The CJEU’s Decision in Wikingerhof: Towards a New Distinction Between Contract and Tort?

image_pdfimage_print

Earlier today, the Grand Chamber of the CJEU rendered its long-awaited decision in Case C-59/19 Wikingerhof. The case, which concerns the claim for an injunction brought by a German hotel against the online platform booking.com, goes back to the age-old question of where to draw the line between special jurisdiction for contract and tort under Article 7 Brussels Ia if the two parties are bound by a contract but the claim is not strictly-speaking based on it.

Arguably the Court’s most authorative statement on this question can be found in Case C-548/12 Brogsitter, where the Court held that a claim needed to be qualified as contractual if the parties are bound by a contract and ‘the conduct complained of may be considered a breach of [this] contract, which may be established by taking into account the purpose of the contract’ (para. 24). Some of the Court’s later decisions such as the one in Joined Cases C-274/16, C-447/16, and C- 448/16 flightright could however be seen as a (cautious) deviation from this test.

In Wikingerhof, the claimant sought an injunction against certain practices relating to the contract between the parties, which the claimant argued they had been forced to agree to due to the dominant market position of the defendant, which violated German competition law. According to AG Saugsmandsgaard Øe – whose Opinion has been discussed on this blog here and here – this claim had to be qualified as non-contractual as it was effectively based not on the contract, but on rules of competition law which did not require a taking into account of the contract in the sense seemingly required under Brogsitter.

In its relatively short judgment, the Court appears to agree with this assessment. Using the applicant’s choice of the relevant rule of special jurisdiction as the starting point (para. 29; which might be seen as a deviation from the purely objective characterisation attempted in Case 189/87 Kalfelis and Brogsitter), the Court held that

[33] … where the applicant relies, in its application, on rules of liability in tort, delict or quasi-delict, namely breach of an obligation imposed by law, and where it does not appear indispensable to examine the content of the contract concluded with the defendant in order to assess whether the conduct of which the latter is accused is lawful or unlawful, since that obligation applies to the defendant independently of that contract, the cause of the action is a matter relating to tort, delict or quasi-delict within the meaning of point 2 of Article 7 of Regulation No 1215/2012.

Despite repeated references to the decision in Brogsitter, the Court thus seems to move the focus away from whether ‘the conduct complained of may be considered a breach of contract’ towards what may be seen as a lower threshold of whether an examination of the content of the contract is ‘indispensable’. (Similar wording was admittedly also used in Brogsitter (paras. 25–26) but did not made it into the dispositif of the decision.) Applying this test to the case at hand, the Court explained that

[34] In the present case, Wikingerhof relies, in its application, on an infringement of German competition law, which lays down a general prohibition of abuse of a dominant position, independently of any contract or other voluntary commitment. Specifically, Wikingerhof takes the view that it had no choice but to conclude the contract at issue and to suffer the effect of subsequent amendments to Booking.com’s general terms and conditions by reason of the latter’s strong position on the relevant market, even though certain of Booking.com’s practices are unfair.

[35] Thus, the legal issue at the heart of the case in the main proceedings is whether Booking.com committed an abuse of a dominant position within the meaning of German competition law. As the Advocate General stated in points 122 and 123 of his Opinion, in order to determine whether the practices complained of against Booking.com are lawful or unlawful in the light of that law, it is not indispensable to interpret the contract between the parties to the main proceedings, such interpretation being necessary, at most, in order to establish that those practices actually occur.

[36] It must therefore be held that, subject to verification by the referring court, the action brought by Wikingerhof, in so far as it is based on the legal obligation to refrain from any abuse of a dominant position, is a matter relating to tort, delict or quasi-delict within the meaning of point 2 of Article 7 of Regulation No 1215/2012.

Considering the limited popularity of the Brogsitter judgment, today’s restatement of the test will presumably be welcomed by many scholars.

 

 

9 replies
  1. Adrian Briggs says:

    ‘Many scholars’ will have to speak for themselves. What are we now supposed to say when, for example, a repairer is said to have breached the common duty of care which he owed to a customer who contracted for the repair of a chattel ? Is the answer to depend on whether the matter falls within Section 2 or Section 4 of Chapter/Title II ?

  2. Geert van Calster says:

    I believe Tobias’ biggest take-away from the judgment is the Court’s emphasis on ‘indispensability’ of contractual interpretation for A(7)1 to be triggered (he will correct me if I am wrong).
    As I argue in my review of the judgment, I think that’s a change of emphasis viz Brogsitter and e.g. Apple v eBizcuss rather than a change in nature of the CJEU approach.
    However assuming one applies the authority that courts must not dwell too long on merits in assessing jurisdictional gateways, it does follow that A7(1) will only be engaged in those cases where the contract prima facie is overwhelmingly needed to solve the underlying dispute. This still leaves room for manoeuvre for the creative claimant (see also the AG’s points on forum shopping), but not as much as might have been expected prior to this judgment.

  3. Michiel Poesen says:

    Although I agree with the decision’s outcome, I wonder whether it will offer national courts much guidance in the future. I am still not sure what it is exactly we must characterise. Between paragraphs 32 and 36, the judgment identifies the ‘legal basis’, the ‘indispensability to interpret the contract’ (which feature prominently in this judgment), and the ‘legal issue at the heart of the case’ as the objects of characterisation. In Wikingerhof it seems that the matter is not a contractual one from whichever angle one looks at it, but this might be different in other cases.

  4. Gilles says:

    Dear Adrian,

    Are you suggesting that the case might have an impact on the scope of the category of consumer “contracts”? That would be a logical development. If the case narrowed the category of contract, it should equally narrow the categories of consumer / labour contracts for claims based on statutory rights of weaker parties…

  5. Krzysztof Pacula says:

    Dear Professor Briggs,

    I guess that one can only hope that a different solution could still be adopted in the context of consumer/labour contracts at least when it comes to ‘tort within contract situation’ (for instance, by understanding ‘contract’ differently or by prioritizing contractual classification in relation to the contracts with weaker parties; that being said, I agree with the consideration that impacting the scope of the category of consumer/labour contracts could be somewhat logical consequence of narrowing the general concept of ‘contract’).

    If that is not the case, I do wonder about the impact of this ‘narrowing’ with regards to the question of law applicable and Rome I/Rome II distinction in relation to consumer/labour contracts. I’ve touched upon that issue in the previous post pertaining to the Opinion presented in the case C-59/19.

  6. Adrian Briggs says:

    In answer to Gilles and Krzysztof, one way to limit the effect of this calamitous decision would be to keep it out of Sections 4 and 5. It cannot, surely in a civilised world, be open to an employer to say to the employee that he is sued as a thief and not as an employee, &c: that would allow an employer to strip a vulnerable person of the jurisdictional protection which is offered to them. But it is going to take years to undo the damage which this decision does to the relative certainty which the decisions – like them or not – like Brogsitter and Holterman offered: cui bono ?
    In further answer to Krzysztof, I am not sure I can see, just yet, what effect this will have on the Rome I/II issues.

  7. Tobias Lutzi says:

    According to the AG Opinion (para. 111), the question of whether a claim falls under Art. 7(1) or (2) is indeed to be distinguished from the one of whether or not it falls under Sections 3, 4 or 5.
    As the decision in Wikingerhof seems (to me) to narrow down the scope of Art. 7(1) – possibly even in the interest of protecting what was clearly the weaker party in this case – there certainly are strong arguments not to extend it to the analysis required for Sections 3–5.

  8. Adrian Briggs says:

    Not so sure about protecting the weaker party. It allows the contracting party who is (alleged to be) abusing a dominant position to choose whether to bring proceedings against the other for a declaration that he has done no wrong in either of two places, as Art 7.2 allows. Who is to protect us from those who would protect us ?

  9. Eduardo Álvarez-Armas says:

    I largely agree with Geert that this is mostly a slight change in emphasis, for, as Tobias mentioned himself, the question whether “the interpretation of the contract […] is indispensable to establish the lawful or […] unlawful nature of the conduct complained of” was already present in para. 25 of Brogsitter, and, significantly, is not as such featured in the dispostif of either of the two decisions. In polite dissent from Michiel´s opinion, I do not see “indispensability to interpret the contract” as being in equal standing with the other considerations he points to, but as a “means to an end”, or a method to ascertain (in Brogsitter language) whether “the conduct complained of may be considered a breach of the terms of the contract”, more than anything else.
    As a side note, I do agree with Tobias that there are good reasons not to extend Wikingerhof’s takeaway to sections 3-5. But even if it is not extended to those sections, there will still be delicate situations: for instance, those involving passengers. Passengers are generally “weak parties” for substantive-law purposes, but not for PIL purposes (at least not within Brussels I bis), and therefore are “trapped” within Art. 7 Brussels I bis without access to consumer-protective jurisdictional grounds (aside from travel package scenarios).

Comments are closed.