15 Colum. J. Eur. L. F. 83 (2009)

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Anastasia Vezyrtzi

INTRODUCTION

One of the main objectives of the Council Regulation 44/2001 (formerly the Brussels Convention) is legal certainty.[1] As the European Court of Justice (ECJ) has stressed, this objective requires “that the jurisdictional rules which derogate from the basic principle of the Brussels Convention, such as Article 5(1), should be interpreted in such a way as to enable a normally well-informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued.”[2] The general head of jurisdiction is in Article 2, which establishes the principle of the defendant’s domicile: “persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.” Article 5(1) – whose ratio legis was justified on the basis of “a close link between the court and the action or in order to facilitate the sound administration of justice”[4] – confers alternative grounds of jurisdiction, giving to the plaintiff the possibility to choose where to start court proceedings and thus permitting some forum shopping within the jurisdictional parameters imposed by the Regulation.[5]

THE AUTONOMOUS INTERPRETATION OF THE PLACE OF PERFORMANCE (ARTICLE 5(1))

One of the chief innovations of the Regulation was the reframing of Article 5(1) by the introduction of Article 5(1)(b).[6] Under the Brussels Convention, the ECJ set forth two interpretative approaches regarding special jurisdiction, requiring the determination of both the nature of the contractual obligation forming the basis of the action (De Bloos decision) and the place of performance by recourse to the applicable national law via the private international law of the forum (Tessili decision). Unlike the traditional approach-which is still followed under 5(1)(a) [9] – Article 5(1)(b) not only deems the place of performance identical for every obligation stemming from the contract, but also “defines the place of performance in an ‘autonomous’ way, i.e., independently from the lex causae,” in relation to two types of contracts (contracts for the sale of goods or the provision of services).[10] As regards the contract for the sale of goods (which is the only one to be dealt with here), Article 5(1)(b) looks to the “principle of characteristic performance” to establish one place of performance that will apply to the whole contract, “namely by concentrating on the place of delivery of goods.”[11] But has the new rule really simplified things in practice?

DETERMINATION OF THE PLACE OF DELIVERY IN A SALES CONTRACT INVOLVING CARRIAGE OF GOODS

The key concept of “place of delivery” is neither expressly defined in the Regulation nor can its meaning be inferred from either its legislative history or its wording.[12] Therefore, the determination of a court’s jurisdiction becomes rather complex, especially in respect of sales contracts that involve the carriage of goods from one member state to another. The question that divides commentators and courts is the following: Is the place of performance the place where the goods are handed over to the buyer, or the place at which the goods were handed over to the first carrier for transmission to the buyer?

The Tribunale di Padova, in its decision of January 10, 2006, resorted to international substantive law instruments, namely Article 31 of the CISG (United Nations Convention on Contracts for the International Sale of Goods), in order to interpret the concept of “place of delivery,” “since recourse to the lex causae is to be avoided in favour of an ‘autonomous interpretation.’”[14] In an endeavor to justify his recourse to the CISG, Judge Rizzieri pointed out that “the CISG must be relied upon as it constitutes a set of rules which, as seen, even the European legislature has used as a model due to its acceptance at the international level and its ability to bring uniformity and autonomy of results.”[15] Consequently, under Article 31 of the CISG, “[i]f the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists: (a) if the contact of sale involves carriage of the goods-in handing the goods over to the first carrier for transmission to the buyer.” In addition, Judge Rizzieri noted that the same approach has been adopted by two other autonomous but non-binding instruments, the UNIDROIT Principles of International Commercial Contracts (Article 6.1.6(1)) and the Principles of European Contract Law (Article 7:101(1)). The Italian Corte Suprema di Cassazione in its decision of September 27, 2006[19] followed the same solution and applied also CISG Article 31(a). In contrast, the Oberste Gerichtshof of Austria held in its decision of December 14, 2004, that the place of delivery “is to be understood in the actual sense of the wording. It is the place where the buyer actually accepts delivery of the conforming goods.”

The main goal of an “interinstrumental approach of interpretation” is to create a common and uniform understanding of basic concepts, considering the CISG is in force in most EU Member States and it therefore forms in a wide sense part of the acquis communautaire.[21] This approach has been strongly criticized on two main grounds[22]: a) that a European procedural instrument, such as the Brussels 1 Regulation, cannot be interpreted in the light of a substantive law instrument of “extra-European” origin such as the CISG; and b) that a procedural law concept cannot be defined on the basis of substantive law rules. According to some commentators, one should also avoid using either the European or the UNIDROIT Principles on Contract Law as interpretative tools, as they are not binding, they refer to substantive and not procedural issues, and “they do not constitute some kind of generally applicable rules” in international trade.[23]

The counterarguments that were developed in academia,[24] some of which were also pointed out by Judge Rizzieri in the rather innovative Padova decision, were the following: First, that when the concept that needs to be determined is a substantive and not a procedural one, it needs to be defined on the basis of substantive law rules. One such rule is the CISG, which constitutes an autonomous set of rules so resorting to it satisfies the need for an autonomous interpretation of the concept. Second, that despite the CISG’s non-European origin, “[i]t is not a coincidence that the European legislature used the CISG as a reference for drafting Directive 1999/44/EC . . ., relating to certain aspects of the sale of consumer goods and associated guarantees.”[25]

REFERENCE OF THE GERMAN SUPREME COURT TO THE ECJ FOR A PRELIMINARY RULING

After its judgment in Color Drack GmbH v. Lexx International Vertriebs GmbH, in which the ECJ ruled that where there are several places of delivery within a single Member State and “[i]n the absence of determining factors for establishing the principal place of delivery, the plaintiff may sue the defendant in the court of the place of delivery of its choice,” the ECJ once again had to deal with the interpretation of Article 5(1)(b), and more specifically with the determination of the “place of delivery” in contracts that involve carriage of goods from one member state to another. Due to the contradicting approach adopted by state courts, in its decision of July 9, 2008[27], the German Federal Supreme Court decided to stay the proceedings and request a preliminary ruling by the ECJ. The German Supreme Court seemed to regard as the “place of delivery” the place where the buyer obtains or should have obtained under the contract control over the goods; i.e., the place of final destination of the goods.[28]

CONCLUSION

The mere existence of “special jurisdiction” in section 2, Chapter II, of the Regulation and the increase in potential jurisdictions for a plaintiff to choose from in deciding where to bring a case inevitably continue to produce incentives for forum shopping.[29] Notwithstanding the approach to follow an “autonomous” interpretation of the place of performance in order to ensure transparency and to avoid conflicts of jurisdiction, the new Article 5(1) Brussels 1 Regulation does not truly simplify things.[30] The absence of express definitions of key concepts of the Regulation leads to different interpretations from the various courts of the Member States, causing uncertainty and allowing a certain amount of forum shopping. In addition, as mentioned by one commentator, the fact that the new rule only applies to the sale of goods and the provision of services when the place of performance is in a Member State still leaves some place for application of the former rules, creating inconsistent results and causing “a multiplication of the applicable rules.”[31] Finally, in cases where Article 5(1)(b) is not applicable, because no actual delivery occurred and no agreement exists on the place of performance, one has to fall back upon subparagraph (a) by virtue of subparagraph (c) and therefore still resort to national private international law and the diverging solutions under national substantive laws.[32] Pending the ECJ decision on the interpretation of the concept of “place of delivery,” one can draw the conclusion that the goal of legal certainty as regards jurisdiction is still only partially satisfied under the new regime.

Endnotes

[1] See, e.g., Case C-129/92, Owens Bank Ltd. v. Fulvio Bracco and Bracco Industria Chimica SpA, 1994 E.C.R. I-117, ¶ 32. 

[2] Case C-440/97, GIE Groupe Concorde v. Master of the Vessel “Suhadiwarno Panjan,” 1999 E.C.R. I-6307, ¶ 24; see also Case C-26/91, Jakob Handte & Co. GmbH v. Traitements Mécano-chimiques des Surfaces SA, 1992 E.C.R. I-3967, ¶ 18; Case C-256/00, Besix SA v. Wasserreinigungsbau Alfred Kretzschmar GmbH & Co. KG (WABAG), 2002 E.C.R. I-1699, ¶¶ 26, 54.

[4] Council Regulation 44/2001, Recital 12, 2001 J.O. (L 012) 1, 2; see also BRUSSELS I REGULATION 89-91 (ULRICH MAGNUS & PETER MANKOWSKI eds., 2007).

[5] Ronald Brand, CISG Article: 31 When Substantive Law Rules Affect Jurisdictional Results, 25 J.L. & COM. 181, 184 (2005).

[6] Proposal for a Council Regulation (EC) on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [hereinafter Proposal for a Council Regulation], at 6, COM (1999) 348 final (July 14, 1999). 

[9] BRUSSELS I REGULATION, supra note 4, at 100-101.

[10] Franco Ferrari, Remarks on the Autonomous Interpretation of the Brussels 1 Regulation, In Particular of the Concept of “Place of Delivery” Under Article 5(1)(b), and the Vienna Sales Convention, 1 REVUE DE DROIT DES AFFAIRES INTERNATIONALES/INT’L BUS. L. J. 83, 89 (2007). See also Proposal for a Council Regulation, supra note 6, at 14 (“The Brussels Convention rule regarding contractual obligations is maintained. But to remedy the shortcomings of applying the rules of private international law of the State whose courts are seised, the second subparagraph of Article 5(1) gives an autonomous definition of the place for enforcement of the ‘obligation in question’ in two specific situations.”); BRUSSELS I REGULATION, supra note 4, at 134-135. 

[11] BRUSSELS I REGULATION, supra note 4, at 136.

[12] Ferrari, supra note 10, at 92; for the methods of interpretation of the Regulation in general see, among others, BRUSSELS I REGULATION, supra note 4, at 31-39.

[14] Ferrari, supra note 10, at 92; for a detailed analysis of the Tribunale di Padova decision, see Ferrari, supra note 10, at 83-99.

[15] Trib. di Padova, supra note 13.

[19] For application of CISG Article 31 in light of the Brussels I Regulation, see also Oberlandesgericht Wien [OLG Wein] [Provincial Appellate Court] June 1, 2004, 3 R 68/04y (Austria); Maxi Miliaan B.V./Baby Pushchairs, S.L., Arrondissementsrechtbank [Rb.] [District Court], Hertongenbosch, 12 May 2004 (Neth.).

[21] See Franco Ferrari, I rapporti tra le convenzioni di diritto materiale uniforme in materia contrattuale e la necessità di un’ interpretazione interconvenzionale, 36 RIVISTA DI DIRITTO INTERNAZIONALE PRIVATO E PROCESSUALE 669 (2000); BRUSSELS I REGULATION, supra note 4, at 33.

[22] See, e.g., Trib. di Rovereto, 28 aug. 2004, n. 1224: (“The key to interpreting the Regulation must be found in EU law. Therefore, the phrase ‘place of delivery’ mentioned by Art. 5(1)(b) must be interpreted autonomously to serve the goals of certainty and predictability, which form the basis of the provision. For purposes of an autonomous interpretation, there is no need to make reference to the Vienna Convention, because it is not EC law, but rather a convention of substantive law.”). For a comment on the result of this decision, see Brand, supra note 5, at 189.

[23] BRUSSELS I REGULATION, supra note 4, at 140.

[24] Ferrari, supra note 10, at 90.

[25] Trib. di Padova, supra note 13.

[27] Pending at the E.C.J. as C-381/08, Car Trim GmbH v. KeySafety Systems SRL.

[28] For an analysis by the German Federal Supreme Court of the conflicting views regarding the interpretation of the “place of delivery,” see id. ¶¶ 19-23.

[29] ANDREW BELL, FORUM SHOPPING AND VENUE IN TRANSNATIONAL LITIGATION 59 (2003).

[30] Ferrari, supra note 10, at 93.

[31] Id.

[32] Id. See also id. at 99 n.108 (listing additional sources discussing this issue).