CJEU Rules on Validity of Jurisdiction Clauses in General Terms & Conditions
On 8 March 2018, the Court of Justice of the European Union (the CJEU) handed down its judgment in Case C-64/17, Saey Home & Garden NV/SA v. Lusavouga-Máquinas e Acessórios Industriais SA, on the validity of jurisdiction clauses in general terms and conditions.
In that case, Lusavouga-Máquinas e Acessórios Industriais SA (Lusavouga), a Portuguese company, concluded an oral commercial concession agreement with Saey Home & Garden (Saey Home), a company with its registered office in Belgium, for the exclusive promotion and distribution of goods in Spain. Shortly after the conclusion of the agreement, Saey Home terminated the contractual relationship and Lusavouga initiated legal proceedings before the Portuguese courts seeking compensation for the premature and unexpected termination of the contract. Saey Home, however, argued that the Portuguese courts lacked jurisdiction. More particularly, it argued that its general terms and conditions referred to in its invoices contained a jurisdiction clause providing that commercial disputes initiated against it would be decided by the courts of Kortrijk (Belgium). Saey Home therefore argued that only the courts of Kortrijk had jurisdiction to hear this dispute since, pursuant to Article 25 of EU Regulation 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Ibis Regulation), when a jurisdiction clause is agreed by the parties, the jurisdiction of the court designated in that clause becomes exclusive.
The Portuguese District Court disagreed with Saey Home.
It ruled that, pursuant to Article 7(1) of the Brussels Ibis Regulation, disputes arising out of a contract fall under the jurisdiction of the courts of the “place of the performance of the obligation” in question. According to the Portuguese District Court, Portuguese courts could validly assert jurisdiction.
Saey Home filed an appeal against that decision and argued that the “place of the performance of the obligation” was actually Spain as the contract provided for the supply of services in that country.
The Portuguese Court of Appeal decided to stay the proceedings and referred various questions to the CJEU in order to determine whether the Portuguese, Belgian or Spanish courts had jurisdiction over the dispute at hand.
The CJEU first ruled on the validity of the jurisdiction clause contained in the terms and conditions. In reaching its decision, the CJEU recalled that a jurisdiction clause must clearly demonstrate in writing the consensus between the parties. More importantly, when such a jurisdiction clause is laid down in general terms and conditions, the contract signed by both parties must expressly refer to these general terms and conditions. In the present dispute, however, the CJEU noticed that there was no written agreement between the parties but that the jurisdiction clause at issue was only mentioned in the general terms and conditions which were referred to in the invoices of Saey Home. The CJEU therefore found that that clause did not meet the requirements of Article 25(1) of the Brussels Ibis Regulation.
Having declared the jurisdiction clause invalid, the CJEU then looked at the interpretation of Article 7 of the Brussels Ibis Regulation which provides that disputes arising out of a contract fall under the jurisdiction of the courts of the “place of the performance of the obligation” in question. The CJEU first recalled that the answer to the question of where a commercial concession agreement has to be performed depends on whether this is a contract for the sale of goods (in which case the “place of performance” of the obligation is the place where the goods were delivered) or whether it is a contract for the supply of services (in which case the “place of performance” of the obligation is the place where the services were provided).
The CJEU first recalled its former case-law according to which concession agreements should qualify as contracts for the supply of services.
Secondly, provided that the concession agreement at issue indeed qualified as a contract for the supply of services (which is a question that will need to be addressed by the Portuguese courts), the CJEU further recalled that, if a contract for the supply of services provides for several places of performance, then the “place of performance of the obligation” within the meaning of Article 7(1) of the Brussels Ibis Regulation must be understood as the place of the main supply of services, as is clear from the provisions of the contract. In the absence of such provisions, the “place of performance of the obligation” shall be the place where the agent is domiciled.