French Judgements on Article 5(1)(b) of the Brussels I Regulation

In 2006, the French supreme court for private matters (Cour de cassation) held in two cases that distribution contracts ought to be considered as Contracts for the Provision of Services for the purpose of article 5 (1)(b) of the Brussels I Regulation.

The first judgement was delivered on July 11, 2006. In 1997, the German company Wema Post Maschinen had undertaken to pay a 3% commission to several “intermediaries” (intermediaires) (whose names do not appear in the judgement) if they could make happen the sale of a machine to the Delrieu company (seemingly French). The exact nature of the 1997 contract is unclear, and is certainly not characterised by the Cour de cassation, which may mean that the court did not find it material. The sale happened in 2002, and the “intermediaries” sued the German party before a French Court for payment of the commission. In 2005, the Court of Appeal of Limoges held that it did not have jurisdiction over the dispute, as the payment ought to have been made in Germany. The Cour de cassation reversed. It held that the contract between the parties was a Contract for the Provision of Services in the meaning of article 5, and that, as the service had been been provided in France, French courts had jurisdiction.

On October 6, 2006, the Cour de cassation held in Solinas (reported in the last issue of the Journal de Droit International) that a commercial agency contract was a Contract for the Provision of Services for the purpose of article 5. Solinas was the French agent of a Portuguese company, Fabrica Textil Riopele. In 2003, Solinas sued its principal before the Paris Commercial Court and sought payment of an indemnity for increasing the customers of Fabrica Textil Riopele and payment of damages for abusive termination of the (agency) contract. Fabrica Textil Riopele argued that the French court lacked jurisdiction. In 2004, the Paris Court of Appeal held that French courts lacked jurisdiction over the claim for payment of the indemnity, as it ought to be performed in Portugal, at the domicile of the principal. The Cour de cassation reversed and held that the contract between the parties was a Contract for the Provision of Services in the meaning of article 5, and that, as the service had been been provided in France, French courts had jurisdiction.

It is tempting to interpret these two cases as indications of the willingness of the Cour de cassation to rule that all distribution contracts are Contract for the Provision of Services, and that only mere sales contracts will be considered as Sales of Goods in the meaning of article 5. But after Waeco, it seems that these solutions should be confined to contracts which do not involve sales.

If you know of other European cases that would have ruled on the same issue, feel free to post a comment and to share this information.

Comments on this entry are closed.

  • Giorgio Buono May 8, 2007, 10:19 pm

    First of all, I would like to thank Gilles for his posts, that are always interesting and thought-provoking.

    At a first glance, I would say that a proper definition of “distribution contracts” has to be provided in order to discuss the jurisdictional issues: since this type of contract may include a number of different (and often complex) obligations, the outcome of the analysis might differ.

    An Italian case dealing with jurisdiction in distribution contracts has been just published in the latest issue of the “Rivista di diritto internazionale privato e processuale” (whose table of contents is posted on the site): Corte di Cassazione (Sezioni Unite), judgment of 4 may 2006, n. 10223, in RDIPP, 2007, p. 194 ff.

    The case, decided by the Italian Supreme Court in plenary sitting (Corte di Cassazione – Sezioni Unite), dealt with a distribution contract concluded between an Italian firm (plaintiff) and a French textile factory (defendant). Apparently, the structure of the distribution contract was a very simple one, stipulating a number of sales of goods and an exclusive distribution agreement.

    The Italian firm had sued the French company, claiming damages for breach of contract in respect of both the exclusive distribution agreement and the late delivery of goods.

    The Corte di Cassazione, confirming the judgments of the lower courts, held that the Italian judge lacked jurisdiction over the claims, since in asserting jurisdiction in distribution contracts, under art. 5.1 of the Brussels Convention, reference has to be made to the characteristic performance of the distribution contract, that is the provision of goods, and thus to the place of delivery of the goods (France, in this case, pursuant to art. 31 of the CISG).

    The reasoning of the Italian Supreme Court can be summarized as follows:
    – the ECJ, in the Ivenel case (n. 133/81) has held that the obligation to be taken into account for the purposes of the application of art. 5(1) of the Brussels Convention is the obligation which characterizes the contract;
    – furthermore, in the Shenavai case (n. 266/85), the ECJ held that “the Court before which the matter is brought will, when determining whether it has jurisdiction, be guided by the maxim ‘accessorium sequitur principale’; in other words, where various obligations are at issue, it will be the principal obligation which will determine its jurisdiction”;
    – according to a well-established principle of the Corte di Cassazione, in distribution contracts the characteristic performance (viz., the principal obligation) is the provision of goods, since the subsequent activity of (exclusive) distribution depends on it;
    – as a consequence, in case of a distribution contract, jurisdiction under art. 5(1) of the Brussels convention must be assessed with respect to the delivery of goods (this being the performance of the characteristic obligation).

    Although the judgment has been given on art. 5(1) of the Brussels Convention, the rationale underlying it can be easily transferred to the provision of reg. 44/2001.

    As a last remark, on art. 5(1) of reg. 44/2001, I would recommend a very recent book written by an Italian scholar, who has carried on a thorough analysis of EC jurisdiction rules in contracts: Pietro Franzina, “La giurisdizione in materia contrattuale : L’art. 5 n. 1 del regolamento n. 44/2001/CE nella prospettiva della armonia delle decisioni”, Padova (CEDAM), 2006.

  • Gilles Cuniberti May 9, 2007, 12:18 am

    Thanks for your comment.

    I think it will be interesting to see whether la Cassazione will also adopt the same solution when applying new article 5(1)(b). I guess it could indeed be argued that a way to characterize a contract involving both the transfer of onwership of goods and the provision of services would be to determine the most important, relevant or principal of the two and characterize accordingly. That is obviously not the path chosen by the French cour de cassation.

  • Adrian Briggs May 9, 2007, 6:27 am

    What does this do to the line of reasoning in various cases that the characteristic performer in distribution contracts is the seller rather than the distributor ? On the face of it they sit rather awkwardly together.

  • Gilles Cuniberti May 9, 2007, 1:22 pm

    I guess that Adrian refers to the French cases which held that the seller was the characteristic performer in concession contracts in the meaning of article 4 of the 1980 Rome Convention. An issue was whether these cases applied to all distribution contracts or only to some, namely concessions. The contracts in the two cases mentioned in my post seem to have been of another kind, where the distributor never becomes the owner of the goods, but just facilitates the sale. The Cour de cassation may want to distinguish between the two kinds of distribution agreements.
    So much so that a more recent case on a concession which has not yet been reported has just been pointed out to me, ruling differently. More to come in another post.