Paris, Lugano or Brussels?
The Brussels I Regulation and the Lugano Convention have each a territorial scope based on the same criteria. But it is not always easy to assess which instrument applies in a given dispute.
Take for instance a contract whereby a French bank assigned a claim to a French national domiciled in Switzerland. The contract contains a clause providing for the jurisdiction of French courts. The bank initiates proceedings in France. Which legal regime governs the clause?
Answer of the Paris Court of appeal: the French code of civil procedure governs, and the clause is unenforceable. Reason: the contract was not truly international, and thus only French law governed, as the only connection with a foreign country was the residence in Switzerland of one party, which was not material.
WRONG, rules the French supreme court for private and criminal matters (Cour de cassation) in a judgment of 30 January 2013. The Lugano Convention applies, as, the court rules, the French national was domiciled in Switzerland.
Well, even if the French national, who happened to be the defendant, was domiciled in Switzerland, the other party was domiciled in France, and the clause provided for the jurisdiction of French courts. So why would not the Brussels regime apply?
From the Lugano Convention’s perspective, the answer would be: Because of the provision in Art. 64(2)(a) of this Convention.
Art. 54b of the 1988 Lugano Convention.
…or rather because of Art. 54b(2)(a) of the Lugano Convention’s 1988 version, which seems to have been applicable for intertemporal reasons to the present case. The result stays the same. It may be important in other cases, however, because Art. 17 of the 1988 convention differs in some details from Art. 23 of the present Lugano régime.
This provision states (art. 64):
Such a State refers to a State which does not belong to the EU, right? So, the fact that the clause provided for the jurisdiction of French courts should have excluded the application of Article 17 of the 1988 Lugano Convention?
Dear Gilles, no. The jusrisdiction clause is governed by Article 17 of the 1988 convention.
I know Jan, but Article 54 contained the same rule:
now I get your point. It depends on how you read the two limbs of Art. 54(2). Is the first limb a general rule (application of the Lugano convention in all cases where the defendant is domiciled in a Lugano-only-State), which is merely supplemented by the second limb, that extends the reach of the Lugano convention in cases of agreements conferring jurisdiction on courts in Lugano-only States, regardless of the defendant’s domicile? Or is the second limb a lex specialis for jurisdiction agreements? It seems to me that you prefer the second interpretation. I am rather inclined to favour the first reading, which is also advocated by Tanja Domej (University of Zurich) in the Dasser/Oberhammer Commentary on the Convention (Art. 64 marginal number 5: “Hat der Beklagte seinen Wohnsitz in einem Nur-LugÜ-Staat, so [ist] Art. […] 23 LugÜ (und nicht Art. […] 23 EuGVVO) auch dann anzuwenden, wenn […] ein Gerichtsstand in einem EU-Staat prorogiert wurde.”
I guess you are right, I am more convinced by the second reading. The leading French authority, H. Gaudemet-Tallon, seems to be as well.
The first reading seems to me to be correct, being consistent with the core principle of protecting the defendant’s right to be sued in the courts of his domicile, subject only to prescribed exceptions. Swiss domiciliaries should not be deprived of that right except in accordance with Lugano. As it seems to me, this becomes all the more important once the recast Regulation kicks in.
My impressionistic take on this matter is that the ambiguity of art. 54 of Lugano 1988 (art. 64 of Lugano 2007) should be interpreted in the light of the system of the Lugano Convention (and of the akin Brussels regime).
While it is true that both instruments favor the domicile of the defendant as the main criterion for their application and value such domicile as ‘general forum’, there are two instances in which the defendant’s domicile loses (part of) its significance. This is the case when an esclusive competence (art. 16 or 22) or a choice of court agreement (art. 17 or 23) exists.
In the latter case the decreased importance of the criterion of the defendant’s domicile is signaled by the circumstance that the application of art. 17 (or art. 23) needs only that one of the parties, not necessarily the defendant, is domiciled within the territorial scope of the Convention (the 1988 text reads “If the parties, one or more of whom is domiciled in a Contracting State”).
This concept is even better specified by art. 4 of both Lugano 2007 and Brussels I Regulation. Finally, it is dealt with in a (temptatively) definitive way in the Recast (Reg. 1215/2012, art. 25) that renders the domicile of both parties irrelevant (“regardless of their domicile”).
What really matters in the economy of the provision is the choice of a judge belonging to a Contracting (or to a Member State).
Once we have shown that art. 17 (and art. 23) has partially different characters and scope of application from the rest of the Convention, it follows that the dilemma posed by art. 54(2) or 64(2) should be solved by treating the second prong as a lex specialis for choice of court agreements. Hence, the French judge should have applied the Brussels Regulation in lieu of the Lugano Convention.
The consequence is that a judge of a Member State will always apply Brussels I when the chosen judge belongs to a Member State and at least one of the parties is domiciled in a Member State (after the recast, it will simply always apply ‘Brussels I recast’). It will apply the Lugano Convention if the chosen judge belongs to a Contracting State that is not part of the EU.
There will be something more to say on this, but I think I have already taken up too much space!
I am quite convinced by your analysis, Giacomo. But I am concerned with one consequence: different regimes would apply to the same clause within Europe. It is true that the essential reason is that we do have different regimes. Yet, is there not other way to reach uniformity than forcing Switzerland to join the EU?
De lege feranda it indeed seems preferable to apply the Brussles regime rather than the Lugano regime when the parties have agreed on an EU-member-state’s court to have jurisdiction. This seems to be better in line with the scope of both regimes. De lege lata, however, I have doubts whether this result can be reached. In my opinion the wording of Art. 54b/64 Lugano is not ambiguous. It clearly provides that Lugano applies if either one oft wo requirements is fulfilled – i.e. if either the defendant has ist seat in a non-EU contracting state or (!) the courts of such a state have jurisdiction under Arts. 16, 17 Lugano. Therfore, there seems to be no room for a teleological interpretation on the basis of both regimes‘ scope.
It may be interesting to see what German courts have done in such cases. A case which is very similar to the fact pattern underlying the reported decision by the Cour de cassation is Bundesgerichtshof (Federal Court of Justice; BGH), February 22, 2001, Neue Juristische Wochenschrift 2001, p. 1731 = IPRax 2002, p. 124: The defendant was a Swiss domiciliary, the plaintiff was residing in Germany, both had agreed on a clause conferring jurisdiction on German (!) courts. The BGH explicitly ruled that Art. 17 of the Lugano Convention of 1988 and not Art. 17 of the Brussels Convention was to be applied, “because the Swiss defendant is domiciled in a State which is not a member of the European Community (Art. 54b II lit. a Lugano Convention)”. And for the reasons given by Andrew Dickinson, I do not think that we should reverse this position. Pacta sunt servanda.
Dear Gilles, I agree that the consequence is not the most desirable. But this is what ordinarily happens when the same choice of court agreement is evaluated by judges belonging to different legal systems, say a French, a Japanese and a U.S. judge. A way to bring uniformity inside Europe could be to keep Lugano at pace with Brussels..even if this might not be the most efficient method.
Dear Ivo, since reasonable people can (and do) differ on the interpretation of art. 54/64, including here in this very forum, I would submit that there is an ambiguity, a point needing a clarifying interpretation. It rests to be seen what is the most convincing one.
Dear Jan, it is one of the possible interpretation. However, why ‘pacta sunt servanda’?
Although in the present case the “old” Lugano Convention applied, here some thoughts on the “new” Convention.
It is a widely acknowledged principle (also in EU law) that exceptions
from general rules must be interpreted in a narrow way. This raises
the question of whether para 1 or 2 of Article 64 constitutes such an exception to the general rule. Referring to the general rule that an international
convention normally prevails over internal law (as an international convention of the EU, the revised Lugano Convention is the higher source of law and has priority over the parallel rules of the Brussels I Regulation), Article 64( 1) of the revised
Lugano Convention is a clear exception from this rule; therefore it must be
interpreted in a narrow way. Article 64(2) of the revised Lugano
Convention is an exception to the exception of Article 64( 1) and must be
interpreted in a broad way. This leads to the conclusion that Article 64(2)
has to be understood as a non-exhaustive enumeration narrowing down the
field of appitcation of Article 64( 1). The revised Lugano Convention applies
to all cases of special and/or an exclusive jurisdiction.