exists. While it is up to the national court to assess this in fact, the Court does indicate it is unlikely to be the case when no written agreement has been made (neither initially nor subsequently confirming an earlier verbal agreement) and all one has are the invoices.
Choice of court being unlikely, next up is the application of Article 7(1) to determine which court has jurisdiction to hear an application for damages relating to the termination of a commercial concession agreement concluded between two companies, each established and operating in a different Member State, for the marketing of goods on the domestic market of a third Member State in which neither of those companies has a branch or establishment.
Referring to Corman-Collins, the Court classifies concession agreements as being service contracts, which per Article 7(1) second indent, leaves to be determined the ‘place in
a Member State where, under the contract, the services were provided or should have been provided;’. Note: the place in a Member State. Not different places. Per Wood Floor Solutions, when there are several places of performance of the obligation characteristic of a contract for the supply of services the ‘place of performance’ must be understood as the place with the closest linking factor, which, as a general rule, will be at the place of the main provision of services. This place of ‘main provision’ follows from the provisions of the contract and, in the absence of such provision, of the actual performance of that contract and, where it cannot be determined on that basis, the place where the agent is domiciled (still per Wood Floor Solutions). This specific determination is left to the referring court.
One imagines different national courts may have treated all of this as acte clair – except perhaps for the peculiarity of Spain being a Member State where neither of the parties has either domicile or branch.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206.
Update 1 October 2019 the CJEU held today and as expected found such agreements to be invalid. Update 21 March 2019. Szpunar AG opined today and suggests there is no such valid consent. Update 14 November 2018 Hearing took place yesterday – Opinion AG scheduled for 28 February 2019.
A quick flag to those of you following consumer protection and the Directive (2002/58) on privacy and electronic communications. In Case C-673/17 Planet49 the Court of Justice is being asked to clarify to what extent a website which pre-ticks boxes in general terms and conditions (here: to share relevant personal data) is compatible with relevant EU laws.
File of the case here (in Dutch only).
Thank you Stefanie Roosen for flagging the issue in what after a bit of searching I take it to be Delta Lloyd v Witsen. At issue is not immediately a conflict of laws concern however the case does highlight a discussion often occurring with respect to choice of court and choice of law: when do mere references to general terms and conditions (GTCS) become binding upon parties, all the more so when these refer to industry standards. Here: HISWA standards, the ‘Nederlandsche Vereeniging voor Handel en Industrie op het Gebied van Scheepsbouw en Watersport’ est.1932. The Netherlands are a seafaring nation: HISWA is big.
During repairs to the yacht Kontiki, the rear cable of the shipyard’s portal crane broke, the Kontiki fell and she suffered severe damage. The shipyard had in the course of negotiation, agreement and confirmation referred to no less than three different HISWA sets. The Rechtbank Noord-Holland held that as a result, none was validly incorporated into the contract (neither incidentally was a mere sign quayside, limiting liability).
As I have reported on this blog before (e.g. here), there is no magic wand when it comes to GTCS: all that is required is due diligence. Neat filing and dito reference. Electronically or otherwise: it is elementary for all things legal.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.1.
Thank you Jeffrey Neuburger for flagging Wiseley v Amazon in the US Federal Court of Appeal (9th circuit). Jeffrey has excellent overview and analysis so I will suffice with identifying a few tags: the issue of click-wrap agreements (when does one agree to GTCs contained in pop-ups and hyperlinks and the like); application of a putable law to a contract (the von Munchausen or ‘bootstrap’ principle); comparative dispute resolution law: how would EU law look at the issues? Have fun.
Learn your lines, son!: the (ir)relevance of grammar for choice of court underlined in Global Maritime Investments.
“These general terms and conditions will be governed by and construed in accordance with English law.
With respect to any suit, action or proceedings relating to these general terms and conditions each party irrevocably submits to the jurisdiction of the English courts.”
In Anchorage, the High Court had already dismissed a semantic approach to choice of court agreements in contracts (and choice of court clauses) subject to English law. In Global Maritime Investments Cyprus v O.W., Teare J considered in summary judgment, sought by GMI, whether the aforementioned clause is exclusive, and if not, whether proceedings commenced by GMI in England, block any future proceedings on the same (or wider) contractual issues sought by OW in Denmark. GMI had started proceedings in England following OW’s November 2014 filing for bankruptcy in Denmark. OW had initiated proceedings in Denmark in March 2015. At issue was among others the ‘netting-out’ provisions between parties (effectively, a final settlement of reciprocal dues in different currencies, with derivatives of commodity transactions being the underlying transactions between the parties in this case).
Teare J held that the clause even if not so phrased verbatim, was meant to be exclusive, among others in line with what ‘the reasonable commercial man’ (the bonus mercator, if you like) would have understood the clause to be, especially under the lex contractus, English law. All the more so in light of the use of ‘irrevocably’. At 51 he does offer sound commercial advice to avoid disputes such as the one at issue: it is desirable to employ transitive language, such as in ‘each party agrees to submit all claims’.
I do not think there is justification for the Court not to have considered the impact of the Brussels I (and /or Recast) Regulation on the clause: the judgment keeps entirely shtum about it. Under the rules of the Regulation, all clauses are considered exclusive unless specifically stated. Saying that the clause expressis verbis amounts to non-exclusivity, would be quite a stretch. (I agree it is not clearly worded exclusively – however that is exactly where the Brussels I Regulation is of assistance).
It is quite clear to me that this judgment (issued 17 August – I have delayed reporting for exam reasons) will not be the end of the jurisdictional affair. In particular, parties I am sure will be at loggerheads as to what litigation is to be considered ‘relating to these general terms and conditions’, in particular with OW’s insolvency proceedings in the background.
I have delayed reporting on judgment in Case C-322/14, Jaouad El Majdoub v CarsOnTheWeb.Deutschland GmbH, held 21 May 2015, for exam reasons. I reported earlier on the due diligence required of businesses when establishing choice of court through electronic means. The ECJ has now also had its say, in a case concerning a B2B contract for the purchase of a car. [Choice of court in a B2C context tends to be covered by the consumer contracts title hence is not at stake here. [Mark Young and Philipe Bradley-Schmieg review the relevance of the case for B2C contracts here].
Choice of court allegedly had been made in favour of the courts at Leuven, Belgium, in the vicinity of which the seller’s parent company has its head office. The buyer however sued in Germany, the domicile of the German daughter company (and of the buyer, a car dealer). Buyer claims that the contract at any rate was with the daughter company, not the mother company, and that choice of court had not been validly made. He submits that the webpage containing the general terms and conditions of sale of the defendant in the main proceedings does not open automatically upon registration and upon every individual sale. Instead, a box with the indication ‘click here to open the conditions of delivery and payment in a new window’ must be clicked on (known as ‘click wrapping’).
In essence therefore the question is whether the requirements of Article 23(2) of the Brussels I Regulation (now Article 25(2)) are met only if the window containing those general conditions opens automatically, and upon every sale. That Article was added at the adoption of the Brussels I Regulation, precisely to address the then newish trend of agreeing to choice of court (and indeed choice of law; but that is not covered by Brussels I) through electronic means.
The provisions on forum clauses in the 1968 Brussels Convention, Brussels I and the recast are drafted in a way ‘not to impede commercial practice, yet at the same time to cancel out the effects of clauses in contracts which might go unread’ (Report Jenard) or otherwise ‘unnoticed’ (the ECJ in the core case Colzani). the Report Jenard also notes that in order to ensure legal certainty, the formal requirements applicable to agreements conferring jurisdiction should be expressly prescribed, but that ‘excessive formality which is incompatible with commercial practice‘ should be avoided.
The first sentence of Article 25(1) discusses the parties ‘agreement’ as to choice of court. (It leaves a large array of national law issues untouched, such as consideration, mandate, 3rd party effect. etc. On some of those issues, see also Refcomp). The remainder of Article 25(1) concerns the possible formats in which agreement is testified. Article 25(2) (and 23(2) before it) accompanies Article 25(1) a’s option of having the agreement put down ‘in writing’.
In line with the requirement not to be excessively formalistic, the ECJ essentially requires that parties be duly diligent when agreeing to choice of court. If click-wrapping makes it possible to print and save the text of those terms and conditions before the conclusion of the contract, then it can be considered a communication by electronic means which provides a durable record of the agreement.
Note that the Court does not hold on whether the agreement is actually reached between the parties: only that click-wrap may provide a durable record of such agreement, where it exists. (One could imagine choice of court having been protested, for instance, or other issues of national law having an impact on the actual existence of the agreement. and one can certainly imagine a continuing discussion on what contract was concluded between what parties in the case at issue].