Court of Justice of the EU Holds that National Courts Have Jurisdiction to Block Sales on Foreign Websites
On 21 December 2016, the Court of Justice of the European Union (the CJEU) delivered an interesting judgment in Concurrence SARL v. Samsung Electronics France and Amazon Services Europe SARL on the interpretation of Article 5(3) of Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation).
Article 5(3) of the Brussels I Regulation provides that, in matters relating to tort, a person domiciled in an EU Member State may, in another EU Member State, be sued “in the courts for the place where the harmful event occurred or may occur“.
The CJEU delivered the judgment in response to a question referred for a preliminary ruling by the French Supreme Court in proceedings between, on the one hand, Concurrence SARL (Concurrence) and, on the other hand, Samsung Electronics France SAS (Samsung) and Amazon Services Europe SARL (Amazon).
Concurrence, one of Samsung’s dealers, had complained that other Samsung dealers were selling products on Amazon websites with French, German, Italian, Spanish and UK domain names. These sales allegedly took place in breach of a contractual clause prohibiting online sales. Relying on a provision of French law pursuant to which a party assisting directly or indirectly in breaching the ban on sales outside a selective or exclusive sales network may be held liable, Concurrence had requested a French court to order Amazon to withdraw the products concerned from its various websites. After that a Paris Commercial Court and an appeal court had both dismissed the action on the ground that they lacked jurisdiction over foreign websites not directed at the French public, the French Supreme Court finally referred the question for a preliminary ruling to the CJEU.
As a preliminary point, and referring to its earlier case law, the CJEU held that the expression “place where the harmful event occurred or may occur” in Article 5(3) of the Brussels I Regulation is intended to cover both the place where the damage occurred and the place of the event giving rise to it. Hence, the applicant may sue the defendant in the courts of either of those places.
In the case at hand, the place of the event giving rise to the damage (i.e., the sales on Amazon websites with non-French domain names) was situated outside France. Hence, the CJEU examined whether the French courts had jurisdiction on the basis of “the place where the damage occurred“.
In this regard, the CJEU reiterated its earlier case law that the place where the damage occurred may vary according to the nature of the right allegedly infringed. In addition, the likelihood of damage occurring in a particular EU Member State is subject to the condition that the right which was allegedly infringed is protected in that EU Member State.
The CJEU then turned to the facts of the case. It found that it was justified to confer jurisdiction on the French courts as French law provides for liability for the infringement of the prohibition on resale outside a selective distribution network. Moreover, the alleged damage also occurred on French territory. In this regard, the CJEU noted that the damage suffered by a dealer in case of infringement of the conditions of a selective distribution network is the (i) reduction in the volume of its sales resulting from sales made in breach of the conditions of the network; and (ii) ensuing loss of profits.
Finally, the CJEU found it irrelevant that the websites at issue did not operate in France but in other EU Member States. According to the CJEU, it is sufficient that the events which occurred in those EU Member States resulted in or may have resulted in the alleged damage in the jurisdiction under control of the French court, which is something for the French court to ascertain.
In view of the above, the CJEU concluded that Article 5(3) of the Brussels I Regulation must be interpreted as conferring jurisdiction on the courts of the territory of the EU Member State which protects the prohibition on resale outside a selective distribution network, provided that the plaintiff allegedly suffered a reduction in its sales in that territory. This conclusion is in line with the opinion which Advocate General Wathelet had already issued on 9 November 2016.
The CJEU has thus taken a further step towards a generalised cross-border jurisdiction of Member State Courts in the European Union.
Note: The Brussels I Regulation was repealed with effect from 10 January 2015 by 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). However, the CJEU judgment remains fully relevant as the wording of Article 7(2) of the Brussels Ibis Regulation is identical to that of Article 5(3) of the now repealed Brussels I Regulation.
This post was drafted by my colleagues Koen T’Syen and Hélène Cambresier. It was first published in the December 2016 edition of Van Bael & Bellis’ newsletter on Belgian Business Law.