Relationship to questions of applicable law
If a claim falls within Article 5, and special jurisdiction is given to, say, the English court, it means only that the court has special jurisdiction over the defendant in respect of the claim set out in the writ. Once jurisdiction has been decided, and attention turns to the task of determining the merits, the court will have to identify the law whichwill be applicable to the substance of the claim. There is no inevitable connection between the basis on which the court found that it had special jurisdiction, and the identification of the applicable law for resolution of the claim over which that special jurisdiction has been determined to exist.
Until recently, the first step in dealing with the substantive claim would be to characterise the substantive issue or issues, so as to identify the law to be applied to it or them. In doing so, the court would not have been constrained by the rules of the Lugano Convention (or, indeed, Brussels Convention or Regulation) which had determined its jurisdiction. The court was free to adjudicate the merits of the dispute by applying its rules of contract, or rules of substantive law other than the law of contract if it found, according to its private international law of characterisation, that the issue for decision was not in substance a contractual one. It was as if the jurisdictional enquiry was completed and the page had been turned.[1]
This made sense at a time when a court with special jurisdiction would have to apply common law principles of the conflict of laws to find the applicable law. But in civil and commercial maters, the rules of applicable law for contractual obligations arising from contracts made after 17 December 2009, and for non-contractual obligations arising from events which give rise to damage and which occurred after 11 January 2009, were common and uniform across the Member States. The Rome I and Rome II Regulations applied uniform rules for applicable law across the Member States, with exclusions which are only minor; and they are retained rules of law in United Kingdom after Completion Day. It will mean the definition of ‘matters relating to a contract’ in Article 5( 1) will be close to that of ‘contractual obligations’ in the Rome I Regulation; and the definition of ‘matters relating to tort, delict and quasi-delict’ in Article 5(3) will be close to that of ‘non-contractual obligation’ in the Rome II Regulation.
We will examine this more closely in the context of each Article, below. At this point it is sufficient to say that although a court with special jurisdiction under Articles 5(1) or 5(3) may not be strictly bound to apply the applicable law rules of the particular Rome Regulation which corresponds to the special jurisdiction, connection between special jurisdiction and applicable law is liable to be tighter than it was.
Special jurisdiction in matters relating to a contract: Article 5(1)
Article 5(1) of the Lugano Convention provides:
A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued:
(1) (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;
- (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:
- - in the case of the sale of goods, the place in a State bound by this Convention where, under the contract, the goods were delivered or should have been delivered,
- - in the case of the provision of services, the place in a State bound by this Convention where, under the contract, the services were provided or should have been provided;
- (c) if point (b) doesnot apply then point (a) applies:
The provision which now appears as Article 5(1) has been upgraded on several occasions. Earlier (though not the earliest) versions of the text made some separate provision for contracts of employment, but otherwise contained only what now appears as sub-paragraph (a).[2] The detailed specification of the ‘place of performance of the obligation in question’ in sub-paragraph (b) was a later development. Sub-paragraph (c), which appears to do little more than state the obvious, is also new, but will call for little further examination.
The objections which could be made to the provision which now appears as Article 5(1 )(a) were many, though not all were convincing. One major objection to a rule giving special jurisdiction to the place of performance of the obligation in question derived from its interpretation as the obligation upon which the claimant based his claim: the court with special jurisdiction would therefore be that for the place where that obligation was, or was meant to be, performed. This was a satisfactory general rule in cases concerning delivery of defective or non-conforming goods: the aggrieved buyer would be able to sue a seller domiciled in another State in the courts for the place of delivery. But it was rather less satisfactory when it meant that an unpaid seller could sue where payment was due to have been made. That would give special jurisdiction to a court which may have had little substantial connection with the facts which had given rise to the dispute and the issues which were required to be adjudicated: expressed in the idiom of the common law, the place of payment of the price will rarely, and then only coincidentally, be the natural forum for such a claim.
It also had a tendency to confer jurisdiction on the seller’s own courts, either because a canny seller will have contracted for payment to be made at his place of residence or business, or because this was the default option provided by the lex contractus. In fact, the laws of four of the original six Contracting States generally provide for payment to be made at the debtor’s, and hence at the defendant’s, place of business. The accession of the United Kingdom and Ireland, under the various laws of which payment is generally due where the creditor, not the debtor, is based, showed this rule in a new light, because English sellers in particular were handed a surprise home advantage. After much loud grumbling, the legislative response was not the abolition of the Article for which some had called, but the adoption of Article 5(1 )(b).
The adoption of Article 5(1 )(b) certainly meant that Article 5(1) applied in a more predictable way; in particular, it meant that special jurisdiction could be ascertained before the contract had been broken. But that goal would not be achieved simply by
SPECIAL JURISDICTION: LUGANO STATE DOMICILIARY (1) defining the place of performance of the obligation in question, for the question of how that place, under the contract, was to be pinpointed was not addressed. If it still required a court to apply its substantive law of contract, including its rules of the conflict of laws, to discover the answer to that question, there would still be problems. Responding to this, the judicial response came when the European Court interpreted Article 5(1 )(b) in a way designed to make its operation plainer and less elaborate than that still applicable for Article 5(1 )(a). Inch by inch the application of Article 5(1) was moved towards simplicity and away from complexity.
There will be relatively few contracts for which Article 5(1 )(b) will not specify the place of the obligation in question. Apart from the sale of goods and the provision of services, and remembering that contracts of insurance, consumer contracts and individual employment are separately dealt with, there is not much left for Article 5(1 )(a) to cover. Of course, not all contracts are sale, and not everything supplied to a buyer will be goods or services. The precise demarcation will be examined at the point where it needs to be understood: that is, at the point at which it is necessary to identify the obligation in question.
- [1] See the Opinion of the Advocate General in C-26/91 Jakob Handle <£ Co GmbH v Soc Traitements Mécano-Chimiques des Surfaces [1992] ECR 1-3967, [23]—[24]. It may be that this will also have been the case in C-548/12 Brogsitter v Fabrication de Montres Normandes EU:C:2014:148, [2014] QB 753, where the claim was a matter of special jurisdiction relating to a contract, but the substance of the claim was pleaded as a tort. 2 Regulation (EC) 593/2008, [2008] OJ L177/6. 3 Regulation (EC) 864/2007, [2007] OJ LI99/40. 4 Article 1 of each Regulation. 5 Law Applicable to Contractual and Non-Contractual Obligations (Amendment, etc.) (EU Exit) Regulations 2019, SI 2019 No 834.
- [2] C-533/07 Falco Privatstiftung v Weller-Lindhorst [2009] ECR 1-3327. 2 For the proposition that this is in some sense the justification for the special jurisdictional rule in Art. 5(1), and for the decision that it is inadmissible to plead that Art. 5(1) should be inapplicable where it would confer jurisdiction on a court which in fact has little close connection, see C-288/92 Custom Made Commercial Ltd v Stawa Metallbau GmbH [ 1994] ECR 1-2913. 3 The Eider [1893] P 119; Bank of Scotland v Seitz 1990 SLT 584 (though cf Deutsche Rückversicherung AG v La Fondaria Assicurazioni SpA [2001] 2 Lloyd’s Rep 621, making the point that the rule is general rather than absolute).
