EAPIL blog

Introduction Beverly Hills Polo Club branded goods are sold in the USA and the UK. Trade marks in the USA are owned by X. Corresponding trade marks in the UK are owned by Y. Trade mark law is territorial. Does Amazon infringe UK trade mark law by advertising the USA branded goods on its USA […]

The fourth issue of 2023 of the Rivista di diritto internazionale privato e processuale (RDIPP) is out. Along with recent case law and materials, it features five contributions. Cristina Campiglio, Giurisdizione e legge applicabile in materia di responsabilità medica (ovvero a proposito di conflitti di qualificazioni) (Jurisdiction and Applicable Law in Matters of Medical Liability […]

The latest issue of the Journal of Private International Law (Volume 19, Issue 3) is now available. This issue features eight articles and one book review. Chukwuma Samuel Adesina Okoli and Abubakri Yekini, Implied jurisdiction agreements in international commercial contracts: a global comparative perspective, 321-361 This article examines the principles of implied jurisdiction agreements and […]

An international conference on the recast of the Brussels I bis Regulation will take place at the Skylounge of the University of Vienna on 12 April 2024. Organized by Professors Burkhard Hess, Christian Koller and Paul Oberhammer (Institut für Zivilverfahrensrecht, Universität Wien), the event will bring together representatives of the European Commission and of the […]

The Conclusions and Recommendations of the latest annual meeting of the Council on General Affairs and Policy of theHague Conference on Private International Law, which was held from 5 to 8 March 2024, have recently been published. The most significant developments arising from the document include the following. Legislative Work The Council noted the progress […]

The author of this post is Sara De Vido, Associate Professor of International Law at the Ca’ Foscari University of Venice. This post, drawn from a broader article (S. De Vido, ‘The Privatisation of Climate Change Litigation: Current Developments in Conflict of Laws‘ Jus Cogens 6, 65–88 (2024)), explores the promise of ecofeminism as a […]

A curious judgment has been rendered recently by the highest court of Germany in civil matters. The Federal Court (BGH) considers a long-term rental agreement for an apartment in Germany as a ‘purely domestic matter’ (reiner Binnensachverhalt) – even though it was concluded between a foreign state and one of its nationals, who still had […]

As announced on this blog a few days ago, the website of the European Association of Private International Law has a new look and some new contents. Take a tour of the new website and learn about who we are, what we do, and how members can contribute to the Association’s goals, including by launching […]

A call for papers has recently been issued by Michiel Poesen and Patricia Živković (University of Aberdeen), co-convenors of the Society of Legal Scholars Conflict of Laws section, for the Conflicts section of the SLS Annual Conference 2024 at Bristol University from 3 to 4 September 2024. The theme of the conference is Learning from Others: Lessons for Legal Scholars?.

The call is reproduced below, as received by the promoters.

As scholars, we interact with others – students; fellow academics; legal practitioners; the wider public – and the 2024 conference will reflect on the gains we can achieve from such interaction in a global academic environment.  The conference will examine this theme in two ways.  First, as scholars attending the SLS conference, we benefit greatly from meeting colleagues from different backgrounds and disciplines and, notably, from other legal jurisdictions (both within and outside the common law world).  What can we gain from taking an international or comparative perspective to our work?  To what extent do different perspectives, such as socio-legal, interdisciplinary or historical viewpoints, assist our research? Secondly, one of the significant elements of the conference is the inclusion of papers from both junior and senior scholars. What lessons can we gain from each other, both in terms of mentoring and in recognising the need to promote the interests of early career legal scholars and offering support for those entering the academy? No scholar is an island. The SLS provides a positive inclusive environment for legal academics at whatever stage of their career to engage with each other and learn valuable lessons from a diverse and inclusive community of legal scholars. Doctoral students are very welcome and are encouraged to submit papers for consideration in the Subject Sections Programme.

Conference Information 

The 2024 conference will be primarily in person with a virtual element.  ECR and EDI sessions, together with the AGM and Council meeting, will be available virtually free of charge.  A small charge will be made for virtual attendance at the plenary sessions. Council members who are not attending the 2024 Conference will still be able to attend the Council meeting and AGM virtually and, consistent with our EDI priorities, speakers who cannot attend may, on sufficient notice, be able to present virtually.  We will also endeavour to allow speakers unable to attend at the last minute due to ill-health or travel restrictions to present virtually. This decision reflects a move globally to resume in person conferences, the significant costs of virtual attendance which would require a rise in price due to the absence of suitable facilities at Bristol University and evidence of a significant drop in numbers for virtual attendance at the 2023 conference. We will also continue to offer support for attendance via our Annual Conference Additional Support Fund (ASF) to support those with special circumstances warranting additional support. Priority for support will be given to applicants who have no other source of funding.

If you are interested in delivering a paper or organising a panel, please submit your paper abstract or panel details by 11:59pm UK time on 22 March 2024. All abstracts and panel details must be submitted through the Oxford Abstracts conference system which can be accessed here – and following the instructions (select ‘Track’ for the relevant subject section). If you registered for Oxford Abstracts for last year’s conference, please ensure that you use the same e-mail address this year if that address remains current. For those whose papers are accepted, the original submission offers the facility to upload a full paper nearer the time. If you experience any issues in using Oxford Abstracts, please contact slsconference@mosaicevents.co.uk. If you are submitting as part of the Gesellschaft für Rechtsvergleichung there will be a tick box option for you to select as you complete the form.

This is the second year we will be running first blind peer review, with a subsequent non-blind review once initial decisions have been made to consider profile diversity before final decisions are made and communicated. The feedback from convenors on this process was overwhelmingly positive.

Decisions will be communicated by 26 April 2024.

Submission Format

We welcome proposals for papers and panels on any issue relating to “Learning from Others: Lessons for Legal Scholars?.” We welcome proposals representing a full range of intellectual perspectives and methodological approaches in the subject section, and from those at all stages of their careers.

Those wishing to present a paper should submit a title and abstract of around 300 words. Those wishing to propose a panel should submit a document outlining the theme and rationale for the panel and the names of the proposed speakers (who must have agreed to participate) and their abstracts.  Sessions are 90 minutes in length and so we recommend panels of three speakers, though the conference organisers reserve the right to add speakers to panels in the interests of balance and diversity.

As the SLS is keen to ensure that as many members with good quality papers as possible can present, speakers should not present twice at the conference at the expense of another credible paper.  When you submit an abstract via Oxford Abstracts you will be asked to note if you are also responding to calls for papers or panels from other sections.

The Best Paper Prize

Please also note that the SLS offers two prizes. First, The Best Paper Prize, which can be awarded to academics at any stage of their career, and which is open to those presenting papers individually or within a panel.  The Prize carries a £300 monetary award, and the winning paper will, subject to the usual process of review and publisher’s conditions, appear in Legal Studies.  To be eligible:

•  speakers must be fully paid-up members of the SLS (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members. The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final.)
• papers must not exceed 12,000 words including footnotes (as counted in Word; figures and tables are not included in the word count);
• papers must be uploaded to the paperbank by 11:59pm UK time on 23 August 2024;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.

The Best Paper by a Doctoral Student Prize 

In 2020 the Society launched the Best Paper by a Doctoral Student Prize, which is open to currently registered doctoral students who are members of the Society. The Prize is £300. There is no link to publication in Legal Studies arising from this award, but any winner would be welcome to submit their paper for consideration by the Society’s journal. To be eligible:

• speakers must be fully paid-up members of the SLS who are Doctoral students. (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members and all authors must be Doctoral students, whatever their discipline). The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final;
• papers must not exceed 12,000 words including footnotes (as counted in Word; figures and tables are not included in the word count);
• papers must be uploaded to the paperbank by 11:59pm UK time on 23 August 2024;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.
• Where a paper eligible for this prize wins the Best Paper Prize, the judges may at their discretion award the prize for Best Paper by a Doctoral Student to a different nominated paper
• The judges may announce a shortlist at their discretion with the winner to be announced by the first week in August.

Registration and Paying for the Conference 

We have also been asked to remind you that all speakers will need to book and pay to attend the conference and that they will need to register for the conference by 14 June 2024 to secure their place within the programme, though please do let us know if this deadline is likely to pose any problems for you. Booking information will be circulated in due course and will open after the decisions on the response to the calls are made.

The third edition of Paul Torremans‘ Intellectual Property and Private International Law has just been published by Oxford University Press in its Private International Law series.

The blurb reads:

The rapidly developing field of intellectual property and private international law could be difficult to navigate for practitioners and researchers because of the complex interface of the two legal disciplines. Intellectual Property and Private International Law sets out the main concepts with a comprehensive analysis of issues arising from the relationship between the two disciplines from common law, European Union and international perspectives.

This highly regarded work examines how jurisdiction is established in intellectual property disputes, how one identifies the applicable law and how to secure the recognition and enforcement of foreign judgments. This new edition encompasses the numerous, and in some cases major, legal developments seen over the past twelve years. It deals with the private international law aspects of the introduction of mandatory exemptions to the Directive on Copyright in the Digital Single Market; discusses the new Court of Justice of the European Union case law on article 7.2 Brussels I Regulations and its divergent approach to European Union intellectual property rights; covers recent EU directives and national case law, including the fundamental change in patent law that will result from the introduction of the European Patent with Unitary Effect and the Unified Patent Court; as well as elucidating the implications of Britain’s departure from the European Union.

New to this Edition:

• Analyses the fundamental change in patent law that will result from the introduction of the European Patent with Unitary Effect and the Unified Patent Court
• Discusses the private international law side of the introduction of mandatory exemptions to copyright in the DSM Directive
• Clarifies the impact of Brexit and other EU directives and case law
• Covers the Court of Justice of the European Union case law on article 7.2 Brussels I Regulation and its divergent approach to Eurasian Economic Union (EEU) intellectual
• Property rights

A corrigendum to Regulation (EU) 2020/1784 of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (the Recast Service Regulation) has been published on the Official Journal of the European Union of 2 February 2023 (L 405).

It concerns Article 33, which is about the information that Member States must share with the Commission so that the latter can make it available to the public at large.

Article 33(1) refers to such information as is required under Articles 3, 7, 12, 14, 17, 19, 20 and 22 of the Regulation. This includes, for example, the names and addresses of receiving agencies, the professions or competent persons that are permitted under national law to effect the direct service of documents, whether national law requires a document to be served within a particular period, etc.

The correction is, specifically, about Article 33(3). As originally published, the latter provision read as follows:

The Commission shall publish the information communicated in accordance with paragraph 1 in the Official Journal of the European Union, with the exception of the addresses and other contact details of the agencies and of the central bodies and the geographical areas in which they have jurisdiction.

According to the corrigendum, Article 33(3) should read instead:

The Commission shall publish the information communicated in accordance with paragraph 1 through appropriate means, including through the European e-Justice Portal.

As this is presented as a corrigendum, rather than an amendment to the Regulation, the revised text is meant to apply as of the date of application of the Regulation, that is, 1 July 2022. In fact, the information referred to in Article 33(3) has never been published on the Official Journal, and appears to be already available on the European Judicial Atlas in Civil Matters, which can be reached through the e-Justice Portal.

The author of this post is Lydia Lundstedt, who is an Associate Professor and Senior Lecturer at Stockholm University. In the interest of transparency, author notes that she previously wrote an expert legal opinion on behalf of BSH Hausgeräte.

On 22 February 2024, Advocate General (AG) Emiliou’s Opinion on the interpretation of Article 24(4) Regulation (EU) No 1215/2012 (Brussels I bis) in BSH Hausgeräte (C-339/22) was published.

Article 24(4) confers exclusive jurisdiction “in proceedings concerned with the registration or validity of patents” upon “the courts of the Member State in which the … registration has been applied for, [or] has taken place …”.

AG Emiliou opines that Article 24(4) 1) does not encompass infringement proceedings even after an alleged infringer pleads the invalidity of the foreign patent; and 2) does not apply to proceedings concerning patents registered in third states, but that a Member State court may give Article 24(4) reflexive effect on the basis of national law. See here for a brief synopsis of the facts and the questions referred and GAVC LAW for a good review of the opinion.

Article 24(4) Does Not Apply to Infringement Proceedings Even After Invalidity is Pleaded

Prior to the CJEU ruling in GAT (C-4/03), there were three possible interpretations of what is now Article 24(4). GAT ruled out the first interpretation, i.e., that the provision does not apply to preliminary questions, by holding that what is now Article 24(4) applied to “all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection”. In describing this background, the AG calls GAT an “unfortunate decision” because it goes beyond what is necessary to fulfil the raison d’être of Article 24(4), which in the AG’s view, is deference to national sovereignty. He explains that because an invalidity finding in an infringement proceeding has only inter partes effects, it does not encroach upon the sovereignty of the state of patent registration. He states that if the EU legislator had not codified GAT when it amended the Regulation, he would have advised the CJEU to overturn GAT.

Even after GAT and its codification, uncertainty remained concerning which of the remaining two interpretations of Article 24(4) were correct, namely, 1) that once invalidity is raised, infringement proceedings fall within Article 24(4) and the infringement court loses its jurisdiction (broad reading) or 2) that while validity falls within Article 24(4), infringement does not. Thus, a court having jurisdiction over an infringement dispute based on the rules in the Regulation retains its jurisdiction over the infringement claim but may not determine validity (narrow reading).

The AG finds that the narrow reading is the “lesser evil” because it better aligns with the system and objectives of the Regulation. Specifically, he finds that it better respects the relationship between the general rule in Article 4 and the exception in Article 24(4), and also better ensures legal certainty as the defendant will not be able to undermine the plaintiff’s choice of jurisdiction by raising a validity defence.

Moreover, the AG notes that a narrow reading ensures that a defendant cannot “torpedo” the proceedings and deny the patent holder its right to intellectual property and to an effective remedy (see Article 17(2) and Article 47 of the EU Charter and 41(2) TRIPS) by raising invalidity so late in the proceedings that the statute of limitations has expired so the patent holder cannot initiate new proceedings before the court of registration.

That said, the AG argues that Article 47 of the Charter requires the infringement court to take the invalidity defence into account and he offers practical guidelines on how a Member State court should procced. He suggests that if an invalidity defence has been properly raised, the infringement court should make a preliminary analysis of how a court in the state of registration would decide the matter (compare Solvay (C‑616/10), where such an analysis is done before granting a preliminary injunction) and balance the patent holder’s right to an effective remedy as well as the requirement of efficiency of procedure with the alleged infringer’s right of defence and the sound administration of justice. If the invalidity defence is serious, the Member State court having jurisdiction over the infringement claim should instruct the defendant to initiate invalidity proceedings in the state of patent registration within a set deadline and stay the infringement case in accordance with its procedural rules until the validity question has been decided by the courts/authorities of the state of registration.

Member State Courts May Give Article 24(4) Reflexive Effect

The AG notes that the reflexive effect of Article 24(4) has implications for the interpretation of the other rules in Article 24 and for Article 25 on prorogation agreements. The starting point for the AG’s analysis is that the Regulation has a “design flaw” in that while it applies to disputes where the defendant is domiciled in a Member State and the subject matter is closely connected to a third state, it was not designed for such disputes. Thus, the AG opines that the gap needs to be filled in by one of three ways.

The AG rejects the first way, i.e., applying Articles 24/25 by analogy to such situations, because it goes against the clear wording of these articles which refer to a “Member State” and also because previous CJEU case law had already held that the Articles did not apply (see IRnova (C-399/21) concerning patents registered in third states and Coreck Maritime (C-387/98) concerning prorogation agreements in favour of third states). The AG also notes that such a solution would be inconsistent with the system of the Regulation.

The AG also rejects a second way whereby Member States courts having jurisdiction over such disputes based on a rule in the Regulation, are bound to exercise that jurisdiction. Referring to the “design flaw” mentioned above, the AG first opines that an absence of specific provisions addressing these situations cannot be interpreted to mean that Member State courts must exercise jurisdiction. The AG notes that there is nothing in the wording or recitals of Articles 33 and 34 that suggests that these provisions are exhaustive. Articles 33 and 34 allow a Member State court to stay proceedings under certain circumstances if proceedings are already pending in a third state court. The AG also rejects the argument that Owusu (C-281/02) supports this interpretation. In that decision, the CJEU stated “Article 2 of the Brussels Convention [now Article 4 of the Regulation] is mandatory in nature and that, according to its terms, there can be no derogation from the principle it lays down except in the cases expressly provided for by the Convention”. The AG notes that in Owusu the CJEU declined to answer the second question which dealt with the specific situation here. The AG also notes that Coreck Maritime and Mahamdia (C‑154/11) suggests that Member State courts are permitted to give effect to prorogation agreements in favour of third state courts.

Second, the AG opines that such an interpretation (i.e. the second way) would be at a variance with the raison d’êtreof Article 24 to give deference to sovereignty and of Article 25 to respect party autonomy. Moreover, he states that this interpretation would not contribute to legal certainty because a resulting Member state judgment would not be valid in the third state and the issue may be relitigated there resulting in irreconcilable judgments.

Third, the AG notes that the Lugano Convention and the 2005 Hague Convention do not remedy these problems because they only bind a few states and therefore unilateral solutions within the framework of the Regulation are needed.

Lastly, the AG rejects the argument that this interpretation was the clear intention of the EU legislator noting that it was not expressed in the text of Regulation, the travaux preparatoires are generally not clear, and in any case, must be understood in the context whereby the EU legislator abandoned the idea of achieving a comprehensive solution to disputes connected to third states.

The AG suggests therefore a third way of filling the gap, i.e. that the Regulation permits Member State courts that have jurisdiction over such disputes pursuant to a rule of the Regulation, to decline jurisdiction on the basis of national law. That said, the AG opines that the Member State courts’ discretion is limited by EU law in that 1) a Member State court may refuse to exercise jurisdiction over a dispute connected to a third State only where the matter in dispute (i.e. patent invalidity) would fall within the scope of Article 24 had the matter been located in a Member State, or where a choice-of-court agreement in favour of a third state otherwise fulfils the requirements laid down in Article 25; and 2) a Member State court must respect the rules on the protection of weaker parties and the exclusive jurisdiction of the courts of another Member State. However, even when these conditions are fulfilled, the AG opines that a Member State court is not required to decline jurisdiction if there is a risk for denial of justice. The AG rejects the argument that this creates a risk for legal uncertainty because this way gives narrow discretion to the Member state courts under specific circumstances.

Comment

I heartily agree with the AG opinion concerning the scope of Article 24(4) so I will limit my comments to his opinion on the reflexive effect of Article 24(4). It seems a bit odd to start off with the premise that there is a design flaw in the Regulation that the CJEU needs to fix instead of accepting the Regulation as it is and interpreting it accordance to the CJEU’s methods of interpretation. The wording of the provisions and the system of the Regulation suggest that Member State courts may not give Articles 24 and 25 reflexive effect under national law.

Indeed, Articles 24 and 25 expressly apply only to Member State courts and Articles 33-34 expressly apply to third state courts. Articles 33-34 are the only rules in the Regulation that permit a Member State court to decline or stay jurisdiction in favour of a third state court. In particular, recital 24 instructs that when applying Articles 33-34, a Member State court may take into consideration

whether the court of the third State has exclusive jurisdiction in the particular case in circumstances where a court of a Member State would have exclusive jurisdiction.

An e contrario interpretation suggests that a Member State may not decline jurisdiction in other situations (except where a higher norm demands this). Moreover, if the Member States already had discretion to give Article 24 and 25 reflexive effect, then Articles 33-34 are superfluous. Lastly, Article 6 exhaustively informs when the Member State courts may apply national rules.

With regard to the objective of Article 24 of giving deference to sovereignty, an argument can be made that, in the absence of an international obligation, the EU does not give third state sovereign interests the same weight as Member State interests. A similar argument can be made with respect to Article 25, i.e., that the EU intentionally refuses to give effect to third state prorogation agreements outside of its treaty obligations, e.g. 2005 Hague Convention on Choice of Court Agreements. That said, the situations involved in Articles 24 and 25 are not completely congruent as Article 25 raises the issue of party autonomy, which is arguably a fundamental right. Also, introducing a discretionary reflexive effect does not further the objective of legal certainty including strengthening the legal protection of persons established in the European Community as it will be less easy to identify in which court one can sue and be sued.

Curiously, the AG’s solution has the unfortunate result that it extends to third states the very solution that the AG criticizes. On the one hand, the AG is critical of GAT and its codification in Article 24(4) because it goes beyond what is necessary to fulfil Article 24(4)’s objective of giving deference to the sovereignty interests of the state of patent registration. On the other hand, the AG suggests that deference to sovereignty interests of the state of patent registration requires that the Member State courts give Article 24(4) reflexive effect when a matter would have fallen under Article 24(4) had the patent been registered in another Member State instead of a third state.

When it comes to the application of Article 24(4), as the AG notes, the CJEU is now “trapped in the solution that it initially adopted”. This is not the case however when giving Article 24(4) reflexive effect. There is no reason why the rule cannot be adapted to better serve its objective without going beyond what is necessary. As noted, deference to the sovereignty interests of a third state does not require a Member State court that is exercising jurisdiction on the basis of a rule in the Regulation to decline jurisdiction over a question concerning a third state patent’s invalidity when the question is raised in infringement action. Thus, there is no reason to “reflexively” apply Article 24(4) to these situations. In contrast, if an alleged infringer sued a patent holder in a Member State on the basis of a rule in the Regulation asking the court to invalidate with erga omnes effect a patent registered in a third state, Article 24(4) should “reflexively” apply as a matter of EU law giving effect to a recognised rule of public international law that one state will not invalidate the public law acts of another state.

The website you’re visiting has been on-line since December 2019. It has undergone only minor changes since.

The time has come to offer readers some new features and a new design.

Between 7 and 10 March 2024 a newly designed website will replace the existing one. Information on the European Association of Private International Law and its activities will prove easier to retrieve, and members will benefit from improved opportunities for exchange and cooperation.

One notable innovation of the new website consists in the creation of a reserved area for the members of the Association (“MyEAPIL”). Through MyEAPIL, members will be able to update their profile and browse the members’ database. They will also be able to check whether the Association has received their fees (by the way, fellow members, if you haven’t paid your fees for 2024, please take a moment to do so as soon as practical: just fill in this form).

EAPIL members will be receiving their login credentials on 11 March 2024 by e-mail (the sender’s address is noreply@eapilapp.org).

The redesign of the new website will also offer an opportunity to fix some technical issues. We’re aware that some of those who have subscribed to be notified of the publication of new posts on the EAPIL blog have not been receiving such notifications recently. Sincere apologies to those affected. We’re working on the problem and trust it’ll disappear once the new website is on-line.

In order to facilitate the transition towards the new website, the EAPIL blog will take a break for a couple of days. No new posts will be published on 7 and 8 March. Posting will resume with the usual pace on 11 March 2024.

The contents of the website will remain accessible at all times during this passage. The display of some pages, however, may occasionally be problematic in the meanwhile. Many thanks in advance for your understanding.

In case of doubts, feel free to get in touch with us at blog@eapil.org.

Curious about how the new website will look like? Please find below the screenshots of the new home page and some other pages.

As regards private international law, March 2024 starts at the Court with the delivery of AG N. Emiliou’s opinion on C-774/22, FTI Touristik, on Thursday 7 – an opinion previously scheduled for February.

By its single question, the Amtsgericht Nürnberg (Germany) asks the CJEU whether Article 18(1) of the Brussels I bis Regulation determines, not only international judicial jurisdiction, but also internal territorial jurisdiction. In addition, this court questions the foreign element required for the application of the Brussels I bis regulation.

In the dispute in the main proceedings, a consumer filed a claim against FTI, a professional providing tourist services, in relation to a package trip. Both parties to the dispute are domiciled in the same Member State, namely Germany; the only cross-border element is constituted by the destination of the trip outside that Member State. The consumer sued before the court of his domicile. FTI relies on the rules of German territorial jurisdiction to argue lack of jurisdiction, in that these rules designate as territorially competent jurisdiction that of the headquarters of FTI Touristik.

According to the referring court, under national rules it does not have territorial jurisdiction to hear the dispute. Venue could only be deduced from the application of the Brussels I bis Regulation, more specifically its Article 18, paragraph 1. Thus the question:

Is Article 18(1) of [the Brussels I bis Regulation] to be interpreted as meaning that, in addition to providing for international jurisdiction, the rule also concerns a provision on the territorial jurisdiction of national courts in matters relating to a travel contract where both the consumer, as a traveller, and the other party to the contract, the tour operator[,] have their seat in the same Member State, but the travel destination is situated not in that Member State but abroad (so-called ‘false internal cases’) with the consequence that the consumer can make contractual claims against the tour operator supplementing national provisions on jurisdiction at the court of his or her place of residence?

The case has been allocated to a chamber of five judges (S. Prechal, N. Wahl, J. Passer, L. Arastey Sahún, and F. Biltgen acting as reporting judge).

One week later, on Thursday 14, AG M. Szpunar will communicate his opinion on C-86/23, HUK-COBURG-Allgemeine Versicherung II. The Varhoven kasatsionen sad (Bulgaria) asks :

Must Article 16 of Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II Regulation) be interpreted as meaning that a rule of national law, such as that at issue in the main proceedings, which provides for the application of a fundamental principle of the law of the Member State, such as the principle of fairness, in the determination of compensation for non-material damage in cases where the death of a close person has occurred as a result of a tort or delict, may be regarded as an overriding mandatory provision within the meaning of that article?

This question is raised in the context of an action for compensation against the insurance company HUK-COBURG, for the moral damage suffered by the parents of the deceased on a traffic accident. The accident took place in Germany; at the time it happened, there was a valid civil liability insurance contract between the driver and the German insurance company HUK-COBURG-Allgemeine Versicherung AG.

The parents of the deceased are Bulgarian nationals permanently resident in Bulgaria. In 2017 they filed claims with the Sofiyski gradski sad (Sofia City Court) against the German insurer for payment of insurance compensation for each parent as compensation for non-material damage suffered as a result of the death of their daughter. The request was declared partially founded at first instance; the appeal court overruled, finding the claimants had not demonstrated that the pain and suffering suffered had caused damage to their health, which, under German law applicable under Article 4(1) of the Rome II Regulation, would constitute a prerequisite for compensation for non-pecuniary damage. The court also rejected the argument put forward by the parents according to which Bulgarian law should be applied under Article 16 of the Rome II Regulation.

On cassation, the Varhoven kasatsionen sad (Supreme Court of Cassation), noted that there is contradictory case law from the Bulgarian courts on the question of whether the Bulgarian provision at stake constitutes a mandatory provision derogating within the meaning of Article 16 of the Rome II Regulation, leading, in the main dispute, to the exclusion of German law.

The preliminary reference will be addressed by judges C., Lycourgos,  J.C. Bonichot, S. Rodin, L.S. Rossi, and O. Spineanu-Matei acting as reporting judge.

Next event with interest for PIL readers is the hearing of March 20, regarding case C-227/23, Kwantum Nederland et Kwantum België. The questions by the Hoge Raad der Nederlanden (Netherlands) are:

1. Does the situation at issue in these proceedings fall within the material scope of EU law?

Should the preceding question be answered in the affirmative, the following questions are also submitted:

2. Does the fact that copyright on a work of applied art forms an integral part of the right to protection of intellectual property enshrined in Article 17(2) of the Charter mean that EU law, in particular Article 52(1) of the Charter, in order to limit the exercise of copyright (within the meaning of Directive 2001/29/EC) on a work of applied art by application of the material reciprocity test of Article 2(7) Berne Convention for the Protection of Literary and Artistic Works requires this limitation to be provided for by law?

3. Must Articles 2, 3 and 4 of Directive 2001/29/EC and Articles 17(2) and 52(1) of the Charter, read in the light of Article 2(7) BC, be interpreted as meaning that it is solely for the EU legislature (and not for national legislatures) to determine whether the exercise of copyright (within the meaning of Directive 2001/29/EC) in the European Union can be limited by application of the material reciprocity test provided for in Article 2(7) BC in respect of a work of applied art whose country of origin within the meaning of the Berne Convention is a third country and whose author is not a national of an EU Member State and, if so, to define that limitation clearly and precisely (see judgment of 8 September 2020, Recorded Artists Actors Performers, C 265/19, EU:C:2020:677)?

4. Must Articles 2, 3 and 4 of Directive 2001/29/EC, read in conjunction with Articles 17(2) and 52(1) of the Charter, be interpreted as meaning that as long as the EU legislature has not provided for a limitation of the exercise of copyright (within the meaning of Directive 2001/29/EC) on a work of applied art by application of the material reciprocity test of Article 2(7) BC, EU Member States may not apply that test in respect of a work of applied art whose country of origin within the meaning of the Berne Convention is a third country and whose author is not a national of an EU Member State?

5. In the circumstances at issue in the present proceedings and given the time of the establishment of (the predecessor of) Article 2(7) BC, are the conditions of the first paragraph of Article 351 TFEU satisfied for Belgium, meaning that Belgium is therefore free to apply the material reciprocity test provided for in Article 2(7) BC, taking into account the fact that in the present case the country of origin acceded to the Berne Convention on 1 May 1989?

The case revolves around the question whether an object of applied art, namely a chair designed in the United States of America, enjoys, in the Netherlands and in Belgium, copyright protection as a “work of applied arts”. The main dispute confronts Vitra, which holds the rights to the chair, and Kwantum, which operates a chain of interior design stores in the Netherlands and Belgium, on the grounds that the latter has marketed a chair which, according to Vitra, would infringe its copyright.

Before the referring court, Kwantum notes that the chair has, in more than 70 years of existence, never benefited from copyright protection in its country of origin – the United States of America. She argues in particular that Vitra cannot invoke such protection in Belgium and the Netherlands, having regard to the criterion of material reciprocity contained in Article 2(7) of the Berne Convention, which constitutes an exception to the principle of national treatment provided for in Article 5, paragraph 1, of this convention.

The deciding judges will be A. Arabadjiev, T. von Danwitz, P.G. Xuereb, A. Kumin, plus I. Ziemele as reporting judge. AG M. Szpunar will announce the date of delivery of the opinion at the end of the hearing.

Finally, on March 21, the same chamber, this time with A. Kumin reporting, will publish the decision in C-90/22, Gjensidige. I reported briefly on facts and questions here. AG N. Emiliou’s opinion was published on December 14, 2024. The Lietuvos Aukščiausiasis Teismas (Lithuania) asks:

1. Can Article 71 of Regulation No 1215/2012 [the Brussels I bis Regulation], having regard to Articles 25, 29 and 31 and recitals 21 and 22 thereof, be interpreted as permitting the application of Article 31 of [the CMR] also in cases where a dispute falling within the scope of both those legal instruments is the subject of an agreement conferring jurisdiction?

2. Having regard to the legislature’s intention to strengthen the protection of agreements conferring jurisdiction in the European Union, can Article 45(1)(e)(ii) of [the Brussels I bis Regulation] be interpreted more broadly, as covering not only Section 6 of Chapter II of that regulation but also Section 7 thereof?

3. After assessment of the specific features of the situation and the resulting legal consequences, can the term “public policy” used in [the Brussels I bis Regulation] be interpreted as covering the ground for deciding not to recognise a judgment of another Member State where the application of a specialised convention, such as [the CMR], creates a legal situation in which both the agreement conferring jurisdiction and the agreement on the applicable law are not observed in the same case?

AG Emiliou did not consider it necessary to answer to the first question in light of what he deemed the correct answer to the following ones. He proposes the Court to interpret Article 45(1)(a) and (e)(ii) of the Brussels I bis regulation as meaning:

that the grounds for the refusal of recognition set out therein do not apply to a situation in which the court of origin established its jurisdiction on the basis of one of several rules contained in a specialised convention, within the meaning of Article 71 of Regulation No 1215/2012, which include – but do not classify as exclusive – a choice-of-court agreement, and when the court of origin was not the court designated by the choice-of-court agreement concluded by the parties concerned.

And also

as meaning that an error, when established, as to the determination of the applicable law cannot, per se, lead to the recognition of a judgment being refused on the ground that it is contrary to the public policy of the State addressed.

This post was contributed by Horatia Muir Watt and Dominique Bureau, who are respectively professors at Sciences Po Law School (Paris) and Paris II Law Faculty. This is the fourth contribution to the EAPIL’s online symposium on the ruling of the Court of Justice in Inkreal, after the posts of  Sergi Gimenez, Gilles Cuniberti and Pedro de Miguel Asensio.

The ECJ’s ruling enables parties to an intra-European domestic contract (meaning, connected solely to one Member state) to submit their future disputes to the courts of another Member state. The broad justification for this new step is the respect for party autonomy and the subsequent need for effectiveness of exclusive choice of court agreements within the common judicial area (judgment, §26, §36). While the reference to such principles does not come as a surprise in the latter context, their relevance with regard to the specific problem at the heart of the ongoing dispute is hardly convincing. Not that there is any lack of other, more technical, arguments. However, the dialectics are somewhat circular, to say the least. This may be linked to the fact that the Advocate General’s Opinion had proposed the opposite solution, possibly indicating in turn an internal division within the Court.

The novelty in the solution is that a choice of foreign forum in a purely domestic or uni-located situation is governed by Article 25-1 of the Brussels I bis Regulation and permissible thereunder. There is no need, then, for the underlying agreement to have any “foreign elements”. Indeed, in this case, not only was there was no link with the Member State whose courts had been chosen (as now uncontroversially allowed in the case of international forum agreements, whether otherwise intra-European or not), but further, there was no circumstance, past or present, which might attach the disputed contract to any country (whether or not a Member State) other than the one in which the parties were already established at the time the contract was concluded and were still so at the date of the court proceedings.

We see this as problematic. Not only by reason of the pattern of argument deployed here (I), but also because of the epistemology at work (II), and, most importantly, the underlying political economy of the final outcome (III).

I. Pattern of Argument

The problem affecting the reasoning in the judgment lies in a methodological slippage. At first glance, the Court carries out a classical exercise in legal hermeneutics: the wording of article 25-1 is examined (pt. 21), consolidated thereafter by a teleological analysis (pt. 26), then a logical justification (pt. 32), and finally the confrontation with a counter-example in the form of the 2005 Hague Convention (pt. 36). Why the latter did not serve, rather, as an analogy; why the silence of the text was taken to be permissive rather than as an implicit reference to the content or practice of other EU instruments, including Regulation Rome I; why there was no consideration of the delicate balance struck between the policy of free movement and the protection of domestic regulatory objectives in Member States…can of course all be ascribed to the normal mysteries of judicial interpretation.

Nevertheless, given the controversial nature of the legal issue and the potential import of the outcome, the location of the tipping point of the argument (pt. 22-23) comes as a surprise. From this point onwards, all the justifications put forward, whether teleological, logical or contextual, all presuppose a conception of the relationship between the internal and the international, which is precisely at the heart of the dispute.

The latter comprises two successive questions. Does the applicability of Article 25 of Regulation Brussels I bis require the contractual relationship (to which the choice of forum agreement pertains) to be international (or at least non-exclusively domestic, as under its twin article 3§3 of Regulation Rome I on choice of law)? If so, does the sole choice of a foreign court by the parties to such a relationship suffice to fulfill this condition? But answering the second question in the affirmative quite simply negates any prior requirement and merges the two problems into one. As Advocate General J. Richard de la Tour observed, if we hold that recourse to a provision of Regulation No 1215/2012 presupposes the existence of a condition of internationality, it would be fallacious to assume that this is fulfilled through an agreement between the parties. In other words, this way of framing the question puts an end to any further, non subjective, requirement of “internationality”. With the sequence of questions reversed, the reasoning then becomes circular.

This objection could be disqualified as merely aesthetic if it were not for a series of interconnected consequences. These may differ of course according to the structure of the court system in any given country. But let us take France as an example. In the case of an exclusively domestic contract, subject to French law, some forum agreements of which the effect would be to modify the rules of domestic territorial venue – for instance, choosing a court in Paris rather than in Marseilles – would be void under article 48 French Code of Civil Procedure. But then, according to the ECJ’s new ruling, an agreement between the same parties in the same circumstances, but conferring jurisdiction on a court in Rome (rather than in Paris), would be perfectly valid. If the parties are attempting (together or separately) to shop, for various reasons, for a more favorable forum than Marseilles, this opening comes as a godsend.

Indeed, following the ruling, it means that the agreement to take the dispute to a foreign court would have to be enforced – meaning that the court of a Member State other than the one designated under the otherwise applicable rules of domestic civil procedure would have to stay and then possibly decline jurisdiction – assumedly, even if the dispute falls within the scope of mandatory provisions of the (domestic) law of that forum. Thus, in the French example above, the same contract might also contain a choice of (any) foreign law. The latter choice would normally be subject (without prejudice) to the mandatory provisions of local (French) law, under article 3 § 3 of Regulation Rome I. However, if the court of the other Member State designated in the choice of forum agreement were to disregard such provisions – or, rather, since this whole situation is henceforth to be thought of as international, if it were to decline to exercise the option offered by article 9§3 of Regulation Rome I in favour of an overriding statute at the place of performance-, there is no guarantee that a “second look” could make them effective at the ultimate, enforcement stage. Indeed, the violation of an overriding or mandatory rule – and even less a domestic mandatory provision – does not necessarily prevent a judgment handed down in one Member State from becoming effective in another. Moreover, the proviso in article 25 is hardly a protection when it states, in relation to the effectiveness of parties’ choice of court: “unless the agreement is null and void as to its substantive validity under the law of that Member State”, that is, the law of the chosen forum!

In other words, since, it is easy to see how given domestic legal provisions – both substantive and procedural – become irrelevant unless the parties have decided otherwise.  For the moment we must put aside some insidiously nagging questions, beyond the scope of article 25 of Brussels Ibis Regulation: will this expansive permission to engage in jurisdictional barrier-crossing grow into a common understanding as to the merits of party autonomy, so as to apply to cases in which the chosen forum is in a third country? And in such cases is the protection of European mandatory laws (as in the ECJ’s Ingmar line of case-law) sufficient to ensure “jurisdictional touchdown” (“Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalization.” Columbia Journal of Transnational Law 40.2 (2002): 209-274)?  Presumably, a contractual choice in favour of a Member State by parties to a domestic contract in a third country will also be upheld, even if void under the law of the latter?

To come back for the time being to agreements subject to article 25, it might be argued, in response to our objection, that the erasure of the distinction between the domestic and the international as far as choice of court clauses are concerned increases the protection of weaker parties within the European Union, by reason of  the various special asymmetrical fora contained in Chapter II, Section 2 of the Regulation (which might be absent under local rules of civil procedure). A worker or consumer who is obliged to sue in the court of the professional defendant’s domicile in a purely domestic case could, simply by “internationalising” the contract – albeit with the unlikely consent of the employer or seller/service provider – benefit from the availability of a forum closer to home. But if such an advantage is truly important, it would surely be better to oblige Member States to provide the relevant protective forum by means of secondary EU legislation to that effect (as for detached workers, for instance), rather than upsetting the existing general equilibrium between international jurisdictional freedom and domestic procedural and regulatory constraints, with far wider ripple effects.

It could also be said that the “special” jurisdictional rules of article 7 of Regulation Brussels I bis already intrude into local rules of venue. But these have, until now, been triggered only in international cases, that is, when there is, initially, a “conflict of jurisdictions”, in other words a doubt, given the multiple connections of the substantive agreement between the parties, as to which court is apt to decide the case (as the Court accepts: judgment §22). Henceforth, in a domestic context, economic actors can opt out of local rules of venue in contract cases. They are not usually free to change the rules, say in tort cases, within a given Member State.  But, as from now, we may wonder why they should not be able to do so, with a little help from further analogizing. Or is there really something specific about contracts that mandates a more expansive approach to party autonomy?

II. Epistemological Issues

How then to understand the Court of Justice’s resolute erasure of the distinction between the domestic and the international – in the very specific context of Article 25 of the Brussels I bis Regulation, but of which the thrust could be significantly broader? Of course, the alternative approach would have meant defining an objective parameter to trigger the liberal regime – free choice of forum – defined therein. Where exactly to place the threshold of the international? This is undeniably a challenge in itself, as we well know from the long endeavor behind the Rome Convention/Regulation Rome I to define the thrust of party autonomy in respect of choice of law. But at this point one may simply wonder why the Court did not borrow from the (albeit imperfect) definition of article 3 § 3 of the latter, twin, instrument.

This approach sets a limit to freedom of choice of a foreign law in cases that are wholly domestic “but for” the choice itself. Arguably, the terms of the difficulty are not identical when it comes to jurisdiction: in matters of choice of law, it is easier to set a limit to party freedom by subjecting the contract to the domestically mandatory rules of the country in which, but for the agreement,  all the other conceivable connecting factors converge. However, applied to choice of forum agreements under article 25 of the Brussels Ibis Regulation, the “but-for” approach would have allowed each Member State to decide, similarly, for itself, whether party autonomy should or not prevail over countervailing considerations (linked inter alia, in turn, to the content of the applicable substantive law under art. 3§3 of Regulation Rome I).

If party autonomy has conquered new ground with such apparent ease, it is probably because the trend embodied in the ECJ’s new judgment was already present in a series of steps that appeared to need only a little prompting to expand in the same direction. From the contrat sans loi to a forum without a jurisdiction… the Court seems to have fallen into the trap of the “authority paradigm” (an epistemological difficulty amply explored by G.H. Samuel (‘Is Law Really a Social Science? A View from Comparative Law’ (2008) 67 Cambridge Law J. 288), in the sense that the solution is represented as dictated by its own specific legal logic, leading as it were in a straight line to an inescapable outcome: the blurring of the boundary between the internal and the international (or European). Given the silence of the text of article 25 on this point (which nevertheless constitutes the framework for the reasoning adopted), arguments beyond a purely literal interpretation were necessary. As observed above, the analogies and counterexamples supplied by the Court tended to cancel each other out and could have worked both ways. Are there further possible justifications?

Arbitration as an area of investigation provides food for thought. Arguably, there is a certain parallelism between choice of forum agreements and arbitration, which both allow, broadly speaking, an opt-out by private actors from a given legal system. It might be said, therefore, that, since domestic arbitration is permitted in many Member States (but it is difficult to generalise in a field that is not subject to European Union law), there is no reason to be more restrictive in respect of a domestic forum agreement in favour of a foreign court. However, such an argument is hardly convincing. Firstly, and precisely, because domestic arbitration is only permitted under the conditions laid down by a given national legal system, which decides for itself the extent it allows parties to exit its own court system. Secondly, because even in pro-arbitration jurisdictions such as France, the will of the parties is powerless to transform a domestic arbitration into an international one.

What can be said, however, is that the expansion of international arbitration is certainly at the root of a pervasive and under-theorized conception of party autonomy, perceived or used as a generalized derogation from any regulation or control originating in the public sphere (“regulatory lift-off” in the terms of Robert Wai, cited above). It is true that arbitration serves to free the parties from the public domain and by doing so encourages the privatization of the dispute resolution industry. This is not exactly the case here, since the freedom granted is exercised to the benefit of the courts of another Member State. However, the dual phenomena of artificial internationalization of domestic agreements and privatization of the access to justice are not unrelated. More rarely analyzed in this light, unfettered free movement serves an identical political and economic function with regard to both. It authorizes what we have previously called “metaphorical mobility”.  In other words, the license given to economic actors to insert choice-of-forum and choice-of-law clauses in their contracts, and thus tailor the applicable legal regime, is but a different instantiation of the free movement of goods and services in the common market: a form of legal and jurisdictional mobility without moving.

But the distinction between domestic and international cannot be erased – with the wave of a magic wand aka the will of the parties – without counting the costs downstream. At least, if we wish to preserve a measure of pluralism of national legal orders (or if we are legally obliged to do so, where competences are divided and layered, as in the European Union). Even liberal antitrust law teaches us that healthy competition (whether between players or, internationally, between laws) encounters its limits in the risk of creating a monopoly. Thus, outside this framework, it would have been possible to reflect on the very meaning of the boundary between the domestic and the international in the context of jurisdictional conflicts and elsewhere, or to consider more broadly (which amounts to the same thing) the scope to be conferred on party autonomy, which nothing – not even the competitive paradigm of the internal market in which the law unfolds here – obliged the Court to extend. Furthermore, in the silence of a text (and even then…) alternative and equally plausible schemes of intelligibility always exist. In this case, other avenues were perfectly conceivable. This is borne out by the conclusions of the Advocate General – without reference, which is regrettable, to the various debates within the field. It is not as if there has not been critique, and for a long time, of the autonomy/privatization/mobility nexus and its political economy, both within and beyond the confines of the European Union. The terms of this discussion deserved to be taken up. We can only regret the absence of any trace of such considerations in the judgment – if only to refute the objections – in what is undoubtedly a radical move in the evolution of the ECJ’s case law on contractual matters. The legitimacy of the Court’s role in the careful construction of a pluralist European legal and judicial area, is at this price, when it is called upon to rule, on the basis of an individual dispute, on a legal issue of much wider political, social and economic import. To present the position taken on this point as being dictated by legal logic is to flatten or depoliticize the difficulty.

III. Political Economy

At this point, then, we are prompted to look further into the ideological dimension of the outcome. As with free choice, or the distinction between the public and the private spheres, the problem is less in the principle itself (of mobility, party autonomy, private agency…) than in the disqualification of all types of local regulation, perceived exclusively as hindrances to the fulfillment of a higher political and economic goal. From this point of view, erasing the difference between the domestic and the international obeys a classic competitive paradigm, promoted with regard to a certain conception, now largely called into question, of neoliberal economic analysis of law. Thus, allowing the choice by the parties of a forum in another country in domestic contracts (already the principle when the situation is pluri-located) would supposedly create the conditions for an “upward” competitive spiral, thus improving the quality of jurisdictional services across the board as a result of this pressure.

Indeed, the ECJ’s ruling uses the tools of private international law to implement a project based on a specific, and by no means undebatable, economic rationality. Thus, the linchpin of the regulatory competition thesis was largely theorized within Chicago law and economics in the area of the (largely post-war) market for corporate charters. Thereafter, echoing such ideas from across the Atlantic, free metaphorical mobility, or “barrier-crossing” from the public to the private (the very definition of neoliberalism), empowered the unhindered movement of companies within the European internal market. From that point, was there any good reason to distinguish the fate of internal mandatory rules in company law from that of those governing mere commercial contracts: one might even be said to imply the other? Indeed, while most of the prohibitions enshrined in domestic commercial contract law in liberal regimes are presented as exceptions to the freedom of the parties, whereas large swathes of company law is mandatory in the domestic order with the aim of protecting third parties (rules relating to minimum capital, for example, or “blue sky” statutes..). Yet these provisions are largely neutralized by free circulation (as in Centros etc). If the founders of a company can choose to opt out of an applicable regulatory regime by artificially “internationalizing” or moving (formally) across borders, why not allow other forms of metaphorical mobility in contractual cases, through the insertion of choice of law and forum agreements in domestic agreements?

Reminiscent of the neoliberal model of economic analysis just mentioned, such was the plea by J. Damman and H. Hansmann, inspired by the real or supposed virtues of the legislative or regulatory competition induced by the American intra-federal market for corporate charters (‘Globalizing Commercial Litigation’, 94 Cornell L. Rev. 1 (2008)). In vogue at the neoliberal end of the last century when redistributional and environmental concerns were largely ignored, this now outdated, or highly contested, economic analysis of law, still has its supporters, including in France (counterintuitively… but is this the effect of the arbitration lobby, or merely of an academic fashion lag?). Interestingly, the same authors had initially advocated the introduction of a generalized system of “extraterritorial” courts (in other words, established outside their country of origin but administering the justice of the latter, abroad) precisely to enable competition between legal orders through an unfettered access to multiple, competing courts, even in purely domestic situations (perhaps forgetful that such a technique was actually implemented across colonial and neocolonial empires, including by the United States in China, until surprisingly recently…). But of course, a choice of forum agreement does the job in terms of competition, nearly as well.

It is precisely this model – the competitive paradigm – that may have inspired the Court of Justice here, as it has all those who continue to approve a very liberal use of contractual freedom of choice, whether of court or law. But despite the astonishing and recurrent success of the very idea of the “law market”, the difficulty remains of determining the threshold of the license to opt out of local regulatory limits in domestic cases. In the case of jurisdiction agreements, it could be explained by the impulse, in the long term, to standardize all the rules governing “special” jurisdiction among Member States, and thus, indirectly (as seen above) all contract law. Without going back over all the ground already covered in the fierce debates at the turn of the century on the unification of European private law, we shall simply observe that the prerequisite for successful legal harmonization (within the European Union) is the existence of a minimum of shared (equivalent) ground. The failure of the project to codify European private law (even in the sole area of contract) is perhaps an indication that such a consensus does not exist.

Moreover, if we adopt a structural approach to the problem, and move on from the indirect unification of domestic law to the circulation of judgments resulting from choice-of-court clauses, we can only point out that there is no such thing as complete “fungibility” of Member State judgments under the Brussels I bis Regulation itself, which, even after the abolition of exequatur, still allows for the ultimate intervention of local public policy (and on issues involving fair and equitable process is obliged to do so under relevant human or fundamental rights law). It is therefore to be expected that freeing up elective clauses ex ante will only multiply the number of cases of refusal to enforce the resulting decisions ex post. In other words, the lower the threshold of autonomy at the outset, the greater the degree of control at the end. The well-known example of the two contrasting perspectives, French and American, on “arbitrability” or the extent of party freedom in international arbitration (preventive threshold or control of awards) illustrates this phenomenon of “communicating vessels”. In respect of the new regime of jurisdictional clauses under the ECJ’s ruling, we can bet that the threshold issue – i.e., the reappearance of legitimate impediments to the free exercise of will – will quickly reappear downstream.

We also know that corporate mobility within the internal market has not been without its problems. The case law of the European Court of Justice bears witness to a long, shifting and subtle negotiation between the requirements of free movement and the aims protected by the legislative “obstacles” raised by member states in the name of various equally legitimate aims or policies (be they economic, social, environmental, etc.). Such judicial negotiation in case of conflict is the very “dynamic” of the principle of proportionality within the internal market (to use A. Marzal Yetano’s excellent expression in La dynamique du principe de proportionnalité. Essai dans le contexte des libertés de circulation du droit de l’Union européenne, Institut Universitaire de Varenne, 2014). This tension between multiple values is apparent both in corporate matters and in the field of contractually provided services, whether in terms of jurisdiction or applicable law. This is because any legal rule adopted in a democratic regime is the fruit of complex compromises between potentially contradictory interests, so that in the event of conflict in a particular case, no simplistic equation by which one should prevail other the other makes any sense – if to do so means ignoring the balance previously achieved…

A Conference on Cross-Border Dispute Resolution will be held in Dubrovnik on 8-10 May 2024 organized by the Law Schools of the University of Pittsburgh, Verona and Zagreb.

The Conference will deal with cross-border professional responsibility and privilege, aspects of international arbitration and international litigation. Each day will include discussion-oriented presentations and workshops on practical international arbitration and litigation issues.

Speakers include Ron Brand, Marco Torsello, Franco Ferrari, Milena Đorđević, Dora Zgrabljić Rotar and Giesela Ruhl.

The full programme is available here.

For registration and further info see here and here.

On 22 February 2024, the Law Commission of England and Wales published a call for evidence to help them identify the most challenging and prevalent issues of private international law that arise from the digital, online, and decentralised contexts in which modern digital assets and electronic trade documents are used. They seek the views and evidence of a diverse body of stakeholders from a wide range of perspectives and jurisdictions to ensure their future work on this project will strike the appropriate balance between the theoretical aspect of the law and its practical application. The responses will inform the next steps. They seek responses by Thursday 16 May 2024.

The call for evidence can be downloaded here. A summary of the call can be downloaded here. Responses to the call for evidence should be submitted here.

The Law Commission describes the problem that their project aims to address as follows.

The Problem

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise. In which country’s courts should the parties litigate their dispute? Which country’s law should be applied to resolve it? How can the judgment be enforced in another country? Private international law is the body of domestic law that supplies the rules used to determine these questions.

Problems of private international law are by no means a recent phenomenon. The conditions that give rise to problems of private international law date from at least the fourth century BC. The problems are, however, becoming more difficult and increasingly pervasive because modern technologies challenge the territorial premise on which the existing rules of private international law have been developed.

In this respect, the advent of the internet in the late 1980s has been a catalyst of socio-economic change that has posed significant challenges for private international law. More recent innovations, such as crypto-tokens and distributed ledgers, add novel and arguably intractable problems to these existing challenges.

[The Law Commission’s] project has a particular focus on crypto-tokens, electronic bills of lading, and electronic bills of exchange. This is because these assets are prevalent in market practice, whilst also posing novel theoretical challenges to the methods by which issues of private international law have traditionally been resolved.

The Project

In recent years, a significant aspect of the Law Commission’s work has focused on emerging technologies, including smart legal contracts, electronic trade documents, digital assets, and decentralised autonomous organisations (DAOs). [The Law Commission’s] work has shown that these technologies raise issues of private international law.

In [the Law Commission’s] final report and Bill for work on electronic trade documents, [the Law Commission] noted that there are private international law difficulties associated with electronic trade documents, in particular the inherent difficulties in determining the geographical location of the documents.

However, [the Law Commission] recognised that many of these issues arise in relation to digital assets more broadly. During the passage of the Electronic Trade Documents Act 2023, [the Law Commission] committed to considering these issues in a more general project on private international law and emerging technology.

In 2022, the UK Government asked the Law Commission to conduct this project considering how private international law rules will apply in the digital context. In particular, the Law Commission is asked to consider the disputes which are likely to arise in the digital context (including contractual, tortious and property disputes), and make any reform recommendations it considers necessary to Government.

The post below was written by Pedro De Miguel Asensio, who is Professor of Private International Law at the Complutense University of Madrid. This is the third contribution to the EAPIL’s online symposium on Inkreal, after the posts of Sergi Gimenez and Gilles Cuniberti.

The main contribution of the Inkreal judgment is to establish that Article 25 of the Brussels I bis Regulation allows the parties to a contract, even if they are domiciled in the same Member State and all the elements of the contract are located in that State, to confer jurisdiction to settle the disputes arising from the contract on the courts of another Member State. In fact, this case has provided the Court of Justice with the opportunity to address a question which had been referred to it previously, but which it was unable to rule on at the time because the request for a preliminary ruling was withdrawn by the Portuguese Supremo Tribunal de Justiça and the case removed from the register (EU:C:2017:237).

In particular, among the questions already referred to the Court of Justice in case C-136/16, Sociedade Metropolitana de Desenvolvimento, in connection with the practice relating to the conclusion contracts under the terms of the ISDA Master Agreement, was whether, in a dispute between two national companies of a Member State concerning swap contracts, the existence therein of clauses conferring jurisdiction in favour of another Member State constitutes a sufficient international element to give rise to the application of the Brussels I bis Regulation. Now, the Inkreal judgment in the framework of case C-566/22 answers a similar question in the affirmative and clarifies that the mere agreement of the parties to a contract designating the courts of a Member State other than that of their common domicile as having jurisdiction is sufficient for the legal situation to have an international element for the purposes of the jurisdiction rules of the Brussels I bis Regulation.

Although it is a criterion that could give rise to misgivings insofar as it could leave it to the parties to circumvent, within the limited framework of Article 25 of the Brussels I bis Regulation, the jurisdiction of the courts of the only Member State with which the contract is connected (as the Advocate General emphasised in his Opinion in Inkreal, EU:C:2023:768) and may sometimes cause serious inconvenience to one of the parties (as raised in the second of the questions referred for a preliminary ruling in case C-136/16), the approach adopted by the Court seems the better view. Its position reinforces: (a) consistency between the Brussels I bis Regulation and other Union instruments on judicial cooperation in civil matters (see I, infra); (b) the objectives of predictability and legal certainty in the application of the Brussels I bis Regulation (II, infra); and (c) the particular significance of the Union’s private international law instruments as an element of integration (III, infra).

I. Consistency between the Brussels I bis Regulation and Other Union Instruments on Judicial Cooperation in Civil Matters

The judgment confirms previous case law according to which the application of the rules of jurisdiction of the Brussels I bis Regulation is in any case subject to the existence of an international element, which corresponds to the fact that it is an instrument relating to judicial cooperation in civil matters having cross-border implications, in the terms of Article 81(1) TFEU. However, the judgment not only confirms that for such international element to be present it is sufficient that the situation raises “questions relating to the determination of the jurisdiction of the courts in the international sphere” (para. 22 referring to the IRnova judgmen, EU:C:2022:648), but also adds as a novelty the clarification that such a circumstance is present whenever the parties to a contract are established in a Member State other than the court seised on the basis of the relevant jurisdiction agreement, insofar as in such situations the question arises of determining the courts of which of those Member States has international jurisdiction to hear the dispute in question (paras. 23-25).

In order to reach that conclusion, the judgment attributes a particular relevance to the definition of “cross-border cases” in Article 3(1) of Regulation (EC) No 1896/2006 creating a European order for payment procedure, which provides that “a cross-border case is one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised”. Apart from the relevance given in the judgment to the coordination between the Brussels I bis Regulation and Regulation (EC) No 1896/2006, the approach taken by the Court of Justice also seems to be supported by the content of Regulation (EC 593/2008 on the law applicable to contractual obligations (Rome I Regulation).

Recital 15 to the Rome I Regulation states:

Where a choice of law is made and all other elements relevant to the situation are located in a country other than the country whose law has been chosen, the choice of law should not prejudice the application of provisions of the law of that country which cannot be derogated from by agreement. This rule should apply whether or not the choice of law was accompanied by a choice of court or tribunal.

Consequently, Recital 15 and Article 3(3) of the Rome I Regulation seem to be based on the assumption that the parties to a contract may choose a court of a Member State as having jurisdiction, even if all the relevant elements of the situation prior to their choice of forum (and law) are located in another Member State (regarding the interpretation of Article 3.3 Rome I Regulation in the context of insolvency proceedings, see CJEU Judgment of 8 June 2017, Vynils, C-54/16, EU:C:2017:433, concerning an apparently domestic Italian contract that conteined “a clause stating that English law is the chosen law and a clause choosing the jurisdiction of the London Maritime Arbitrators Association”, para. 20).

In so far as the judgment in Inkreal holds that the rules of jurisdiction in the Brussels I bis Regulation apply only where there is an element of internationality, for which it is sufficient that a purely domestic contract designates a court of another Member State as having jurisdiction, since such a situation “raises a question relating to the determination of international jurisdiction” (para. 24), it is also consistent with the approach underlying the Rome I Regulation. A sort of parallel may be drawn mutatis mutandis between that category and that of a situation “involving a conflict of laws” as regards the field of applicable law. Also, under the Rome I Regulation, in the different context of the applicable law, it is necessary to determine in which situations a foreign element is present, since the rules of the Rome I Regulation only apply “in situations involving a conflict of laws” (as stated in Article 1(1) and recently examined by the Court of Justice in its judgment of 14 September 2023, Diamond Resorts Europe and Others, C‑632/21, EU:C:2023:671, para. 51).

II. Objectives of Predictability and Legal Certainty in the Application of the Brussels I bis Regulation

The judgment highlights that making the application of Article 25 of the Brussels I bis Regulation subject to a finding that the contract has additional links (beyond the agreement conferring jurisdiction) with the Member State of the chosen court would undermine the objective of legal certainty and predictability. It would make it difficult for the designated court before which the action is brought to determine its jurisdiction and increase the risk of parallel proceedings and irreconcilable judgments (paras. 27 to 31).

Although the lis pendens rules of the Brussels I bis Regulation would significantly reduce the risk of parallel proceedings, there is no doubt that the requirement to identify additional elements capable of demonstrating the cross-border impact of the dispute would constitute a significant factor of uncertainty. Illustrative in that respect was the list of potential international elements in addition to the jurisdiction agreement contained in the third of the questions referred for a preliminary ruling in case C-136/16 in relation to the swap contracts at issue. Such elements included the fact that foreign companies were invited to submit proposals to participate in the contracts, that one of the parties is owned by a foreign entity, that under the terms of the contract the parties may transfer their rights and obligations to subsidiaries in other countries, that the contracts at issue had certain connections to contracts concluded with foreign entities, etc.

Moreover, hypothetically, it should be noted that if it had been decided that Article 25 of the Brussels I bis Regulation requires additional factors of internationality to be applied, a particularly broad interpretation in the context of the Union would have been justified. The outcome in practice might not be very different from that resulting from the new judgment.

For example, why would the following not be sufficient connections. First, the mere fact that for one of the parties the contract in question has connections to a different international contract which are relevant to that party. Second, the fact that one of the contracting parties belongs to a group of companies with connections to the Member State in which the designated court is located (for instance, this seemed to be the situation -perhaps with some additional elements- in the notorious El Majdoub judgment, concerning a contract between parties domiciled in Germany with a jurisdiction clause in favour of a court in Leuven (Belgium), see paras 10, 13 and 16 of CJEU Judgment of 21 May 2015, El Majdoub, C‑322/14, EU:C:2015:334).

III. Significance of EU Private International Law rules as an Instrument of Integration 

The broad scope of Article 25 Brussels I bis Regulation is also justified by the Court of Justice as reflecting mutual trust in the administration of justice within the Union and contributing to the development of an area of freedom, security and justice (para. 35). Indeed, the development of civil judicial cooperation within the Union, based on the principle of mutual recognition of judgments, has led to the creation of a judicial area, many elements of which are closer to the treatment of purely internal situations than to strictly international ones. This is reflected, for example, in the contrast between the treatment of situations in which lis pendens arises between Member States of the Union and those concerning parallel litigation in a Member State and a third State.

The criterion adopted in Inkreal is a further step in this direction of overcoming state borders, which is projected onto areas where party autonomy prevails and the choice of the courts of a Member State without any apparent connection with the dispute will typically respond to the legitimate interests of the parties. In practice, moreover, the choice of a court of that other Member State will normally go hand in hand with the choice of its law as the law applicable to the contract. As regards the position of the Member State in which all other elements of the contract are located, Article 3(3) of the Rome I Regulation will be relevant. According to that provision, the choice of law (and court) by the parties does not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement. Consequently, the mandatory rules applicable to the contract will be those of the Member State where all the other elements relevant to the contract are located and not those of the Member State whose courts adjudicate the case and whose law has been chosen by the parties (without prejudice, of course, to the effectiveness of the mandatory rules under Article 9 of the Rome I Regulation).

Given the specificity of the Union’s integration framework, and the particular scope of judicial cooperation in civil matters, the Court is justified in expressly rejecting that the provisions of the 2005 Hague Convention on Choice of Court Agreements should constitute a point of reference in the interpretation of Article 25 of the Brussels I bis Regulation. Pursuant to Article 1(1) of the Convention, its jurisdiction rules only apply either if the parties are not resident in the same State, or if some element relevant to the dispute other than the location of the chosen court has a connection with some other State (see “Explanatory Report” by T. Hartley and M. Dogauchi, paras. 41-43).

Hence, the broad interpretation of Article 25 of the Brussels I a Regulation and its application to purely domestic contracts does not apply to jurisdiction agreements designating the courts of a third State, even if it is a State with which the Union and its Member States are bound by the 2005 Hague Convention on Choice of Court Agreements. Nor does it apply directly in situations where the effectiveness of jurisdiction agreements in favour of a third State is governed by the domestic law of the Member State seised.

Concluding remarks

Unlike in case C-136/16, Sociedade Metropolitana de Desenvolvimento, the Court was not requested in Inkreal to clarify if the application of such a jurisdiction agreement may be waived where the choice of the courts of a Member State other than that of the nationality of the parties causes serious inconvenience for one of those parties and the other party has no good reason to justify such choice. However, the reasoning by the Court seems to support the view that within the specific framework of the Brussels I bis Regulation (and its interplay with the Rome I Regulation) such a concern is of limited significance. This is without prejudice that the possible review of the regulatory framework in order to provide certain protection to small or medium-sized enterprises in a position of contractual imbalance against choice of forum agreements unilaterally imposed on them, is an issue that merits special attention. In any event, such protection would be especially necessary with regard to jurisdiction agreements in favour of the courts of a third State, which in principle fall outside the scope of the Brussels I Regulation.

— This post is based on the post published in Spanish by the author on 8 February 2024, and a short case comment to be published in the journal La Ley Unión Europea.

This is the second contribution to the EAPIL Online Symposium on Inkreal. The first contribution was written by Sergi Gimenez.

As reported earlier on this blog, the CJEU ruled in Inkreal s.r.o. v. Dúha reality s.r.o. (Case C‑566/22) that Article 25 of the Brussels I bis Regulation applies to clauses stipulated in domestic contracts if such clauses provide for the jurisdiction of the court of another Member State.

The CJEU held that domestic contracts providing for the jurisdiction of the court of another Member State have, for that reason alone, an international element which suffices to trigger the application of the Brussels I bis Regulation in general and Article 25 in particular. The clause is thus validated and effective.

Geert van Calster is delighted about this excellent judgment, that Pedro de Miguel Asensio and Matthias Weller also welcome. I disagree.

International Element Required?

The judgment recalls that an international element is required to trigger the application of the Brussels I bis Regulation. The Brussels I bis Regulation was adopted on the basis of Article 81 of the Treaty on the Functioning of the European Union, which gives competence “in civil matters having cross-border implications”. As a result, the court ruled in Owusu that there should be an international element to trigger the application of the Regulation.

The CJEU finds that an international element exists in this case for two reasons. The first is that the proceedings were initiated in a another Member State. The second is the jurisdiction clause itself, which designates a foreign court.

Both of these elements are purely subjective, insofar as they are the result of the will of the parties. Party autonomy suffices to create the international element. And, indeed, the will of a single party, the plaintiff, seems to suffice, as the initiation of the proceedings in another State is deemed sufficient. In this respect, the court relies on the definition of cross border litigation in the European Order of Payment Regulation which refers to the initiation of the proceedings in another Member State. But in the context of the Brussels I Bis Regulation, what really matters is party autonomy and the provision of a jurisdiction clause. In the absence of such a clause, the application of the objective rules of jurisdiction will always grant jurisdiction to the only Member State connected with the dispute, irrespective of where the proceedings were initiated. In contrast, enforcing jurisdiction clauses could be a real game changer.

Adopting subjective criteria such as the inclusion of a jurisdiction clause suggests that, although it cannot rule that the Regulation applies to domestic disputes, the court is ready to interpret the cross border implications test as broadly as possible, so that it can, in effect, extend the reach of the Regulation to domestic disputes.

So what will come next? What will be the other subjective criteria justifying the application of the Regulation and Article 25? Will it be enough for the parties to provide “this is an international contract” in the preamble of their contract? And what about remote objective criteria? For instance, what about the foreign grand parent of one of the local parties to the contract?

The End of the National Rules governing Jurisdiction Clauses?

Many member States have national rules limiting the enforceability of jurisdiction clauses in domestic disputes. In France, for instance, such clauses are only enforceable among certain categories of professional parties (‘commercial people’), and they need to be stipulated in “very apparent characters”.

After Inkreal, it will be possible to bypass those rules by providing, in domestic contracts, the jurisdiction of a Belgian or Luxembourg court. What is the legitimacy of the EU to disapply those rules? One could debate whether party autonomy should be promoted and local parties should always be allowed to choose their preferred court. But certain Member States have made the policy decision that choosing the competent court can have far reaching consequences, and party autonomy should only be allowed between sophisticated actors where it can be established that the parties made an informed choice. What is the legitimacy of the CJEU to cancel this policy decision?

Of course, one could think that national rules will remain applicable and prevent the same parties from including a similar clause providing for another city within the same Member State. But will they? Maybe not, if the parties insisted in their contract that they strongly feel that it is, or want it to be, an international contract.

Coherence with Hague Convention irrelevant

Interestingly, the 2005 Hague Convention on Choice of Court Agreements provides that it only applies to international cases, which are defined objectively:

Art. 1 (2) For the purposes of Chapter II, a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State.

The Court, however, rules that the same definition is not found in the Brussels I bis Regulation, and that there is no reason to seek a coherent interpretation. Instead, as already mentioned, the court prefers to seek coherence with the European Order for Payment Regulation, because it relates to judicial cooperation in civil matters. But is it really convincing, given that this regulation does not include any rule validating party autonomy?

Irrespective of these poor contextual arguments, the result is disastrous. For parties and lawyers providing for jurisdiction clauses (and choice of law clauses) in international contracts, it is critical to avoid developing different legal regimes and to interpret the relevant instruments (Brussels I bis, Rome I, 2005 Hague Convention) coherently whenever it is possible. Most practitioners have a hard time understanding some of the most basic concepts of private international law. They do not need these extra subtleties.

This is the first contribution to the EAPIL’s Online Symposium on Inkreal. It is authored by Sergi Gimenez, who is an Associate Lecturer of Private International Law at the Universitat Pompeu Fabra in Barcelona and a partner in the law firm Augusta Abogados.

In its judgment of 8 February 2024 in Inkreal (Case C-566/22), the Court of Justice of the European Union (“CJEU”) has concluded that there is no impediment for parties to a contract established in the same EU Member State (e.g. Spain) to agree on the jurisdiction of the courts of another Member State (e.g. Germany) to settle their contractual disputes, even if the contract in question has no other connection with the designated Member State. The doctrine established by the CJEU, perhaps questionable in some respects, opens up interesting prospects for companies to choose the dispute resolution mechanism that suits them best, even in purely domestic contractual relations.

Background

Between June 2016 and March 2017, an individual (“FD”) residing in Slovakia lent money to the Slovak company Dúha reality s.r.o. (“Dúha”). The two loan agreements signed between the parties contained a clause whereby the parties agreed that any disputes arising from the loans would be settled “by a court of the Czech Republic having substantive and territorial jurisdiction”.

In early December 2021 FD transferred the claims under the loan agreements in favour of Inkreal s.r.o. (“Inkreal”), a company also incorporated under Slovak law and established in Slovakia.

Since Dúha did not repay the loans, Inkreal sued Dúha before the Supreme Civil and Criminal Court of the Czech Republic at the end of the same month of December, as foreseen in the above mentioned clause.

Doubts then arose as to the possible invalidity of the above-mentioned attribution agreement. Since the dispute concerned a contract governed by Slovak law and was between two Slovak companies, with no connection to the Czech Republic, the Court questioned its possible lack of international jurisdiction. In view of the doubts that arose, the Czech Supreme Court turned to the CJEU for clarification.

The Question

The Czech Supreme Court’s doubts arose from the fact that neither the loan agreements nor the disputing parties have any connection with the Czech Republic. However, the case-law of the CJEU has consistently required that there be an “international element” in the disputes in order for the Brussels I bis Regulation to apply. Thus, the referring court wondered whether the mere will of the parties, by including a clause submitting to the courts of another State, was sufficient to confer an international character on their contractual relationship. If that is not the case, the situation would be purely internal and the EU regulation would not be applicable. In such a case, the possible jurisdiction or lack of jurisdiction of the Czech courts would have to be examined in the light of the internal rules of the Czech Republic itself.

Judgment

In addition to hearing the arguments submitted by the parties involved and analysing the Opinion of the Advocate General (who expressed a view contrary to that reflected in the judgment), the CJEU also took into account the observations submitted by the European Commission and some States that wished to participate. The CJEU concluded that a jurisdiction agreement by which the parties to a contract established in the same Member State agree that the courts of another Member State shall have jurisdiction to hear disputes arising out of that contract falls within the scope of Article 25(1) of the Brussels I bis Regulation even if that contract has no connection with that other Member State.

Reasoning of the CJEU

The CJEU reaches the above conclusion using reasoning that is questionable in some cases but imbued with an undoubtedly practical sense. Although the CJEU insists on its settled case law to the effect that the application of the jurisdiction rules of the Brussels I bis Regulation requires the existence of an “international element”, the truth is that the final decision greatly relativises this requirement.

According to the CJEU, the dispute between Inkreal and Dúha falls within the definition of the concept of a “cross-border case” since the parties are established in a Member State other than that to which the Czech court seised on the basis of the agreement conferring jurisdiction in question belongs (para 23). The CJEU adds that the fact that the main dispute raises a question concerning the determination of international jurisdiction (that of the Czech Supreme Court) reinforces the idea of the existence of a cross-border element (Recital 24).

Paragraph 25 of the judgment contains the key to the CJEU’s decision in determining that

the existence of an agreement conferring jurisdiction on the courts of a Member State other than that in which the parties are established in itself demonstrates the cross-border implications of the dispute in the main proceedings.

In this way, the CJEU opens the way for the parties to a contract to decide, solely by their own free will, to “internationalise” a situation that from any other point of view would be considered purely internal.

To justify its view, the CJEU relies on eminently practical reasons: maintaining that the clause on submission to foreign courts is covered by the Brussels I bis  Regulation allows the plaintiff and the defendant to easily determine the court before which they can sue and be sued, and it also allows the court seised to easily rule on its own jurisdiction. According to the CJEU, the alternative of the court having jurisdiction being determined in accordance with the national rules of private international law of the Member States concerned would lead to greater legal uncertainty, since the application of different national rules could lead to divergent solutions.

Commentary and Possible Implications

Until now, in contractual matters, individuals could “internationalise” a domestic situation with regard to the law applicable to their contract. Indeed, Article 3(1) of Regulation (EC) No 593/2008 (Rome I ) gives a wide freedom of choice of the law applicable to contracts by stating that “the contract shall be governed by the law chosen by the parties“. Thus, in principle, even the parties to a purely domestic contract can choose a foreign law. Notwithstanding this freedom of choice of law, Article 3(3) of the same Rome I Regulation provides for a corrective mechanism to prevent possible abuses or excessively opportunistic choices: if all the relevant elements of the contract (e.g. the place of establishment of the parties, the place of performance of the services or delivery of the goods, etc.) are located in a country other than the country whose law is chosen, the mandatory rules of the first country will continue to apply. Thus, in purely domestic contracts the foreign law chosen by the parties will only apply in those respects in which the law to which the contract is objectively linked does not contain mandatory rules. Article 3(4) of the Rome I Regulation provides for an identical limitation for purely intra-EU cases: if all the elements of the situation are located in two or more EU Member States and the parties choose the law of a third State, such a choice does not prejudice the application of mandatory rules of Community law.

The restrictions provided for in the Rome I Regulation on the law applicable to the contract are not transferable to forum selection clauses. In fact, in its decision, the CJEU has not imposed any kind of limitation on the choice of the courts of another Member State (beyond the restrictions on exclusive and protective forums or those relating to public policy provided for in Article 45). Thus, two or more companies located in the same Member State and concluding a purely internal contract can now decide that any disputes between them will be settled by the courts of a different Member State. And it should be remembered that, by submitting a case to the courts of another Member State, the latter acquire exclusive jurisdiction to hear the case, unless the parties have agreed otherwise.

Until now, in order to transfer a purely domestic dispute to another State, the parties had the mechanism of arbitration at their disposal, agreeing that the seat of the arbitration tribunal would be in another country. With the new doctrine set by the CJEU, the parties may also opt for the ordinary courts of another EU Member State if they consider it appropriate, whether for reasons of speed, efficiency, cost, specialisation or any other reason. Obviously, before making a decision, other aspects must be taken into account, including possible adverse elements such as language difficulties, the added complexity involved in making notifications or taking evidence abroad or even the problems arising from the need to prove to the foreign judge the content of the substantive rules chosen by the parties if these rules are not those of the designated judge.