And the winner is….National law. Saugmandsgaard ØE AG in Austro-Mechana on Tort and reproduction rights.

Determining whether a legal relationship is one in tort, for the purposes of (now) Article 7(2) of the Brussels I Recast Regulation, is in principle subject to autonomous interpretation. National law ought not to feature (emphasised ia in Melzer). In the Brussels I Regulation, Article 5(3) features alongside Article 5(1)’s jurisdictional rule for contract. (In the Recast Regulation, Artt 7(1 and (2)). Sometimes, as in Brogsitter, both are present between two contractual parties and one needs to be separated from the other. In Kalfelis, the CJEU defined ‘tort’ as ‘all actions which seek to establish the liability of a defendant and which are not related to a “contract” within the meaning of Article 5(1).

Tobias Lutzi’s review is very useful in reminding us of the need to distinguish the two tracts of the Kalfelis definition. Just focusing on Brogsitter might lead one into thinking that Article 5(1) and 5(3) [7(1) /7(2)] ‘dovetail’: i.e. if it is not the one, it is the other (with tort being the subordinate category). That is however clearly not the case: that it may have looked like this in Brogsitter is due to liability being present in any case: the issue was there where contractual liability stops and liability in tort takes over.

Article 5(3) therefore requires an ‘action which seeks to establish the liability of a defendant’ which leads the Advocate General here into lengthy review of the Austrian implementation of EU law on copyright levies. With respect, I do not think that is what is either called for or justified. Article 5(3) requires an autonomous, EU interpretation. Too much interference of national law spoils that broth – a point also made in Melzer. Moreover the application of the jurisdictional categories is just that: it determines jurisdiction only. Once that settled, the national courts regain their authority to requalify and indeed may still decide that there is no liability in tort (or contract, as the case may be) at all, but rather one in contract (or tort, as the case may be) or indeed none at all.

I feel Sharpston AG’s centre of gravity etc. modus operandi, suggested by her re distinguishing between Rome I and II in Ergo but (probably) not accepted by the Court, would have come in handy at the jurisdictional level in Austro Mechana, too.

The CJEU’s judgment here is one to look out for.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.11.2

 

 

 

Choice of court, Incoterms and the special jurisdictional rule for contracts.

Update 28 July 2020 for the Italian SC expressing caution re incoterm  “FCA – Free Carrier (named place of delivery)”, see Giulio Monga, here.

Postscript 24 September 2015: the incoterm ‘ex works’ was at issue in Cimtrode The Electrode Company GmbH v Carbide BV at Gerechtshof ‘s-Hertogenbosch. Judgment (on appeal) was issued 1 September 2015. The court held inter alia that whether the incoterm ex works was actually part of the agreement between parties, could only be judged in accordance with the lex causae. The agreement was a verbal agreement, and any choice of court which one of the parties claimed had been made, had not been confirmed in writing. Reference to relevant standard terms and conditions on the invoices sent later, following execution of the agreement, could not, the court held, be regarded as confirmation of the choice of court.

In Rhoonse Recycling & Service BV v BSS Heavy Machinery GmbH, the Court at Rotterdam first of all discussed the factual circumstance of a possible choice of court agreement between parties, in favour of the courts at Eberswalde (Germany). Such choice of court is made in the general terms and conditions of seller, BSS. Whether parties had actually agreed to these, was in dispute. Roonse suggests the reference on the front page of the order form to the general terms and conditions on the backside (‘umseitiger‘) was without subject for that back page was blank. The court therefore suggests that agreement depends on whether, as was suggested, the standard terms and conditions were attached (stapled, presumably) to the order form. Whether this was the case is a factual consideration which Rotterdam does not further entertain for even if the choice of court agreement is invalid, the court found it would not have jurisdiction under the only other alternative: Article 7(1) special jurisdictional rule for ‘contracts’.

Rhoonse suggest that the parties had agreed that the contract, a delivery of good, is performed in Rotterdam for that, it argues, is where delivery took place per the Incoterm CPT (carriage paid to). The CJEU has flagged the inconclusive effect of the mere use of Incoterms for the purposes of finding an agreement between parties under Article 7, in Electrosteel Case C-87/10 (in that case with respect to the use of ‘ex works’) and has generally insisted, per Car Trim Case C-381/08 that the courts need to make reference to all relevant terms and conditions in the agreement so as to determine the place of delivery.

Rotterdam in casu held the Incoterm CPT Rotterdam as being mostly a reference to costs, not place of delivery. Where it is impossible to determine the place of delivery on that basis, without reference to the substantive law applicable to the contract, that place at least for the sale of goods, the CJEU held, is the place where the physical transfer of the goods took place, as a result of which the purchaser obtained, or should have obtained, actual power of disposal over those goods at the final destination of the sales transaction. In casu, this was found to be in the geographical jurisdiction of the courts at Den Haag. Given that Article 7(1) does not merely identify the courts of a Member State but rather a specific court within a Member State, Rotterdam has no jurisdiction.

The case is a good reminder of the limited power of Incoterms to determine jurisdiction. Better have a specific choice of court clause (which here may or may not have presented itself here in the general terms and conditions of seller).

Geert.

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.

Geert.

My (conflicts) heart leaps when I behold Canyon v GDF Suez at the High Court.

It does. It really does. (Warning: The next sentence drops all pretext of this posting having poetic qualities). Canyon v GDF Suez is an absolutely perfect illustration of the challenges of the special jurisdictional rule of Article 5(1) of the Brussels I Regulation (now Article 7(1) Brussels Ibis). Starting with the very discussion of whether there was at all a contract between parties (a prima facie case of which is required to trigger Article 5; put differently: there need not even be solid proof of such contract existing), into the discussion of ‘goods’ v ‘services’; back to the at first sight very very puzzling fall-back provision of the third indent of the Article (‘(c) if subparagraph (b) does not apply then subparagraph (a) applies.”; finally, to the determination of ‘the place of performance of the obligation in question’.

Claimant (“Canyon”) is a Scottish company with its registered office in Aberdeen. Defendant applicant (“GDF”), a Dutch company, is a large owner and operator of oil and gas fields. GDF contracted with Cecon NL BV for the transportation and installation of pipelines. Cecon subcontracted to Canyon. Cecon fell behind in payments and GDF committed to paying relevant sub-contractors directly. Canyon relies on that alleged contract and on that contract allegedly having its place of performance in the UK.

Mackie J, no doubt with very able assistance by counsel, does an absolutely perfect job of taking the case through Article 5’s cascade, with impeccable reference to relevant ECJ case-law. Readers are best directed to the (concise) judgment itself. Many thanks to Ryan Deane for alerting me for the case – he has an excellent summary here.

Fantastic class material. Geert.

 

*****

Brussels Ibis Article 7(1)

(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

– in the case of the sale of good, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

(c) if subparagraph (b) does not apply then subparagraph (a) applies.

Calling time on ‘contract’ and ‘tort’ between contracting parties. The ECJ in Brogsitter.

When does a spat between contracting parties become a tort really? Relevant for all sorts of reasons of course. Not in the least, in C-548/12 Brogsitter, with a view to establishing jurisdiction.

Mr Brogsitter sells luxury watches. In 2005, he concluded a contract with a master watchmaker, Mr Fräβdorf, then resident in France. Fräβdorf undertook to develop movements for luxury watches, intended for mass marketing, on behalf of Mr Brogsitter. Mr Fräβdorf carried out his activity with Fabrication de Montres Normandes, company of which he was sole shareholder and manager. It appears that Mr Brogsitter paid all costs relating to the development of the two watch movements which were the subject of the contract.

Fräβdorf and his company subsequently also developed, in parallel, other watch movements, cases and watch faces, which they exhibited and market in their own names and on their own behalf, whilst advertising the products online in French and German. Mr Brogsitter submits that, by those activities, the defendants breached the terms of their contract. According to Mr Brogsitter, Mr Fräβdorf and Fabrication de Montres Normandes had undertaken to work exclusively for him and, therefore, might neither develop nor make use of, in their own names and on their own behalf, watch movements, whether or not identical to those which were the subject of the contract.

Brogsitter seeks an order that the activities in question be terminated and that damages be awarded in tort against on the basis, in German law, of the Law against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb) and Paragraph 823(2) of the Civil Code (Bürgerliches Gesetzbuch); he submits that, by their conduct, the defendants breached business confidentiality, disrupted his business and committed fraud and breach of trust.

Defendants argue that only French courts have jurisdiction, under Article 5(1) of the Brussels I Regulation, to determine all the applications made by Mr Brogsitter, as both the place of performance of the contract at issue and of the allegedly harmful event were situated in France. The Landgericht Krefeld in first instance had found against its own jurisdiction. This went straight to interim appeal, with the Oberlandesgericht Düsseldorf holding that the first instance court’s international jurisdiction derived, with regard to the dispute before it, from Article 5(3) with respect to the hearing and determination of only the civil liability claims made in tort by Mr Brogsitter. The other claims, in contrast, concerned ‘matters relating to a contract’ within the meaning of Article 5(1) of that regulation, and should be brought before a French court. Krefeld was still unsure and referred the following question to the ECJ: (I do not think the ECJ in this case rephrased it much better):

‘Must Article 5(1) of Regulation [No 44/2001] be interpreted as meaning that a claimant who purports to have suffered damage as a result of the conduct amounting to unfair competition of his contractual partner established in another Member State, which is to be regarded in German law as a tortious act, also relies on rights stemming from matters relating to a contract against that person, even if he makes his civil liability claim in tort?’

The ECJ referred to familiar lines: ‘contract’ and ‘tort’ need to be interpreted autonomously. (A European definition needs to be given, not a national one). The concept of ‘matters relating to tort, delict or quasi-delict’ within the meaning of Article 5(3) covers all actions which seek to establish the liability of a defendant and which do not concern ‘matters relating to a contract’ within the meaning of Article 5(1)(a)  (Kalfelis).

However 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 5(1)(a) (at 23). 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 a priori [the German grundsätzlich would have been better translated as ‘in principle’, or indeed, assuming French was the language of the original draft, ‘a priori’ should have been dropped for ‘en principe’; but I stray] be the case 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 24-25).

‘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’: these cases in other words do not lend themselves to a quick fix of jurisdiction review: some skimming of substantive law issues will be necessary.

Incidentally, the link between contracts and torts is also of immediate concern in the area of competition law. (Where the issue is often whether follow-on claims in damages are impacted by choice of court and choice of law in underlying contracts).

Geert.

 

Location of damage resulting from law firm’s alleged wrongful inducement in breach of exclusive jurisdiction clause. The High Court in AMT v Marzillier.

Update May 2019 For ease of reference: confirmed by the Court of Appeal [2015] EWCA Civ 143 and by the Supreme Court  [2017] UKSC 13. Review of the latter two here.

AMT v Marzillier [2014] EWHC 1085 (Comm) concerns special jurisdiction under tort, Article 5(3) of the Brussels I-Regulation, in the event of a loss of contractual right – as well as a cursory review of the consumer title.

Here: the loss, allegedly due to wrongful inducement by defendant (a law firm) to have a contractual claim heard in England. Contractual claims (alleged precarious investment advice) by a group of individuals had been settled by AMT in Germany.  Popplewell J concisely revisits the complete history of Article 5(3), from Bier via Kalfelis and Dumez France to Marinari and Kronhofer, however, leaving out Shevill. (See also below).

On the basis of said precedents he holds that the Courts of England do indeed have jurisdiction: ‘The place where the damage occurred as a result of MMGR’s allegedly tortious conduct was England, where such conduct deprived AMT of the contractual benefit of the exclusive jurisdiction clause which ought to have been enjoyed in England. ‘ (at 46). Counsel for AMT had also put forward an alternative ground which was that the payments for the settlements and costs came from England, and that England is where management time was wasted and future business lost.  Not so: Popplewell J: ‘The unquantified heads of loss for wasted management time and loss of business are not the primary heads of claim and do not constitute the main part of the damage said to have occurred as a result of the harmful event. They are not the damage. They are not initial, direct or immediate damage, but to the extent quantifiable and recoverable, merely the remoter financial consequences of the harm suffered in Germany. ‘ (at 52).

Per Shevil, jurisdiction of the English courts will be limited to the extent of damages suffered by the loss of the contractual benefit of the exclusive jurisdiction clause which ought to have been enjoyed in England: how exactly that ought to be quantified (if liability is at all withheld, of course) will not be a straightforward matter, one assumes.

Succinct review is also made of the consumer title, with the finding that on its applicability there is an issue to be tried. At 58, Popplewell J suggests ‘wherever the dividing line is to be drawn in the case of investors, the result is likely to be heavily dependent on the circumstances of each individual and the nature and pattern of investment. At one end of the scale may be the retired dentist who makes a single investment for a modest amount by way of pension provision. At the other may be an investment banker or asset manager who plays the markets widely, regularly and for substantial amounts, for his own account. In between there are many factors which might influence the result, including the profile of the investor, the nature and extent of the investment activity, and the tax treatment of any profits or losses. The issue is fact specific.’ I do not think too much should be read in these examples – more so, the insistence that circumstances of the case do have an impact on the qualification as ‘consumer’.

Geert.

Pike & Doyle (Mumbai terror) at the High Court: forum non conveniens and the need for distinguishing Rome II and Brussels I

In Pike & Doyle v the Indian Hotels Company Limited, the High Court upheld its jurisdiction in the case of two (surviving but injured) victims of the Mumbai terror attacks. The UK Human Rights Blog has a posting on the forum non conveniens side of the case. I would like to point to some interesting observations in the judgment on the impact of the interpretation of the special jurisdictional rule for tort under the Jurisdiction Regulation (Brussels I).

The First Claimant suffers continuing pain and loss of amenity and substantial economic losses caused by his injuries. The Second Claimant sustained loss of earnings in England and Wales and has a continuing loss in the form of counselling. On that basis both Claimants have therefore suffered indirect or secondary damage as a result of the Defendants’ alleged negligence in Mumbai. The Claimants’ submission is that this is sufficient to found jurisdiction. The Defendants challenge this.

In support of their claim, defendant relied essentially on the impact which EU law suo arguendo has  on the interpretation of the relevant English rules of procedure: as summarised by Stewart J (at 12):

The Defendants’ submission is as follows:
(i) Before 1 January 1987 RSC order 11 rule 1(1)(h) required a plaintiff to establish that the action was “founded on a Tort committed within the jurisdiction”. The test was “where in substance did the cause of action arise?” (Distillers Co Ltd v Thompson [reference omitted]).
(ii) On 1 January 1987 the rule changed such that the new RSC order 11 rule 1(1)(f) became “the claim is founded on a Tort and the damage was sustained, or resulted from an act committed, within the jurisdiction.” The change was made to give effect to Article 5(3) of the Brussels Convention and the decision of the European Court in Handelskwekerij G.J. Bier B.V. v Mines Potasse d’Alsace S.A. [reference omitted]
[references to further precedent omitted]
(iii) The European Rules do not allow indirect secondary damage to found jurisdiction.
Dumez France v Hessische Landesbank [reference omitted]). Marinari v Lloyds Bank plc [reference omitted]). [references to further precedent omitted]
(iv) This is all accepted and is in line with the original Bier case where the European Court held that where an act occurred in one Member State and the damage occurred in another, the Claimant could sue the Defendant in the Courts of either state. (…)
(v) Given the above, the Court should apply normal principles of interpretation to the rule namely: delegated legislation is construed in the same way as an Act, the starting point is to ascertain the legislative intention and the person seeking to understand that intention must do so in the light of the enactment and its purpose. The interpretation must be an informed one [references omitted]
(vi) Therefore since the pre 1987 law would not have allowed indirect secondary damage to found jurisdiction and since the purpose of the change was to align the RSC (subsequently CPR) with the European rules which do not allow such a founding of jurisdiction, the rules should be interpreted consistently with the European cases.

 

Stewart J disagreed and precedent did before him. Absent the European context – for defendant is not domiciled in the EU and the Brussels I-Regulation does not otherwise apply, there is no reason to assume that the relevant English rules cannot be applied taking into account indirect damage as a jurisdictional basis for the English courts: Tugendhat J had already held so with reference to the preparatory works of the relevant change to the Rules of Procedure. He effectively found that Parliament did not fully assimilate the rules relating to non party states with those relating to states which are a party; it effectively wanted their to be a wedge between the application of the jurisdictional rule for tort in and outside the Brussels-I context.

Neither, Stewart J held, can Rome II come to the defendants’ rescue. This was an attempt by defendants to recycle the limitation to Article 5(3) of the Brussels I Regulation. No reference to this was made in the judgment however a prima facie forceful recital in the Rome II Regulation is recital 7: The substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) and the instruments dealing with the law applicable to contractual obligations.

Since Rome II harmonises applicable law for tort even if the national court upholds jurisdiction on the basis of its residuary jurisdictional rules (such as here, given that Brussels I does not apply), this bridge between the various Regulations might resurrect the relevance of the Dumez France and Marinari limitations to the judgment in Bier.

Stewart J however was not swayed and referred to Sir Robert Nelson in Stilyanou:

  • Brussels 1 relates to a different subject matter, namely jurisdiction, and has to be construed as a separate regulation, albeit consistently with the other regulations forming part of the compatible set of measures.
  • Rome II does not abolish the discretion which has to be exercised under the CPR in relation to non Member States.
  • Article 2 on its face is wide enough to include any damage direct or indirect which the regulation as a whole covers. Article 4(1) expressly excludes indirect damage which would otherwise be included by virtue of Article 2. There is no reason why “damage” under the CPR should be interpreted as in a specific Article such as Article 4 which defines the applicable law, rather than interpreted as a general article such as Article 2 which applies to the regulation as a whole (apart from Article 4).
  • Inconsistencies in the meaning of damage may exist as the tests are different under Brussels 1, Rome II and CPR. The latter includes the exercise of the discretion and hence consideration of forum conveniens to ensure the proper place for the trial is selected, whereas Brussels 1 and Rome II do not.
  • Rome II does not concern jurisdiction and does not override CPR 9(a). Where Brussels I does not apply, the issue of jurisdiction will be governed by a country’s own rules ie. in England and Wales the CPR

Neither Stewart J nor Sir Robert refer to recital  7 Rome II however their arguments in my view are supported post their findings by the ECJ judgment in Kainz.

A very interesting case for many aspects of conflicts law.

Geert.

 

 

Liability for defective products and the relationship between Brussels I and Rome II. The ECJ in Kainz.

In Case C-45/13 Andreas Kainz v Pantherwerke AG, the ECJ held on the determination of locus delicti commissi, the place giving rise to the damage, in the case of defective products. It held this was the place where the product in question was manufactured. The special jurisdictional rules of Article 5 are in effect forum conveniens applications: they are intended to enable the court objectively best placed to determine whether the elements establishing the liability of the person sued are present, to assume jurisdiction. For product liability cases, this includes inter alia the possibility of gathering evidence in order to establish the defect in question.

Pantherwerke AG is an undertaking established in Germany which manufactures and sells bicycles. Mr Kainz,  resident in Salzburg, purchased a bicycle manufactured by Pantherwerke from Funbike GmbH, a company established in Austria. On 3 July 2009, while riding that bicycle in Germany, Mr Kainz suffered a fall and was thereby injured. The place of the event giving rise to the damage is, Mr Kainz claims, located in Austria as the bicycle was brought into circulation there, in the sense that the product was there made available to the end-user by way of commercial distribution.

Mr Kainz argued specifically that the Courts should take into account not only the interests of the proper administration of justice but also those of the person sustaining the damage, thereby enabling him to bring his action before a court of the Member State in which he is domiciled. The ECJ disagreed, at 20:

‘although it is apparent from recital 7 in the preamble to Regulation No 864/2007 that the European Union legislature sought to ensure consistency between Regulation No 44/2001, on the one hand, and the substantive scope and the provisions of Regulation No 864/2007, on the other, that does not mean, however, that the provisions of Regulation No 44/2001 must for that reason be interpreted in the light of the provisions of Regulation No 864/2007. The objective of consistency cannot, in any event, lead to the provisions of Regulation No 44/2001 being interpreted in a manner which is unconnected to the scheme and objectives pursued by that regulation.’

This is a statement I like a lot and have advocated for some time. In general, I find the link between applicable law and jurisdiction (often leading to Gleichlauf-type considerations; such as in Article 22’s exclusive jurisdictional rules) not very attractive.

Geert.

Christmas crums part II – ÖFAB confirms narrow scope of the insolvency exception and clarifies ‘place where the harmful event occurred’ in case of tort by omission

Ok, I cheat. Judgment of the ECJ in ÖFAB is in fact a left-over of my summer queue. Contractual claims for payment against a Swedish company (Copperhill) had been assigned to Invest, equally domiciled in Sweden. Invest brought an action against a former director and former major shareholder, both domiciled in The Netherlands. Invest sought to have both held liable for the debts of the company, because they had allegedly allowed that company to continue to carry on business even though it was undercapitalised and was forced to go into liquidation.

Firstly the Court had to decide whether the action falls within the ‘insolvency’ exception of Article 1(2)(b) of the Regulation, which provides that it does not to apply to ‘bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’. The ECJ held that the exception did not apply, for – per previous case-law – it has to be interpreted narrowly. Only actions which derive directly from insolvency proceedings and are closely connected with them are covered by the exception. Here, the actions in the main proceedings do not constitute insolvency proceedings but were brought after Copperhill had been subject to a company reconstruction order (a near-automatic consequence of Swedish company law, I understand, in the event of limited companies having insufficient capital). In any event, the Court held, those actions do not concern the exclusive prerogative of the liquidator to be exercised in the interests of the general body of creditors, but of rights which an individual creditor is free to exercise in its own interests.

Next up was the qualification of the action as one in tort under Article 5(3) of the Brussels-I Regulation, and if so, the determination of the locus delicti commissi. The underlying debt was a result of work carried out under contract, however the action was based on the former company director and shareholder allegedly not properly having carried out their monitoring duties. Consequently the Court held in favour of the application of Article 5(3)’s special jurisdictional rule for tort.

That leaves the determination of the locus delicti commissi. What was at stake, the Court suggested, was not the financial situation or the carrying-on of the business of that company per se, but rather the conclusion to be drawn as regards a possible failure of monitoring by the member of the board of directors and the shareholder.

Turning to the locus delicti commissi, the Court refers to the place where the activities of the company took place: ‘ It is clear from the documents submitted to the Court that, in the period in which the disputed facts took place, Copperhill’s seat was in the municipality of Åre within the jurisdiction of the Östersunds tingsrǎtt, where, in the same period, it carried on its business and built a hotel. In those circumstances, it appears that the activities carried out and the financial situation related to those activities is connected to that place. In any event, the information on the financial situation and activities of that company necessary to fulfill the management obligations by the member of the board of directors and the shareholder should have been available there. The same is true for the information concerning the alleged failure to comply with those obligations. It is for the referring court to ascertain the accuracy of that information.‘ (at 54).

In other words, in a tort caused by omission (rather than by positive action by the alleged tortfeasor), the Court turns to the place where the tortfeasor’s action ought to have taken place, so as to avoid the very omission that led to the action in tort. For it is that place which answers best to the very raison d’être of the special jurisdictional rules of Article 5: ‘In matters of tort, delict or quasi-delict, the courts of the place where the harmful event occurred or may occur are usually the most appropriate for deciding the case, in particular on grounds of proximity and ease of taking evidence‘   (at 50, with reference ex multis to Folien Fischer).

A very useful judgment. Geert.

 

Christmas Crums part I – The ECJ holds on ‘contracts’ in Corman-Collins

One or two interesting developments have been held up in my end of year queue. I shall report on them over the next week and a half or so. First up: judgment of the ECJ in Corman-Collins Case 9/12 – I reported on the Opinion of the AG here. The Court, like the AG, holds in favour of ‘services’: such is the diverse nature of the various obligations in the contractual relationship.

Given its confirmation of the contract falling under Article 5(1)(b), first indent, of the Brussels I-Regulation, the Court did not answer the final, subsidiary, question, which questioned the amount of European harmonisation of ‘place of performance of the obligation in question’ under Article 5(1)(a). As I flagged earlier, the AG had suggested the ECJ confirm its deference to national law on this issue, per Tessili Dunlop.

Geert.

%d bloggers like this: