Despite all endeavors of unification, in Europe, it is still important to know precisely which jurisdiction has the rationae loci competence to hear a civil claim.
The same issue was raised to the Court Of Justice of European Union accordingly to the dispute between a German luxury watch seller and a master watchmaker established in France on March 2014.
Mr Brogsitter sold luxury watches. In 2005, he concluded a contract with a master watchmaker, Mr Fräβdorf, then resident in France, sole shareholder and manager of EURL « Fabrication de Montres Normand’s company » in order to develop two watch movements.
It appears that on behalf of Mr. Brogsitter, the watchmaker also developed, in parallel, other watch movements, cases and watch faces, which he exhibited in his own name at the world watch show in Basel (Switzerland) during April and May 2009.
Claimant submitted that, by those activities, the defendant breached the terms of their contract. As the contract was unilaterally breached, Mr Brogsitter, seeked damages in tortunder German law against the defendant on the grounds of unfair competition such as breaching business confidentiality, disruption and breaching of trust.
He filed his claims in front of the Regional Court of Krefeld and the Court declared itself lacking jurisdiction.
As both parties were domiciled in Member States of the European Union, the European Regulation EC 44/2011 was applicable in relation with this dispute. As it stands from the general provisions of the Regulation:
(Article 3§1) » Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter »
This option is possible in civil claim matters. However, European law provides specific rules in order to resolve a conflict of jurisdiction. The Article 5 of the EC Regulation 44/2011 determines specific competences in contractual or tort matter.
Article 5: A person domiciled in a Member State may, in another Member State, be sued:
(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 goods, 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;
In matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;
It clearly appeared that Mr. Brogsitter decided to bring lawsuits on the basis of tort liability rather than on « breach of contract « grounds. This choice had ensued a request for preliminary assessment on the interpretation of the Article 5 in front of The European Court of Justice.
Thereby, if Mr. Brogsitter files a complain on the grounds of civil tort liability, is it possible for the national judge to requalify the relation between the parties and so declare himself lacking judicial competence?
The European Court’s answer is yes.
By the preliminary assessment, European Court of justice, on March 13th 2014 considers that even if Mr. Brogsitter had filed a civil tort liability claim, as the initial relation in between the parties was contractual, the applicable provision is Article 5§1 related to the contractual matter and not Article 5§3 related to delicts.
The interpretation of the Article 5 of EC Regulation 44/2001 is controversial as for lawyers as for judges in Member States. In 2002, ECJ rendered an award on interpretation of Article 5. Thus, in order to determine the nature of the civil liability claims brought before the referring court, it is important first to check whether they are, regardless of their classification under national law, contractual in nature (see Henkel Case).
The contract between Mr. Brogsitter and Mr Fräβdorf was breached and thus ended. But, the ECJ still considers that it is important to take into consideration the principal purpose of the business relation. That mandatory interpretation obliges national judge to rule on his competence interpreting the whole contract.
This decision implies a restriction for the claimant while deciding the grounds of his action.
As a conclusion, while parties’ endeavor to choose the right strategy for their judicial action, national judge of a Member State shall analyze the principle obligation in accordance with the purpose of the parties’ relation.
Article Written by Anastasia MEDVEDSKAYA and Olivier VIBERT