EAPIL blog

The EU has developed a common judicial area where judgments given in one EU Member State are recognised and can be enforced in all others. To this end, the EU has adopted a number of legal instruments that regulate and ease cross-border enforcement, ensuring legal certainty for all parties and making these processes easier. One of them is Regulation (EC) 805/2004 creating a European Enforcement Order for uncontested claims (the EEO Regulation).

When it was adopted, the Regulation was a ground-breaking instrument that was the first to abolish the need for obtaining a declaration of enforceability in the requested state (the so-called ‘exequatur’). The EEO certificate has replaced it.

Other similar legal instruments were adopted in quick succession, leading to the ‘exequatur’ being abolished by Regulation (EU) 1215/2012 (the Brussels I bis Regulation), although with different conditions than those in the EEO Regulation.

In 2020, the Commission decided to evaluate the EEO Regulation, and to carry out a consultation as a part of the evaluation process. The Commission sought opinions on how the Regulation is working, also with regard to the Brussels Ibis Regulation. It also aimed to collect practical experiences with the EEO Regulation and views on its use in the future.

Upon an invitation by the Commission, the EAPIL formed a Working Group chaired by Jan von Hein (University of Freiburg/Germany). This Working Group presented a position paper in November 2020 that is now available here.

Members of the Working Group will also participate in the upcoming Commission’s online workshop on the revision of the EEO Regulation in January 2021.

In December 2020, the Standing International Forum of Commercial Courts (SIFoCC), which brings together the commercial courts of several countries across the world, launched the second edition of its Multilateral Memorandum on Enforcement of Commercial Judgments for Money.

The memorandum is the result of a collaborative effort from judges sitting in the courts involved, and outlines the way in which the judgment of one jurisdiction can be enforced in another. Over 30 jurisdictions have contributed, including Australia, Brazil, Canada, France, Germany, Hong Kong, Japan, Kenya, Malaysia, New York, Singapore, South Korea and the United kingdom.

More information available here.

Not much to be reported on the activity of the Court for January 2021 on PIL (nor for February, as of today).

The Opinion by AG Campos Sánchez-Bordona in C-913/19, CNP, will be delivered on 14 January. The request comes from the District Court in Białystok, and concerns an insurance case involving the interpretation of Chapter I, Section 3, of the Brussels I bis Regulation, and the systematic relationship with Articles 7.2 and 7.5:

(1) Should Article 13(2), in conjunction with Article 10, of Regulation (EU) No 1215/2012 … be interpreted as meaning that, in a dispute between a trader and an insurance company, the former having acquired from an injured party a claim arising from civil liability insurance against that insurance company, the establishment of court jurisdiction on the basis of Article 7(2) or Article 7(5) of the regulation is not precluded?

(2) If Question 1 is answered in the affirmative, should Article 7(5) of Regulation (EU) No 1215/2012 … be interpreted as meaning that a commercial company operating in a Member State which adjusts losses under compulsory insurance against civil liability in respect of the use of motor vehicles pursuant to a contract with an insurance undertaking established in another Member State is a branch, agency or other establishment of that insurance undertaking?

(3) If Question 1 is answered in the affirmative, should Article 7(2) of Regulation (EU) No 1215/2012 … be interpreted as meaning that it constitutes an independent basis for the jurisdiction of the court of the Member State in which the harmful event occurred, before which court the creditor who has acquired the claim from the injured party under compulsory insurance against civil liability brings an action against an insurance undertaking established in another Member State?

The case will be decided by a chamber of five judges, with Mme Rossi reporting.

Next date will be 28 January, with the hearing in C-603/20 PPU, a case on the Brussels II bis Regulation from the High Court of Justice of England and Wales, Family Division, filed last in October 2020. The proceedings relate to the abduction of a girl to India. The question submitted to the Court reads as follows:

Does Article 10 of Brussels 2 retain jurisdiction, without limit of time, in a member state if a child habitually resident in that member state was wrongfully removed to (or retained in) a non-member state where she, following such removal (or retention), in due course became habitually resident?

The case has been allocated to a chamber of five judges, with Mr. Regan reporting. M. Rantos has been appointed AG.

As reported in other blogs (see for instance here and here), the Trade and Cooperation Agreement that the EU and the UK managed to conclude right before the end of the Brexit transition period does not seem to make any provision for judicial cooperation in civil matters.

On the European side, the Notice to Stakeholders issued by the European Commission in August 2020 already took lack of agreement in this area for granted.

Surprisingly, the press release of the Commission of 24 December 2020, under the heading “A new partnership for our citizens’ security”, states

The Trade and Cooperation Agreement establishes a new framework for law enforcement and judicial cooperation in criminal and civil law matters. (italics added)

And to top it all, have a look a recital 47 of the Recast Service Regulation:

In accordance with Article 3 and Article 4a(1) of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, the United Kingdom and Ireland have notified their wish to take part in the adoption and application of this Regulation.

Probably just a clerical mistake.

On the UK side, the gov.uk website on Brexit was updated on 31 December 2020 (see here), providing information on the rules applicable to cross border cases in civil and commercial matters involving the courts of England and Wales. Links to all relevant Acts and Regulations are found there, too. For cross-border divorces, nothing has been added to the previous information, which already distinguished between proceedings initiated pre- and post-Brexit. The same applies to maintenance and disputes about parental responsibility.

As president of EAPIL and an editor of the blog, and on behalf of all the officers of the association and the editors of the EAPIL blog, I would like to wish to the members of the association and the readers of the blog the best for year 2021.

In 2020, the blog has published 325 posts. In case you missed some of them, here are the 15 most popular ones:

1. Corona Virus and Applicable Law
2. COVID-19 and the Right to Respect for Family Life under Article 8 ECHR
3. UK Applies for Accession to Lugano Convention
4. Paris Court Issues Anti Anti Suit Injunction
5. New Courts for International Commercial Disputes in Germany
6. The Impact of Corona Virus on the Management of Judicial Proceedings in Italy
7. Law and Global Value Chains at the Time of Covid-19: A Systemic Approach Beyond Contracts and Tort
8. French Supreme Court Accepts First Degree Renvoi in Parenthood Matters
9. Wikingerhof: A View from Oxford
10. Another Preliminary Reference on the Succession Regulation Involving (and Referred by) a Polish Notary
11. CJEU Significantly Weakens Jurisdiction Clauses in Case Assignment
12. The COVID-19 Crisis and Employment Contracts: the Italian Emergency Legislation on Dismissals
13. Anti-Anti-Suit Injunctions by German Courts – What Goes Around, Comes Around
14. On ‘Habitual Residence’ under the EU Regulations on Family Matters: Once and for All?
15. Human Rights in Global Supply Chains: Do We Need to Amend the Rome II Regulation?

The latest issue of Acta Universitatis Carolinae Iuridica, a periodical edited by the Faculty of Law of the Charles University in Prague, is out.

The issue’s general theme is ‘Thinking Private International Law through European Lenses’. It focuses on comparative private international law, with an emphasis on the European Union. The contributions – some in English, others in French – were put together on the occasion of the annual meeting of the Group européen de droit international privé (GEDIP), which was to take place between 18 and 20 September 2020 in Prague.

Opened by editorials by Monika Pauknerová and Catherine Kessedjian, the issue is made of three main sections.

The first addresses some general issues. It includes contributions by Johan Meeusen (‘The “logic of globalization” versus the “logic of the internal market”: a new challenge for the EuropeanUnion), Giuditta Cordero-Moss (‘The impact of EU law on Norwegian private international law’), Patrick Kinsch (‘La Convention européenne des droits de l’homme et les conflits de lois: synthèse de dix ans de jurisprudence européenne’), and Hans van Loon (‘Strategic Climate Litigation in the Dutch Courts: a source of inspiration for NGOs elsewhere?’).

The second section, on family law, features articles by Michael Bogdan (‘The relevance of family status created abroad for the freedom of movement in the EU’), Etienne Pataut (‘Codifier le divorce international – Quelques remarques sur le projet GEDIP’), and Zuzana Fišerová (Limits of jurisdiction for divorce under the Brussels IIa Regulation from the Czech perspective’).

Finally, the commercial law section hosts contributions by Jan Brodec (‘Applicable law in international insolvency proceedings (focused on the relation of Articles 3 and 7 of the Insolvency Regulation)’), Petr Bříza (‘Czech perspective on the validity of international arbitration clauses contained in an exchange of emails under the New York Convention’) and Magdalena Pfeiffer and Marta Zavadilová (‘Recognition and enforcement of judgments in commercial matters rendered by courts of non-EU countries in the Czech Republic’).

The whole issue can be downloaded here.

Many good wishes for the Holiday Season and the New Year from the Editors of the EAPIL blog!

Blogging will be light in the coming days, but we plan to gradually resume our usual publishing pace on 7 January.

Elie Lenglart, a lecturer at the University Paris II Panthéon-Assas, gave an online conference on La théorie générale des conflits de lois à l’épreuve de l’individualisme (Individualism and General Choice of Law Theory) on 1 December 2020.

This is the topic of his doctoral thesis, which received the first prize of the French Committee of Private International Law earlier this year.

The English abstract of the work reads:

Individualism is one the characteristic features of modern legal theories. The emergence of individualism has so profoundly altered the meaning of the judicial phenomenon that it may be considered as the decisive factor in the evolution from a classical to a modern conception of the Law. This evolution is the product of a substantial mutation of our vision of the world, inextricably linked to a change of philosophical paradigm. The analysis of this evolution is essential not only to the understanding of the meaning of the Individualism doctrine but also to apprehend its main repercussions. International private Law has also been influenced by this evolution. The Conflict of Laws doctrine is necessarily based on a specific conception of the Law itself. Thus, the emergence of the individualistic approach of the Law undoubtedly has decisive consequences on this field: the methods used to solve conflicts of laws have evolved while the goals have been substantially altered. The Conflict of Laws doctrine is now structured toward the sole analysis of individual interests. This new feature is radically opposed to the balance that characterized the classical approach of Conflict of Laws. In order to reveal the extent of the implications of the Individualism on this field, a study of the concept within the Conflict of Laws doctrine is necessary.

The table of contents of the thesis is available here.

A video of the conference (in French) can be accessed here.

Marta Pertegás (Maastricht University) has posted The 2019 Judgments Convention: the Road Ahead on SSRN.

The abstract reads:

In The Hague and far beyond, the conclusion of the Convention on the Recognition and Enforcement of Judgments in Civil and Commercial Matters (hereafter, “the Hague Judgments Convention”) in July 2019 was welcomed with a long deep sigh of satisfaction. The successful conclusion of this Convention under the auspices of the Hague Conference on Private International Law (hereafter, “the HCCH”) undoubtedly marks a crucial milestone in the area of international dispute settlement in civil and commercial matters. In this contribution, the author describes the circumstances leading up to the conclusion of the Hague Judgments Convention, as well as the Convention´s most salient features. The author also recommends some actions for the Convention to become truly effective. Indeed, the “road ahead” towards an operational international standard of practical relevance is the next challenge for the private international law global community.

This is a guest post by Katažyna Bogdzevič (Mikša), an associate professor of the Institute of International and European Union Law at the Law School of Mykolas Romeris University in Vilnius, Lithuania and an advisor to the Lithuanian Ministry of Justice. 

The CJEU’s judgement in the case of E.E. case (C-80/19) has already attracted scholars’ attention and it is not surprising (for posts on this blog see: here and here). For the first time, the CJEU had an opportunity to elaborate on the Succession Regulation with respect to so many important matters: the cross-border nature of the succession case, the notion of court, the scope of jurisdictional rules and authentic instruments and, finally, the choice of applicable law. The outcome of the case at the Supreme Court of Lithuania, after CJEU judgement, is presented below.

Background of the Case

A deceased person was a Lithuanian national who married a German national and moved to Germany in 2013. The same year she made a will before a notary in Kaunas (Lithuania) and designated her son E.E. as the only heir. She passed away in 2017, and her son approached the notary in Kaunas to open the succession and issue a national succession certificate. However, his request was rejected, as the notary had no jurisdiction in accordance with the Succession Regulation. E.E. have appealed this decision to the court.

Lithuania did not notify the Commission pursuant to Article 79 of the Succession Regulation of the other authorities and other legal professionals (except for the courts), which exercise judicial functions or act pursuant to a delegation of power by a judicial authority or act under the control of a judicial authority. However, the CJEU ruled already in the WB case (C-658/17) that failure by a Member State to notify the Commission of the exercise of judicial functions by notaries, as required under that provision, is not decisive for their classification as a court. As a result, in the absence of a clear answer whether Lithuanian notaries are courts, they applied jurisdiction rules provided by the Succession Regulation for the purpose of issuing national succession certificates.

The Supreme Court of Lithuania, while dealing with cassation appeal, referred a preliminary questions to the CJEU regarding the cross-border nature of the case, the notion of the court and the legal nature of the national succession certificate issued by the Lithuanian notaries, both in case they can be considered courts and in case they cannot.

CJEU Guidelines 

After the CJEU ruling, there are no doubts that the case at stake is of a cross-border character. Hence, this issue is left outside of this comment. The most interesting part is regarding the functions of the notaries and assessment of whether they exercise judicial powers or act pursuant to delegation of power by a judicial authority or act under the control of a judicial authority.  The CJEU reminded that Lithuanian notaries are not courts, unless they act pursuant to a delegation of power by a judicial authority or act under the control of a judicial authority. The CJEU did not use this opportunity to elaborate on these premises but left it for the national court to decide.

The Outcome of the EE Case Back in Lithuania

On 4 November 2020, the Supreme Court of Lithuania ruled in the resolution (No e3K-3-422-378/2020) that Lithuanian notaries are not courts within the meaning of the Succession Regulation.

The Supreme Court started its analysis by recalling Article 3(2) Succession Regulation. The further considerations were based mainly on the Law on Notaries. Article 1 of this law grants notaries with rights to legally establish uncontested rights and legal facts of natural and legal persons to ensure the protection of these persons and the state’s legitimate interests. A notary is required to act with greater diligence and caution and is obliged to comply with the law strictly and to refuse to perform notarial acts if they infringe the law or do not comply with it. Such an understanding of a notary’s functions presupposes that the notary does not solve disputes between the parties, does not establish disputable circumstances, and, in case of doubts or disagreements about the rights or legal facts of persons, shall refuse to certify such rights or facts.  A notary may certify certain rights or facts only if there are no doubts about their content and legality.

Pursuant to Article 26(1)(2) Law on Notaries, which defines notarial acts performed by notaries, notaries shall issue (national) succession certificates. The Supreme Court, in its previous case-law, provided that the facts contained in notarized documents are established and cannot be proved otherwise until these documents (or parts thereof) are declared invalid following the procedure established by law (Article 26(2) Law on Notaries).

In case of a dispute between the heirs in a succession case, such dispute shall be settled in a court in accordance with the rules established in Article 12 of the Law on Courts, which stipulate that the Supreme Court of Lithuania, regional and district courts are courts of general jurisdiction. Since Lithuanian notaries are not granted the right to rule on the issues which gave rise to the dispute between the parties and the right to establish facts which are not clear and obvious or to decide on the disputed facts, the Supreme Court concluded that the issuance of a national succession certificate does not imply the performance of judicial functions. Therefore, if the notaries are not considered courts within the meaning of the Succession Regulation, they are not bound by its jurisdictional rules. The Supreme Court pointed out that in order to establish a uniform solution in cross-border inheritance cases, the legislator could enact a provision obliging Lithuanian notaries to follow the rules of jurisdiction established in the Succession Regulation. However, in their absence, notaries in Lithuania must follow national law rules in cross-border succession cases.

Conclusion

The Supreme Court concluded that in the present case, having established that the succession was of a cross-border nature, a notary in Lithuania is competent to issue a national succession certificate without the need of analyzing jurisdictional rules of the Succession Regulation. To the contrary, in the event of a dispute, the court’s jurisdiction shall be determined based on the provisions of the Succession Regulation.

David Dyzenhaus (University of Toronto Law and Philosophy) has posted Not an Isolated, Exceptional, and Indeed Contradictory Branch of Jurisprudence on SSRN.

The abstract reads:

Private international law [PrIL] got—and gets—virtually no attention in general philosophy of law, by which I mean Anglo-American philosophy of law since World War II with its debates about the nature of law, of legal authority and obligation, and the relationship between law and morality; principally, the Hart/Fuller debate and the Hart/Dworkin debate. I argue that PrIL can illuminate these debates. My argument works by excavating the ‘deep juridical structure’ of the House of Lords decision in Oppenheimer v. Cattermole (1976) through the lens of an article by the great PrIL scholar, F.A. Mann, which changed the course of the case. In particular, I contrast Lord Cross’s dictum that a Nazi nationality-stripping decree of 1941 constituted ‘so grave an infringement of human rights that the courts of this country ought to refuse to recognize it as law at all’ with Lord Pearson’s dictum that an individual would lose his nationality ‘however wicked’ the government and ‘however unjust and discriminatory and unfair’ the law, as long as that government had ‘been holding and exercising full and exclusive sovereign power’ and had ‘been recognized throughout by our government as the government of that country’. I show that Cross’s conclusion presupposes a Kelsenian juridical structure and Pearson’s a Hartian one. Since only the former is properly juridical and can make sense of the idea of judicial duty in PrIL, it is to be preferred.

On 10 December 2020, the CJEU decided in the case of A. B. and B. B. v Personal Exchange International Limited whether and under what circumstances a player in an online poker game can be considered a “professional” and accordingly fall outside the scope of the consumer provisions of the Brussels I and Brussels I bis Regulation.

Facts

B. B., a natural person living in Slovenia, and Personal Exchange International Limited (PEI), a company operating a platform offering online poker on a cross-border basis inter alia in Slovenia, entered into a contract that allowed B. B. to play poker on the platform. The contract contained a jurisdiction clause which conferred jurisdiction on the courts of Malta.

Between March 2010 and May 2011, B. B. spent a daily average of 9 hours on the game and earned no less than EUR 227.000 in just over one year. In 2011 PEI froze B. B.’s account and retained the money in his account.

After being sued by B. B. in Slovenia, PEI refused to consider him a consumer and insisted on the validity of the choice-of-court clause contained in the contract.  PEI thus denied the jurisdiction of the Courts in Slovenia. The Vrhovno sodišče, the highest court of Slovenia, referred the question of the international jurisdiction of the Slovenian courts over the case to the CJEU.

Issue

The legal issue was therefore whether a person can be regarded as a consumer in the sense of Art 15 et seq. Brussel I Regulation if the person has specialised knowledge and skills in the area, spends a considerable amount of time with the subject matter of the contract and derives a significant profit from it.

Holding and Rationale

In its judgment, the CJEU first clarifies that the Brussels I Regulation applies on the basis of temporal scope under  Art 81 Brussels Ibis (para 3).

Regarding characterisation as a consumer or professional, the CJEU stresses that neither the profits made, nor the regularity with which the game was played, nor the knowledge or expertise of the player would be decisive as such (para 49). Instead, the Court of Justice highlights that B.B. did not offer any goods or services to third parties and had not officially registered its activity (para 48). With these guidelines in mind, the CJEU left the final characterisation of the B.B.’s status to the national court (para 49).

Assessment

The judgment is in line with the CJEU’s previous case law, such as the decision in Petruchova and Schrems. The Court of Justice rightly stresses the need for legal certainty, which could be undermined if the characterisation as a consumer were to depend on variables such as the profits made, the time spent on an online game or the knowledge or expertise of the player.

It is equally easy to understand why the Court of Justice introduced the criterion of offering goods and services to third parties for qualification as a professional. More contestable is the criterion of registration of activities by the player: whether somebody is to be considered a professional or a consumer should not be made subject to his or her own decision to register. As a result of the decision, it will be extremely hard, if not impossible, to ever consider an online poker player a professional. Hold’em all!

A new development in Poland concerning the legal situation of children born to same-sex couples, including through surrogacy, is worth mentioning.

The current state of affairs in this area in Poland was illustrated earlier on this blog, and here on Conflictoflaws. As explained in these posts, Polish authorities and administrative courts tend to object to the transcription into Polish civil status registry of a foreign birth certificates indicating persons of the same sex as parents. This results in practical complications in everyday life of the family, for example when parents apply for an ID cards for their children.

In one of such cases, the Regional Administrative Court in Kraków decided on 9 December 2020 to submit the following preliminary question the Court of Justice of the EU (III SA/Kr 1217/19, in Polish):

Should Article 21(1) in connection with Article 20(2)(a) of the Treaty on the Functioning of the EU in connection with Article 7, Article 21(1) and Article 24(2) of the EU Charter of Fundamental Rights be interpreted in such a way that it precludes the authorities of an EU Member State, whose nationality a child holds, from objecting to the transcription of the birth certificate issued in another Member State, indispensable for the issuance of the identity card of the Member State of the child’s nationality, on the ground that its national law does not provide for same-sex parentage, whereas the birth certificate indicates persons of the same sex as parents?

The referring court asked that the matter be dealt with under an urgent procedure, since the interests of a child are at stake.

In the case at issue, a child was born in Spain to two women, one of Polish and the other one of Irish nationality. The Spanish birth certificate indicates both women under the heading Mother A and Mother B as parents. The women were legally married in Ireland. The child does not have either Spanish or Irish nationality (the reason for that is not explained in the decision), so parents wanted the birth certificate to be transcribed into Polish civil status register asa a precondition to apply for an ID card and a passport. Administrative authorities, referring to the quite settled jurisprudence of the Administrative Supreme Court, rejected this application explaining that such transcription would be contract to public policy (ordre public).

The information about this case was released on the official website of the Polish Ombudsman (here), who intervened in the case and submitted that CJEU should have its say on the matter, given that EU law, including as regards the free movement of persons, is involved.

Directive (EU) 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC was published on 4 December 2020 (OJ L 409/1).

It consists of 79 recitals, 26 provisions (some of them actually looking as recitals, and vice-versa), and two Annexes, the second being a correlation table of provisions – to my mind, a good lawmaking practice. It will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union; transposition shall be ready by 25 December 2022; the national measures will apply from 25 June 2023.

The Key Features of the Directive in a Nutshell

The Directive is based  on Article 114 TFEU (see nevertheless Recital 76, arguing that the intervention of the EU is necessary due to the relevance of the cross-border element).

Having regard to its overarching objective, the Directive joins the group of measures aiming simultaneously at the protection of the consumer, the promotion of fairer competition and the creation of a level playing field for traders operating in the internal market (in other words, this piece of legislation has not been conceived only for the sake of consumers; therefore, it is here submitted that it should not be interpreted only with them in mind).

The Directive  takes up the failures of precedent legal acts in relation to the enforcement of consumer law, particularly Directive 2009/22/EC on injunctions for the protection of consumers’ interests. As in other fields of EU law, it clearly endorses private enforcement.

According to the Directive, a consumer is any natural person who acts for purposes outside that person’s trade, business, craft or profession, independently of how she is referred to (data subject, traveler, retail investor, etc) in the legal act allegedly infringed.

The Directive covers infringements of the provisions of Union law referred to in its Annex I, to the extent that they protect the interests of consumers, and provided the natural person involved acts as such.

For those willing to get the whole picture as to the scope of the Directive it is worth noticing that it does not substitute the enforcement mechanism contained in the EU legal acts listed in Annex I (by the way: keep in mind that Annex is subject to be amended each time that a new Union act relevant to the protection of the collective interests of consumers is adopted). In addition, Member States are able to retain or introduce national legislation that corresponds to provisions of this Directive in relation to disputes that fall outside the scope of Annex I. My understanding is that this possibility relates only to subject matters, and not to the subjective scope of the Directive.

The impact of the Directive on national systems will depend on the Member State concerned. National procedural mechanisms for the protection of collective or individual consumer interests – where they exist – do not need to be replaced. It is for the Member States to decide whether the procedural mechanisms for representative actions required by the Directive are part of an existing procedural mechanism for collective injunctive measures or redress measures, or a distinct procedural mechanism.

What matters is that at least one national procedural mechanism for representative actions complies with the Directive in every Member State, and, as a consequence, at least one effective and efficient procedural mechanism for representative actions, for injunctive measures and for redress measures, is available to consumers in all Member States.

In terms of contents, the Directive does not address every aspect of the proceedings. Already whether these should be judicial or administrative, or both, is to be decided by the Member States considering the area of law or the economic sector at stake.

The provisions eventually adopted focus on legal standing (and its mutual recognition), remedies (injunctive relief, redress measures), funding, settlements, allocation of costs, information about representative actions, effects of final decisions, limitation periods, disclosure of evidence, and penalties.

It is for the Member States to lay down the rules complementing those of the Directive under the principle procedural autonomy, subject to the requirements of effectiveness and non-discrimination.

Aspects of the Directive of Interest for PIL

The Directive does not intend to affect the application of rules of private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law, nor establish such rules (in other words, the well-known shortcomings of the existing PIL instruments are not remedied).

This intention has not prevented the lawmaker from shaping two cross-border categories: ‘cross-border infringements’, and ‘cross-border representative actions’.

The former covers ‘in particular’ the case of consumers affected by an infringement who live in Member States other than the Member State in which the infringing trader is established; what else is included is unclear. The latter designates the situation of a qualified entity bringing a representative action in a Member State other than that in which it is designated; conversely, if a qualified entity brings a representative action in the Member State in which it is designated, that representative action will qualify as a domestic representative action, even if it is brought against a trader domiciled in another Member State and even if consumers from several Member States are represented within that representative action. I would argue here that those categories have no meaning beyond the Directive itself; in other words, they should be accorded no significance in terms of application of PIL instruments.

Recital 22, according to which ‘It should be noted that Regulation (EU) No 1215/2012 does not cover the competence of administrative authorities or the recognition or enforcement of decisions by such authorities’, deserves a similar assessment. In my view, whether a representative action filed by an administrative authority falls under the scope of the Brussels I Regulation or not still depends on the autonomous characterization of the dispute as ‘civil and commercial’.

In addition to the clarification regarding PIL instruments, the following issues of interest for cross-border disputes are addressed in the Directive (not necessarily in the operational part).

Useful information for the courts – When bringing a representative action, a qualified entity should provide sufficient information on the consumers concerned by the representative action to the court or the administrative authority, thus allowing the court or administrative authority to determine whether it has jurisdiction and to determine the applicable law.

Useful information for the consumers – Member States should be able to set up national electronic databases that are publicly accessible through websites providing information on the qualified entities designated for the purpose of bringing domestic representative actions and cross-border representative actions, as well as general information on ongoing and concluded representative actions.

Legal standing criteria – For the purposes of cross-border representative actions, qualified entities should be subject to the same criteria for designation across the Union. Examples are listed – non exhaustively – under recital 25. Moreover, qualified entities that have been designated on an ad hoc basis are not allowed to bring cross-border representative actions.

Mutual recognition – Member States should ensure that cross-border representative actions can be brought before their courts or administrative authorities by qualified entities that have been designated for the purpose of such representative actions in another Member State. The identity of qualified entities enabled to sue abroad will be communicated to the Commission, who will compile a list and make it publicly available. Inclusion on the list serves as proof of the legal standing of the qualified entity bringing the representative action.

Opt-in – In order to ensure the sound administration of justice and to avoid irreconcilable judgments, where the consumers affected by an infringement do not habitually reside in the Member State of the court or administrative authority before which the representative action is brought, an opt-out mechanism is excluded regarding representative actions for redress measures. In other words, consumers have to explicitly express their wish to be represented in that representative action in order to be bound by the outcome of the representative action.

Cooperation and the exchange of information between qualified entities from different Member States is encouraged, in order to increase the use of representative actions with cross-border implications.

The post below was written by Bernard Haftel, who is Professor of Private International Law at the University of Sorbonne Paris Nord.

This is the fifth contribution to the EAPIL online symposium on the ruling of the Court of Justice in the case of Wikingerhof v. Booking.com. The previous posts were authored by Matthias Lehmann, Adrian Briggs, Gilles Cuniberti and Peter Mankowski. 

Readers are encouraged to share their views by making comments to the posts. Those wishing to submit longer contributions for publication are invited to get in touch with the managing editor of the blog, Pietro Franzina, at pietro.franzina@unicatt.it.

With the Wikingerhof ruling of 24 November 2020, the European Court of Justice once again returns to the seemingly endless question of the distinction between matters relating to contract and tort [1] within the meaning of Article 7 of the Brussels I bis Regulation and once again fails to provide a satisfactory solution.

As in the Brogsitter case, the present case dealt with an action between contracting parties based on the breach of rules which are considered, at least in domestic law, to belong to the law of torts. A German hotelier – the now famous Wikingerhof – decided to take action against the well known online platform Booking, established in the Netherlands, seeking an injunction prohibiting certain conducts provided for in Booking’s general terms and conditions. In particular, the plaintiff alleged that Booking had, without its consent, placed a reference to “preferential prices” or “discounted prices”, that it had been deprived of access to the contact information provided by its contracting partners via the platform and that it had made the hotel’s positioning dependent on a specifically high commission.

The difficulty inherent in classifying this type of situations, based on tort provisions but exercised between contracting parties [2], had been singularly aggravated by the famous Brogsitter judgment which had, in this respect, laid down the following rule: an action for liability based on tort rules in national law but brought between contracting parties is a matter of contract “where the conduct complained of may be considered a breach of the terms of the contract, which may be established by taking into account the purpose of the contract”.

Case law subsequent to the Brogsitter judgment had in fact reflected this, in particular with regard to the thorny question of liability actions for termination of established commercial relations, especially when base on French law (former Article 442-6, I, 5° now Article 442-1, II of the French Code de commerce).

Yet, in every respect, even if nothing expressly indicates it, the Wikingerhof judgment constitutes a complete reversal of the Brogsitter judgment (I), reintroducing, in a questionable manner, the distributive approach of the Kalfélis judgment (II) and substituting a new criterion, loosely based on previous case law (III) and consequently raising the question of the durability of certain recent solutions (IV).

I. A Discreet Turnaround

Even if at no time does the Court say so and even if, in his opinion, Advocate General Saugmadsgaard Øe cleverly tries to claim the contrary, the Wikingerhof judgment is a pure and simple repudiation of the Brogsitter case law.

In this respect, the judgment is particularly laconic, which is in stark contrast to the Advocate General’s opinion, simply stating that an action falls within the scope of the matters relating to a contract within the meaning of point 1 of Article 7 “if the interpretation of the contract between the defendant and the applicant appears indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter” (para. 32), thus taking up a passage along these lines from the Brogsitter judgment (para. 25), and specifying that if the contrary is the case, if it is not necessary to examine the content of the contract, then the action will belong to the matters relating to tort, delict or quasi-delict within the meaning of point 2 of Article 7 (para. 33).

This presentation must be read in the light of Mr Saugmadsgaard Øe’s opinion, which refers to and distinguishes between two possible interpretations of the Brogsitter judgment. According to a first approach, which he calls “maximalist”, a claim would fall within the scope of contractual matters “if the conduct complained of may be considered a breach of the terms of the contract” (para. 69), whereas, according to a “minimalist” interpretation, a claim would fall within the scope of contractual matters when “the interpretation of the contract between the defendant and the applicant appears indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter” (para. 70).

It was this second – minimalist – approach that was advocated by the Advocate General and which was adopted by the Court, thus repudiating the maximalist reading.

However, it will not escape anyone’s notice that the quotation illustrating the so-called maximalist reading is in fact the actual operative part of the Brogsitter judgment. Despite the ingenuity of the Advocate General’s approach, it is quite clear that by repudiating the so-called maximalist reading, the Court of Justice has here made a complete reversal, abandoning the contribution of the Brogsitter Case.

There is a notable difference here with the French Cour de Cassation, which is more and more frequently staging its reversals of case law [3], where, out of loyalty to its predecessors or perhaps out of humility, the judges of the Court of Justice never actually say that they are making a case law reversal.

The judgment thus reverts to a distributive logic, typical of the Kalfelis judgment: actions between contractors will be either tortious or contractual, depending on the rules on which they are based.

II. The Principle of a Distributive Approach

Whereas the Brogsitter judgment largely implied an absorption of the tort by the contractual part, i.e. a submission of all actions between contracting parties to the forum of the contract as soon as the conduct complained of could be regarded as a breach of contractual obligations, the present judgment focuses essentially on the nature of the rules on which the application is based, which has three damaging consequences.

Firstly, a dispersal of the dispute. It will often happen that the same contractual dispute will give rise to both tort and contract aspects, especially when the applicable laws will, like English and German law, leave the plaintiff an option in this respect. In such cases, the two aspects of the dispute, which are like two sides of the same coin, will be dealt with by two different courts. It might be tempting to object that Article 4 remains available in this case and allows the entire dispute to be referred to the judge of the defendant’s domicile, but this option is left to the plaintiff’s discretion, which brings us to the second difficulty.

The solution then aggravates the procedural imbalance between the parties. By multiplying the number of judges likely to be competent, here according to the basis of the claim, we multiply the power of the one who has, in practice, control of the option: the plaintiff. This inequality is in itself an anomaly in a trial which is normally based on the principle of equality of arms, and the Advocate General cannot agree with him when he considers that forum shopping is not in itself a problem and only becomes so in the event of abuse (para. 86 et seq.). In our view, Forum shopping, which benefits only one of the parties, is always, inherently bad.

Finally, the solution becomes truly impracticable when the resolution of the dispute depends on both tort and contractual aspects. Let us take the example of an action brought on the basis of a tort but which comes up against the principle of non-cumul [4]. In such a case, the court hearing only the tort aspect will either have to disregard the contractual aspects for which it has no jurisdiction and therefore give an inappropriate decision, or take them into account in dismissing the tort action but not rule on the contractual aspect.

This second solution, advocated by the Advocate General (para. 88), is not more convincing. It must be understood that the court would then have to consider the contractual aspect in its entirety, and thus determine the content of the contract, the extent of the obligations imposed by the stipulations and by the law applicable to it and the position of that law as regards the option or non-cumul question, but could only draw the consequence, in the event of non-cumul, of dismissing the action based on tort and would be obliged to refer the resolution of the contractual aspect to the forum of the contract. Such a solution would be, at the very least, a very poor administration of justice and a great waste of time and, at worst, a source of major inconsistencies. It is enough to imagine that the two successive judges would adopt different positions as to the law applicable to the question of cumulative liability.

It is therefore in many respects unfortunate that the European Court of Justice has decided to return to the distributive approach of the Kalfelis case law.

However, contrary to what the Kalfelis judgment might have suggested, it is not the classification in national law that will determine the nature of the tort or contract, but an autonomous classification and for the purposes of the Regulation, which presupposes a criterion.

However, in this respect, the desire to maintain the appearance of continuity with the Brogsitter case law leads the Court to endorse a largely flawed criterion.

III. The Chosen Criterion

The concern to maintain the illusion of continuity in the case law, and in particular continuity with the Brogsitter judgment, led the Court to uphold what was probably the most questionable point in that decision: the “test” which, in the logic of that judgment, was to determine “where the conduct complained of may be considered a breach of the terms of the contract”. In order to determine whether this is the case, the Brogsitter judgment advocated checking wether “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 ” (paras 24 and 25).

This test is particularly questionable because it is completely incapable of taking account of the subtle interweaving of legal rules and contractual provisions, it being furthermore recalled that, as the Advocate General observes, the methods of coordination of the two orders of liability vary from one country to another (paras 55 and 56).

Indeed, the effect of a contract is always to alter the pre-existing legal order, in particular by making unlawful what would have been lawful in the absence of the contract or by making lawful what would have been unlawful in the absence of the contract. Thus, even where the action will be based on an extra-contractual provision in domestic law, it will often be necessary to interpret the contract in order to determine whether or not the conduct complained of was lawful. An example of this is an action brought by the holder of intellectual property rights against his licensee for exceeding the rights granted. The interpretation of the contract is necessary to determine whether or not the rights granted have been exceeded. However, assuming that the rights have been exceeded, illegality would arise from the rules governing the author’s monopoly, in the same way as if there were no contract at all. In this respect, the objections proposed by Mr. Saugmadsgaard Øe, who takes the view that the criterion involving the interpretation of the contract would apply only to the claim and not to any defences, are not really convincing (paras 105 et seq.).

All in all, the other criterion mentioned by the Advocate General, distinguishing between, on the one hand, “the stipulations of a contract and/or rules of law which are applicable because of that contract” and, on the other hand, “rules of law which impose a duty on everyone, independently of any voluntary commitment”, would have seemed infinitely more accurate and more practicable to us.

It corresponds to the idea of “plus contractuel” [5], perfectly expressed by Lord Goff, according to which “the law of tort is the general law, out of which the parties can, if they wish, contract” [6].

It is an approach of this kind that should undoubtedly prevail in matters of conflict of laws, for the application of the Rome I and Rome II Regulations [7].

However, in matters of jurisdiction, the question arises in a different way. The question of jurisdiction often arises at the beginning of the dispute, at a time that necessarily calls for simplicity. In French law, moreover, the question arises concretely in a phase with a single judge – the juge de la mise en état – and it is in this respect necessary to simplify as much as possible the treatment of questions of qualifications. For this reason, as explained above, it is preferable to adopt a global and non-distributive approach, contrary to what might be done for the conflict of laws [8].

IV. The Survival of Intermediate Case Law

This change of course raises a question of scope, in terms of the solutions adopted since the Brogsitter judgment and, at least in part, based on them.

In particular, the European Court of Justice held in a Granarolo case that an action for the termination of commercial relations must be classified as contractual where there is a “tacit contractual relationship” (whatever that is) between the parties. Following the new logic of the Wikingerhof judgment, such a solution could probably not be renewed. In fact, the conduct complained of – i.e. the termination of established commercial relations – is sanctioned by the former Article L. 441-6, I, 5° (now L. 442-1, II) of the French Commercial Code whether or not there is a framework contract binding the parties. This is even its main interest. It is therefore a rule “which imposes a duty on everyone, independently of any voluntary commitment” and, obviously, since it is a mandatory legal obligation, the lawful or unlawful nature of the conduct complained of does not in any way imply an interpretation of the contract which may bind the parties.

This remark reflects on many other hypotheses and in particular the “pratiques restrictives de concurrence” (restrictive practices of competition) which appear in Articles L. 442-1 et seq. of the Commercial Code and similar provisions in other legal systems.

In all these cases, such practices are prohibited in any event, whether or not there is a contract between the parties. In fact, the prohibition of “subjecting or attempting to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties” in Article L. 442-1, I, 2° of the Commercial Code is very similar to the abuse of a dominant position under German law at issue in the commented judgment.

Is it to be inferred from this that, henceforth, all actions based on restrictive practices of competition would necessarily fall within the scope of tort, even between contractors?

And what about actions relating to these unbalanced clauses and seeking their annulment? In the area of conflict of laws, the European Court of Justice has ruled that the assessment of the lawfulness of contractual terms is a matter for the Rome I Regulation, even where the action is brought by a third party to the contract, in this case a consumer protection body. Is this solution obsolete?

Or should a distinction be drawn according to the purpose pursued by the action, holding that an action seeking to have a contractual stipulation declared null and void would be contractual in nature, even where that nullity results from a rule of conduct binding on everyone?

If so, in the event of an action seeking to challenge a clause that is unbalanced, there would then be two competent judges: the forum of the tort for the action for liability stricto sensu and the action for an injunction and the forum of the contract for the annulment, which would add to the dispersion of the litigation.

The judgment provides few answers to all these questions. More than ever, it would be necessary for the Court of Justice to take a higher view and to consider all the solutions that it infers from the qualifications it adopts as a whole.

 

[1] On this matter, see in particular V. Heuzé, “De quelques infirmités congénitales du droit uniforme: l’exemple de l’article 5. 1 de la Convention de Bruxelles du 27 septembre 1968”, Rev. crit. DIP 2000, p. 589 s., M.-E. Ancel, P. Deumier, M. Laazouzi, Droit des contrats internationaux, 2nd ed., 2019, § 106 et s. ; H. Gaudemet-Tallon, M.-E. Ancel, Compétence et exécution des jugements en Europe, 6th ed., 2018, § 186 et seq.; J.-S. Queginer, Le juge du contrat dans l’espace judiciaire européen – Qualification et détermination d’une compétence spéciale, th. Lyon 3, 2012; M. Minois, Recherche sur la qualification en droit international privé des obligations, LGDJ, 2020.

[2] On which see, in particular, S. Bollée, “La responsabilité extracontractuelle du cocontractant en droit international privé », in Mélanges en l’honneur du Professeur Bernard Audit, LGDJ, 2014, p. 119.

[3] For a recent and very clear example, see Cass. civ., 1st, 18 déc. 2019, n° 18-12.327 and n° 18-11.815, D. 2020. 426, note S. Paricard ; ibid. 506, obs. M. Douchy-Oudot; ibid. 843, obs. Régine; AJ fam. 2020.131; ibid. 9, obs. A. Dionisi-Peyrusse ; RTD civ. 2020. 81, obs. A.-M. Leroyer; Dr. fam. 2020, comm. 39, note J.-R. Binet; adde. S. Bollée, B. Haftel, “L’art d’être inconstant – Regards sur les récents développements de la jurisprudence en matière de gestation pour autrui”, Rev. crit. DIP 2020.267.

[4] In some systems, such as French law, where the same fact can theoretically constitute both a tort and a breach of contract, the plaintiff has no choice and can only act on the contractual ground, which is generally referred to as the principle of non-cumul.

[5] J. Huet, Responsabilité délictuelle et responsabilité contractuelle. Essai de délimitation entre les deux ordres de responsabilités, th. Paris II, 1978, especially n° 672; see also B. Haftel, La notion de matière contractuelle en droit international privé – Etude dans le domaine du conflit de lois, th. Paris II, 2008, especially. n° 618 et s.

[6] Henderson v. Merrett Syndicates [1994] 3 All ER 506 [532].

[7] See B. Haftel, op. cit.

[8] On the idea of an independence between the qualifications adopted in the field of jurisdiction and the one to be adopted in the field of conflict of laws, see B. Haftel, “Entre ‘Rome II’ et ‘Bruxelles I’: l’interprétation communautaire uniforme du règlement ‘Rome I'”, JDI 2010, no 3, doctr. 11, and, for the opposite view, see T. Azzi, “Bruxelles I, Rome I, Rome II: regard sur la qualification en droit international privé communautaire”, D. 2009, p. 1621.

Tamás Szabados (Eötvös Loránd University) published In Search of the Holy Grail of the Conflict of Laws of Cultural Property: Recent Trends in European Private International Law Codifications, in theInternational Journal of Cultural Property (vol. 27, 2020). The abstract reads as follows.

Most private international laws do not address cultural property specifically but, instead, apply the general lex rei sitae rule also to artifacts. Legal scholarship has revealed the flaws of the rigid application of the lex rei sitae principle to cultural goods and has proposed alternative connecting factors, such as the lex originis principle, to prevent forum and law shopping in this field. Reacting to the criticisms, some of the more recent private international law codifications have decided on the adoption of specific rules on stolen and illegally exported cultural goods that combine the lex rei sitae and the lex originis rules and provide room for the parties’ autonomy. This article draws the conclusion that these more recent legislative solutions do not necessarily promote legal certainty and predictability with regard to the governing law and are far from being a Holy Grail for the conflict of laws of cultural property, whether on a national level or within the European Union.

See here for more information.

In December 2019 the Hague Conference on Private International Law (HCCH) convened experts and stakeholders from around the world to discuss technology developments in cross-border litigation in an a|Bidged event dedicated to the 1965 Service Convention.

The contributions by the various speakers to The HCCH Service Convention in the Era of Electronic and Information Technology are now available in video format online.

Additionally, the discussions of the event resulted in a dedicated publication – a|Bridged – Edition 2019: The HCCH Service Convention in the Era of Electronic and Information Technology. The ebook released on 24 November 2020 can be downloaded from the HCCH website.

The a|Bridged – Edition 2019 focuses on the use of modern technology in the context of the Service Convention. Although the text of the convention itself does not contain specific references to technology in the service of documents, contributors show that the provisions’ neutrality allow them to adjust to new developments and technologies of the present time.

The book is structured in four parts.

The first part – The Prism: The Tech Battle for e-Service – examines all kind of technology supported developments from secured e-mail, electronic submission and transmission platforms to distributed ledger technology and artificial intelligence. These options are discussed from the perspective of appropriate solutions for end-to-end digitisation of transmission and execution procedures to be used under the HCCH Service Convention.

In the second part – The Lab: All Across the World – judicial representatives from different regions (i.e. England and Wales, South Korea, Brazil) discuss how their own national service procedures currently make use of information and communication technology, or are taking steps to develop in this direction in the near future. Solutions already in place or projects that are currently been developed are presented.

The third part – The Open Lab: The Text of Tomorrow – focuses on how the Service Convention could be operating in the future based on technology developments facilitating judicial cooperation, relying on blockchain technology, and options to ‘update’ the applicable provisions.

The fourth part – HCCH Unplugged – addresses specific topics that can arise from the use of information technology in the operation of the HCCH Service Convention such as security of transmissions and data protection, guarantees in the e-service of process, use of electronic email, social media, blockchain and Distributed Ledger Technology (DLT) for transmitting and handling legal records, the transmission of scanned documents via cloud computing to be served abroad, and localising the defendant via his email address for direct service purposes.

As readers of this blog know, the first EAPIL (Virtual) Seminar, devoted to the impact of Brexit on Private International Law, will take place tomorrow from 11 am to 1 pm (MET). For more information on the event, see here.

Registrations to the Seminar are now closed. The login details have been sent to the registered participants by e-mail this morning (if you can’t find our e-mail, please check your spam folder or get in touch with us at blog@eapil.org).

The author of this post is Michiel Poesen, PhD candidate at KU Leuven.

This post tells a short story about the fate of European private international law’s neutrality paradigm… Our story starts where you probably would not expect it: the 2019 Belgian company law reform.

In 2019, the Belgian legislature reformed the Company Law Code in a bid to attract more investors to Belgium. (For the record, the previous government also launched the idea of offering businesses an interesting venue for transnational litigation–the Brussels International Business Court or BIBC, which did not make it through).

One of the reform’s key elements was to make company law leaner and more flexible. Facilitating this flexibilisation, the legislature also revised the Belgian private international law provisions pertaining to company law. In sympathy with the well-known CJEU case law on the freedom of establishment in the EU, the legislature traded the seat principle for the incorporation principle as the connecting factor for the law applicable to and adjudicatory jurisdiction over companies (Articles 109–110 Code of Private International Law; Article 111 contains a list of legal questions governed by the lex societatis).

Clearly, the incorporation principle gives up on the traditional idea that the connecting factor for companies should be based on a physical element such as the presence of a company’s place of administration (see R Michaels, ‘Globalizing Savigny? The State in Savigny’s Private International Law and the Challenge from Europeanization and Globalization’ in M Stolleis & W Streeck (eds), Aktuelle Fragen zu politischer und rechtlicher Steuerung im Kontext der Globalisierung (Nomos 2007) 142).

Interestingly, the statute provides for one carve-out concerning adjudicatory jurisdiction (I should thank Professor Joeri Vananroye and Professor Stijn De Dier for bringing it to my attention). Claims relating to the personal liability of directors towards third parties can be brought in the Belgian courts if the company has its ‘main establishment’ in Belgium and has a merely formal connection the state where it is incorporated:

… the Belgian courts have jurisdiction over actions concerning the liability of directors of corporations resulting from Article 2:56, §1, of the Corporations and Associations Code towards third parties other than the corporation that arose out of acts committed in the performance of their administrative function, provided that the main establishment of the legal person is in Belgium, while the legal person is incorporated outside if the European Union [or indeed an EFTA state that ratified the Lugano II Convention] and has a merely formal connection to that state [Translation by the author, the authentic text is available in Dutch and French in the Belgian state gazette].

The main establishment ‘is determined by taking into account primarily the place of administration, as well as the centre of its business and activities, and in subsidiary order the statutory seat’ (Article 4, §3 Code of Private International Law, available in English here – although not yet reflecting the 2018 overhaul). This, in fact, is a special tort jurisdiction rule that seeks to shield Belgian residents from companies who operate in Belgium but are incorporated outside of the EU (e.g. for fiscal or organisational purposes).

The Belgian legislature enacted this provision to strike a balance between a company’s freedom to choose the forum pursuant to the incorporation principle and the protection of general interests in Belgium, such as environmental protection or the fight against tax fraud (see here, at 144–145).

Private international lawyers will be interested to know that finding the physical ‘seat’ (Sitz in classical Savignyan terms) of the tortious relationship between a director and a third party, however, was not part of the legislature’s motives. This is quite interesting. For it demonstrates how the legislature sought to balance material interests through the law of conflict of jurisdictions (see Michaels, supra, 140–141).

Hence, the legislature was not enticed by European private international law’s traditional focus on finding the legal relationship’s geographical connection (which one American realist provocatively called ‘transcendental nonsense’ long before the Belgian company law reform; FS Cohen, ‘Transcendental Nonsense and the Functional Approach’ (1935) 35 Columbia Law Review 811).

The post below was written by Peter Mankowski, who is Professor of Private International Law at the University of Hamburg. Apart from one section, the post is based on the author’s German-language case note in the Lindenmaier Möhring Kommentierte BGH-Rechtspechung. The translation into English was permitted courtesy of C.H. Beck Verlag, München.

This is the fourth contribution to the EAPIL online symposium on the ruling of the Court of Justice in the case of Wikingerhof v. Booking.com. The previous posts, authored by Matthias Lehmann, Adrian Briggs and Gilles Cuniberti, can be found here, here and here. 

Readers are encouraged to share their views by making comments to the posts. Those wishing to submit longer contributions for publication are invited to get in touch with the managing editor of the blog, Pietro Franzina, at pietro.franzina@unicatt.it.

Problem Description

The boundary between contract and tort, between Article 7 pts. (1) and (2) of the Brussels I bis Regulation, has been a mine-field for years.

The CJEU has continued to defer it to the detriment of tort and to the benefit of contract (see paradigmatically Brogsitter, paras 24-27, and flightright, paras 59-64; cf. also Holterman Ferho, paras. 70-71, and Feniks, paras 40-49). This generates enormous uncertainty (see only Baumert, EWiR 2014, 435; Slonina, ecolex 2014, 790; Wendenburg/Maximilian Schneider, NJW 2014, 1633; Dornis, GPR 2014, 352; Brosch, ÖJZ 2015, 958; Wendelstein, ZEuP 2015, 624; Reydellet, RLDA 111 [2016], 33; Pfeiffer, IPRax 2016, 111).

According to the CJEU, for a matter to be contractual, it is sufficient that there has been a breach of contractual obligations because it appears essential for the interpretation of the contract to determine whether the conduct at issue in the main proceedings is lawful or unlawful (Brogsitter, paras 24-27).

The national courts struggle with this and in some cases even make express ‘Brogsitter reservations’ (see in particular OGH ÖJZ 2015, 1051 with note Brenn; discussed by Mankowski, EuZA 2016, 368). By submitting its reference, the German Bundesgerichtshof (GRUR 2019, 320 — booking.com) sought certainty and a general decision from the CJEU on how far the CJEU intends to stick to Brogsitter (Mankowski, EWiR 2019, 157, 158). The CJEU has acknowledged and recognised that the concrete reference for a preliminary ruling in Wikingerhof is important in terms of legal policy, as is clearly evidenced by the fact that the Grand Chamber with the President and Vice-President of the CJEU decides, the fullest brass possible below the full plenum (the latter being reserved for rather constitutional matters).

Legal Assessment

Article 7 pt. (2) Brussels I bis Regulation refers to any action seeking to establish liability for damage on the part of the defendant and which does not relate to ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) (Kalfelis, para. 18; Löber, para 19). An autonomous interpretation is required for both ‘contract’ and ‘tort’, which is more abstract from national understandings (paras 30 et seq.).

Both Article 7 pts. (1) and 2 are exceptions to the general jurisdiction of Article 4 Brussels I bis Regulation and are therefore to be interpreted strictly. According to Recital (16) of the Regulation, they are both justified from the point of view of particular proximity to the facts and evidence. An action therefore has as its object ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) if an interpretation of the contract between the applicant and the defendant appears indispensable in order to determine whether the conduct alleged by the applicant against the defendant is lawful or, on the contrary, unlawful (Brogsitter, para. 25).

This is the case, inter alia, of an action based on the provisions of a contract or on legislation applicable under that contract (Holterman Ferho, para. 53, and Kareda, paras 30-33). On the other hand, where an applicant relies on the rules on liability in tort, delict or quasi-delict, that is to say, a breach of a legal obligation, and it does not appear necessary to examine the content of the contract concluded with the defendant in order to assess whether the conduct alleged against the defendant is lawful or unlawful, since that obligation on the defendant exists independently of that contract, an tort falls within the scope of the action within the meaning of Article 7 pt. (2).

In the present case, Wikingerhof relies on an infringement of German antitrust law, which generally prohibits the abuse of a dominant position irrespective of a contract or other voluntary commitment. More specifically, because of Booking.com’s strong position on the relevant market, Wikingerhof had no choice but to conclude the agreement at issue and to be subject to the effects of the subsequent amendments to Booking.com’s General Sales Conditions, even though some of Booking.com’s conduct was unfair.

The central legal question is therefore whether Booking.com has abused a dominant position for the purposes of antitrust law. In order to determine whether the practices alleged against Booking.com are lawful or unlawful under that competition law, it is not essential to interpret the contract between the parties to the main proceedings, since such an interpretation is, at most, necessary in order to establish the existence of those practices (para. 35).

It follows that, subject to verification by the referring court, the action brought by Wikingerhof, in so far as it is based on the statutory obligation not to abuse a dominant position, must be regarded as constituting a tort.

That is consistent with the objectives of proximity and the sound administration of justice pursued by the Brussels I bis Regulation. The court having jurisdiction under Article 7 pt. (2) — in cartel cases, that of the market affected by the alleged anti-competitive conduct — is best placed to rule on the main question of the merits of that allegation, in particular with regard to the collection and assessment of the relevant evidence (para 37 with reference to Tibor-Trans,  para. 34, and VKI v Volkswagen, para. 38).

Contract vs Tort in European International Procedural Law and Conflict of Laws

The CJEU is trying to engineer a cautious move away from Brogsitter without formally abandoning Brogsitter, and indeed by repeating the central statement from Brogsitter. In any event, for antitrust cases Brogsitter should not pass through.

In a very important situation, the CJEU restores its right to jurisdiction in tort. However, the gain in legal certainty is not as great as if a more general statement had been made. This is because the restriction to a specific situation still leaves the initial question open to all other situations. It may even induce the national courts to make even more complicated attempts to reveal, by comparison parallels or divergences with antitrust law for the situations to be assessed by each of them. AG Saugmandsgaard Øe had launched nothing less than a frontal full-force attack on Brogsitter or at least on a ‘maximalist’ reading of Brogsitter (Opinion of 10 September 2020, paras. 74-115).

Yet the CJEU has not endorsed this and has not distanced itself from Brogsitter at the general level. Wikingerhof does not overrule Brogsitter. It does not finally break with Brogsitter (Matthias Lehmann, Wikingerhof: CJEU Reestablishes Equilibrium between Contract and Tort Jurisdiction). It even cites with seeming approval to the Brogsitter formula – yet eventually opts for partially breaking free from that formula, namely for claims based in antitrust law. On the other hand, Wikingerhof does not firmly shut the door to future deviations from Brogsitter in other fields or in general.

In the age of private enforcement in particular, antitrust law is not a good ground for — as the CJEU is now trying to do — dissolving contract law in particular, but not in general.

Civil actions in the field of antitrust, especially since actions for damages or injunctions to use certain General Terms and Conditions will often come from suppliers or customers of the cartel participants or of the dominant enterprise. They therefore operate in the context of contractual relations. The cartel and abuse of power will be reflected in an arrangement of the contractual terms (service, consideration or conditions) favourable to the cartel or dominant undertaking. Antitrust induced nullity of the contract leads to more than one stage. The cartel or abuse of power becomes the background to the contract in question, and vice versa, it becomes almost a preliminary question of the cartel effect or abuse of power. It is therefore precisely in the case of cartels or abuse of power that contracts are the rule, not the exception (see to a similar avail Briggs, Wikingerhof: A View from Oxford).

However: Preliminary questions do not determine the classification of the main question. Nor do they do so with regard to the distinction between the contract and the tort for the main issue. There is no specific qualification for the main question (Pfeiffer, IPRax 2016, 111).

The CJEU’s departure from Brogsitter in antitrust law and the establishment of a tort/delict qualification could possibly give rise to an argumentum a maiore ad minus (tentatively in a similar direction the comment of Simon Horn to Matthias Lehmann’s post on this blog). If one is already moving in antitrust law with its relative proximity to the contract in tort law, it is necessary to move even more safely into tort law in the case of torts less close to the contractual realm.

However, this would be an attempt to assess parallels to, or divergences from, antitrust law by comparing them. Wikingerhof may indicate a reversal of the trend. The previously seemingly unstoppable rise of contract at the expense of tort/delict does not progress any further at least. However, a full reversal of the trend has not yet been completed, but rather requires further probation samples. But Wikingerhof might be some beginning. That tort regains some ground at the expense of contract is not akin to a catastrophe (but cf. Briggs, Wikingerhof: A View from Oxford), but a necessary correction of the previous over-stretching of ‘contract’ by Brogsitter.

If different, but concurring claims in contract and tort happen to exist, the best way to treat them might possibly be the introduction of annex competences rather than re-characterisation or deferring boundaries by characterisation.

Yet this enters another difficult field of striking balances of competing interests right (Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 notes 34-35). Re-characterizing certain claims in tort as claims in contract if they can be said to be based on a breach of contractual obligations – in essence what Brogsitter boils down to –, and the result that two claims in contract compete would be not more than a bypassing escape strategy (Baumert, EWiR 2014, 435, 436; Kiener/Neumayr, ZFR 2015, 505, 506-507; Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 note 35).

The CJEU’s Missing Look at the Conflict of Laws

Unfortunately, the CJEU in Wikingerhof completely fails to look at the sister area of conflict of laws as well. The mere existence of Article 6(3) Rome II Regulation and the clear attribution of private antitrust law to the unlawful acts in the realm of conflict of laws have provided very strong arguments for classifying private law specifically in tort/delict.

In that realm, Recitals (7) of the Rome I and Rome II Regulations require that the Brussels I bis Regulation be interpreted as well. Unfortunately, there is no parallel Recital in the Brussels I bis Regulation. At the occasion of the next recast, a future Brussels I ter Regulation should receive such a Recital in order to draw the current missing third line to the interpretation triangle with Rome I and Rome II and make the triangle so obvious that it can no longer be ignored by the CJEU.

Does an Overarching Notion of ‘Contract’ Exist under the Brussels I bis Regulation?

A major part of the discussion subsequent to Wikingerhof, in particular on Conflictoflaws.net, has focused on whether ‘contract’ has the same meaning throughout the entire Brussels I-bis Regulation, i.e. in essence, whether Wikingerhof gets also relevant for insurance, consumer or employment contracts; opinions are divided (see Lutzi, Briggs, Van Calster, Poesen, Álvarez-Armas ).

Undeniably, there is a certain tendency particularly in Králová, paras. 58-63, pointing towards the CJEU tentatively favouring different notions of ‘contract’ for the purposes of Article 7 pt. (1) Brussels I bis Regulation, on the one hand, and Article 17 of the same Regulation, on the other (a then isolated predecessor might be found in Ilsinger, paras 56-57). AG Saugmandsgaard Øe expressed such tendency even more clearly in Wikingerhof (Opinion of 10 September 2020, para. 113).

Furthermore, Brogsitter has some counterparts extending the domain of consumer contracts to claims which under national law might have their fundament in tort (see in particular BGH NJW 2011, 532; BGH NJW 2011, 2809; BGH IPRax 2013, 168, 171; BGH WM 2012, 646; BGH ZIP 2013, 93). Reliantco, decided after Králová, is the current highwater mark (see paras. 58-73). In the background informing Article 17(1) in general, the desire for adequate consumer protection – mandated by Art. 153 TFEU – is a strong and specific influence. Yet ‘contract’ should follow the same concept throughout which is essentially based on economic ideas and categories of voluntary or involuntary creditorship plus cooperating mechanisms and the meeting of the minds (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub III). ‘Consumer contract’ adds the B2C element to ‘contract’, but is nevertheless based on ‘contract’ (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub IV).

‘Hotels Can Sue in Germany’: Marketplace Court for Cartel Victims and Danger of Derogation

Broken down from the high and abstract plane to the small change: The poster titles on Wikingerhof in the relevant internet publications have the tenor ‘Hotels can sue in Germany’ (in particular LTO, 24 November 2020; Hamburger Abendblatt, 25 November 2020).

In fact, under Article 7 pt. (2) Brussels I bis Regulation, the Court of Justice of the European Union establishes a market jurisdiction for the victims of the cartel. However, there is no reason why it should apply only to certain sectors, or even only to hotels, and not to all sectors, as Article 7 pt. (2) does not differentiate anywhere according to bananas, nor does Article 6(3) Rome II Regulation in the conflict of laws.

However, the counter-reaction seems obvious for cartels and dominant companies if it has not been implemented proactively for a long time: in its own general terms and conditions for contracts with suppliers or customers, by means of a jurisdiction clause, the courts have exclusive jurisdiction in their own place of residence. This is because Article 7 pt. (2) Brussels I bis Regulation creates only a ground of special jurisdiction and not a ground of exclusive jurisdiction which would bar any derogation. Article 7 pt. (2) gives way to Art. 25 Brussels I bis Regulation, and the Brussels I bis Regulation does not provide protection against derogating choice of court agreements (on antitrust claims and jurisdiction agreements under Article 25 Brussels I bis Regulation / Article 23 Brussels I Regulation, see Cartel Damages Claims, and Apple Sales International; see also Mankowski, EWiR 2015, 687; id., TBH 2020, 45; Stammwitz, Internationale Zuständigkeit bei grenzüberschreitenden Kartelldelikten [2018] pp. 391-437; Pfeiffer, LMK 2018, 412366; C. Krüger/Seegers, WuW 2019, 170; Goffinet/R. Spangenberg, J. dr. eur. 2019, 199).

However, this is not yet the final step in the assessment. The market power of internet portals in particular is a well-known phenomenon and a significant problem. In turn, it has provoked a specific counter-reaction by the European legislator. This counter-reaction is the P2B Regulation, i.e. Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services.

That said, the P2B Regulation only grants protection to business users by means of (unsystematic) individual standards (Nadine Schneider/Kremer, WRP 2020, 1128, 1129; Stefan Ernst, CR 2020, 735, 739), but not comprehensive. It requires transparency and mandatory content in general terms and conditions. On the other hand, it refers only exceptionally to orders for annulment in respect of general terms and conditions, in particular in Article 3(3) P2B Regulation. In particular, it does not lose any word on choice-of-court agreements. This fits with the general line that recent EU special acts for the online sector – e.g. the Geo-Blocking Regulation in its Article 1(6) – in principle respect the Brussels I bis Regulation (see e.g. Recital (9) P2B Regulation).

It is true that the P2B Regulation favours mediation as the preferred method of dispute resolution. However, Art. 12 (5) P2B Regulation expressly states that the P2B Regulation does not affect the enforcement of rights by way of court action. The Brussels I bis Regulation protects its species, namely Articles 15, 19 and 23. However, only typically weaker parties with derogation bans, but not business users within the meaning of the P2B Regulation and small enterprises such as the Wikingerhof Hotel.

The market-based jurisdiction under Article 7 pt. (2) Brussels I bis Regulation, which has now been confirmed by the Court of Justice of the European Union, thus enables cartel victims against foreign internet portals to form a forum actoris, a forum actoris at their own domicile, but is subject to a derogation. In the broad legal policy perspective, de regulatione ferenda it can be considered to include special protection standards for SMEs (small and medium-sized enterprises) in a future Brussels I ter Regulation, i.e. to treat C2SME contracts as a separate category.

This is, however, a new round of the game, to be played in the future, and would in any event be the subject of a major debate which will certainly feature fiercely competing lobbying interests, with an uncertain outcome as to the final result.