#15485 - Brussels I Rome I - International Commercial Law

BASIC RULE = Defendant is sued in the courts of her home country (Art. 4) unless an Exception applies:

Exceptions = Contracts, Torts, situation where the Defendant has a local branch office, real property, companies, intellectual property rights (IP), insurance, consumer contracts, and employment matters

By Art.23 Basic Rule CAN be contracted out by agreement but must be

• In writing or

• in a form according with practices which parties established between themselves

• form widely used or acknowledged in trade (25(1)(a-c));

SPECIAL JURISDICTION:

Art.7(1)(a) Contract: if contract matter, can sue D in MS where contract should have been performed

Art.7(1)(b) Sales of Goods Contract: presumed that “place of performance of obligation” is MS where goods were / should have been delivered (see Electrosteel judgment below)

Art.7(2) Tort: D may be sued in MS where harmful event occurred / may occur

Art.7(5) Branch Office: if D has a branch or office in another MS D may be sued there if dispute arises out of the operations of that branch or office.

By Art.25 Rules on General and Special Jurisdiction CAN be contracted out; sets out formal requirements (in writing etc)

EXCLUSIVE JURISDICTION: OVERRIDES the Basic Rule and Special Jurisdiction

Art. 2 Land / tenancies: MS where land is situated has exclusive jurisdiction

Art. 2 Constitution or dissolution of Co.’s: MS where Co. has it seat (i.e. Reg Office)

Art. 2 IP Rights: registration or validity of IP rights, MS where rights are registered or applied for

By Art.24 Exclusive Jurisdiction CANNOT be contracted out (ltd for insurance, consumer and employment contracts)

THE WEAK PARTY (less economic power):

Art. 17-19: Special rules for insurance, consumer and employment contracts

Art. 17-19: Weak party can generally only be sued in his own courts BUT is given choice as to whether wishes to sue in own courts or other party’s courts

Applies to eCommerce (i.e. internet seller can be sued anywhere); businesses control this by refusing to sell / deliver goods to certain jurisdictions

By Art.23 CAN be contracted out

FIRST TO FILE

By Art.29 Court first involved in proceedings (first seised) will have jurisdiction unless it declines

By Art. 31(2) If parties select jurisdiction under Art. 25, court may hear case if not first seised

By Arts. 36-37 Judgements in MS must be recognised+enforced, w/ some exceptions (see chart)

SUING IN ENGLISH COURTS

3 circumstances in which English courts may have jurisdiction:

a) if claim form is served on D whilst she is physically in jurisdiction

b) if D submits to jurisdiction of English courts

c) if courts authorise service of claim form out of jurisdiction

ELECTROSTEEL Europe SA v Edil Centro

Correct interpretation of expression ‘place of performance of the obligation in question’, found in the first indent of art 5(1)(b): unless otherwise agreed, the court must take account of all relevant terms and conditions ‘under the contract’, including INCOTERMS; if not possible to determine on that basis, place of delivery is where physical transfer took place.

Rome I Regulation 593/2008 = Law

APPLICATION = Art. 1(2) no need for parties to be EU national / domiciled in EU; Rome I does not apply to wills and probate and matters governed by Co. law

BASIC RULE = Art. 3(1) Ps can choose Law of Contract expressly or impliedly; if so, it governs contract

• BUT Art. 3(3) Ps choice of law cannot be “shopped around”; there should be a commercial connection with the chosen Law (also by Art. 4(4) court may apply law of MS where contract is more closely connected)

Art.4 Where Ps failed to choose law Rome I will apply; law of contract is MS where S has his habitual residence UNLESS B is a consumer Art.6 (i.e. B’s MS law will apply if B is a consumer)

PRESUMPTION = Art. 4(1) states presumption of whose laws will apply to each Type of contract:

Art 4(1(a) Sale of Goods Contract = law where S has place of habitual residence

Art 4(1)(b) Sale of Services Contract = law where service provides has place of habitual residence

Art.4(1)(c) Immovable Property = law of MS where property located will apply; not appl. to contracts for repair / construction

Art. 4(1)(e) Franchise Agreement = law where franchisor has place of usual residence

Art 4(1)(f) Distribution Agreement = law where distributor has place of usual residence

• Exception for contracts with local / branch offices (Art. 19)

Art.5(1) Contract for Carriage of goods = law where carrier has its place of business, if also country of loading / discharging

• Presumption can be REBUTTED by showing contract “manifestly more closely connected” with another country or where there is a network of closely connected contracts

Where contract is not in category or is hybrid, will be governed by law of country where P required to effect characteristic performance of contract has habitual residence (Art. 4(2))

If cannot be determined under either Art 4(1) or Art 4(2), will be governed by law of country where “most closely connected” (Art. 4(4))

LOCAL ‘MANDATORY’ RULES: if applicable law conflicts with “mandatory rules” of jurisdiction in which dispute is being heard, applicable law cannot be used (e.g. FSMA 2000, CRA 2015 in UK)

THE WEAK PARTY:

Art.6 If no law chosen, Consumer Contracts governed by law of Consumer’s habitual residence

Art.8 If no law chosen, Employment Contracts governed in MS where work takes place

Model Answer

Choice of Jurisdiction

May be asked to determine where Delivery took place where INCOTERM incorporated into contract

The answer should incorporate the case law in Electrosteel with reference to Brussels I Article 7(1)(b):

• under Electrosteel Europe sa v Edil Centro SpA the place of deliver under Brussels I Article 7(1)(b) is:

• As expressly stated in the contract (including any incoterm to which the contract refers); or

• If this is not clear from the contract itself, place of delivery shall be the place of physical delivery into the buyer’s hands.

Electrosteel states that Jurisdiction is determined as expressly stated in the contract including any INCOTERMS.

E.g. if INCOTERM is CIF, legal delivery of the goods passes to the buyer on physical delivery on board of the ship – on facts: Scheldemond UK. Therefore, jurisdiction under Brussels I Article 7(1)(b) is UK.

Consider options:

1. Allow proceedings to start in Holland...