JURISDICTION IN MATTERS RELATING TO CONSUMER CONTRACTS

General

Section 4 of Title 11 of the Lugano Convention is entitled ‘Jurisdiction over consumer contracts’. Articles 15 and 16 identify the particular contracts to which the Section applies, and the courts which have jurisdiction over proceedings in matters relating to them, as follows:

• 15. (I) In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Articles 4 and 5(5), if: (a) it is a contract for the sale of goods on instalment credit terms; (b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or (c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the State bound by this Convention of the consumer’s domicile or. by any means, directs such activities to that State or to several States including that State, and the contract falls within the scope of such activities. (2) Where a consumer enters into a contract with a party who is not domiciled in the State bound by this Convention but has a branch, agency or other establishment in one of the States bound by this Convention, that party shall, in disputes arising out oj' the operations of the branch, agency or establishment, be deemed to be domiciled in that State. (3) This Section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.
• 16. (I) A consumer may bring proceedings against the other party to a contract either in the courts of the State bound by this Convention in which that party is domiciled or in the courts for the place where the consumer is domiciled. (2) Proceedings may be brought against a consumer by the other party to the contract only in the courts of the State bound by this Convention in which the consumer is domiciled. (3) This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

Article 17, which is set out separately below, deals with agreements on jurisdiction and their application to contracts falling within Article 15. The provisions of the corresponding rules of Regulation 44/2001 were substantially the same, but in Regulation 1215/2012, the provision which corresponds to Article 16(1) of the Convention was made to be significantly different; the point is dealt with below. The European Court has explained that Section 4 applies when three conditions are met: first, one contractual party (the consumer) must be acting in a setting which may be regarded as foreign to his professional activity; second, a contract between such a consumer and a professional must actually have been concluded; and third, the

¹

Though some of the detail has been supplied by case law to supplement the definitions provided by the Section.

contract must fall within one of the three cases set out in Article 15(1). Each of these conditions must be satisfied, so that if one of them is lacking, Section 4 will not apply.^[1] This requirement is stringent, as Section 4 is an exceptional jurisdictional provision.

General scope and purpose of Section 4 of Title II

Contracts made by consumers with professionals form the second category of subject matter covered by its own largely self-contained code of jurisdictional rules. These rules are justified by the perception that there is liable to be such inequality of arms as between consumer and professional that the jurisdictional playing field should be tilted so that the professional has to play uphill: to put it only a little crudely, if the consumer is required to litigate away from his home court he will probably just give up. The similarity to the structure of rules for matters relating to insurance is noticeable: the jurisdictional rules exclude the application of much of the remainder of the Convention; there is considerable restriction on the right of parties to bind and to hold each other to an agreement on choice of court; and a court has a duty to deny recognition to a judgment from a court in another Lugano State in which the taking of jurisdiction conflicted with these jurisdictional rules.

The Convention does not tilt the playing field as much as it might have. The protective, or consumer-favouring, rules operate only when the professional is domiciled in a Lugano State. Where that condition is not met, a claim against the professional may be covered by Article 4, and the rules of national jurisdiction which it incorporates, but this would not give the English consumer an automatic right to sue the non-Lugano professional in the English court. However, such a rule was incorporated into Regulation 1215/2012; and its substance was copied and inserted into the Civil Jurisdiction and Judgments Act 1982, as Section 15B(2). That makes this a rule of national law in the United Kingdom, which will be incorporated into the Convention by virtue of Article 4 when the professional neither has nor is deemed to have a domicile in a Lugano State but the claimant consumer is domiciled in England.

Whereas Section 3 of Title II applies to all insurance matters, there is a more restrictive definition, or identification, of consumers or their contracts included in Section 4. This is partly statutory and partly judicial. The material to explain which cases fall within the framework of Section 4 of Title II may be organised by reference to three issues. The first is the general definition of ‘contract ... concluded by a ... consumer’. The second concerns the three categories of contract into which the Convention requires the ‘contract ... concluded by a ... consumer’ to fall. The third concerns the range of claims, not all of which may seek the judicial enforcement of contract admitted on all sides to be valid and binding, which fall within the material scope of Section 4 of Title II.

• [1] C-375/13 Kolassa v Barclays Bank pic EU:C:2015:37, [2016] 1 All ER (Comm) 733; C-215/18 Kraiova v Primera Air Scandinavia AIS EU:C:2020:235, [2020] ILPr 499. 2 If the Convention does not give jurisdiction, and the professional is out of the jurisdiction, permission to serve out would have to be obtained at the outset of proceedings: see Chapter 24. 3 Regulation 1215/2012, Art. 18(1). 4 Set out in detail in Chapter 20. 5 Reversing the effect of C-318/93 Brenner & Noller v Dean Witter Reynolds Inc [1994] ECR 1-4275, [16] in cases to which the Convention and Section 15B apply.