Background
Facts
Decision
Comment
Article 5.1 of the Brussels Convention(1) introduced an alternative basis of jurisdiction in contractual matters for the court of the place where the contractual obligation on which the the claim is based was, or should have been, performed. The new Article 5.1(a) of European Council Regulation 44/2001(2) contains the same rule of jurisdiction.
The application of this rule has caused disputes in the recent past. More specifically, the issue of determining the place of performance of the obligation that founds the claim was recently put before the Antwerp Court of Appeal.(3)
A Belgian company (NV Icos Benelux) formed a joint venture with an Italian company (SRL Benoto Italiana) to produce posts for a railway bridge. On January 26 1995 the joint venture ordered NV Essers to transfer the site material to its warehouse in Doornik. The invoices, which were not contested, were only sent to the registered office of the Italian company in Brussels. The Italian company neither responded to the invoices nor contested them. Further, the joint venture never approved the invoices.
The invoices remained unpaid and consequently Essers issued a writ before the Commercial Court in Hasselt.
The Commercial Court received the claim and ordered the defendants to pay €23,387.66 plus interest. The court based its jurisdiction on Article 5.1 of the Brussels Convention and the applicable Belgian law. Further, the court held that Essers could rely on having received the assignment of the joint venture, and that this was not contested since the invoices were only sent to the second defendant (Benoto).
One member of the joint venture, Icos, contested the first instance decision and appealed. According to Icos, there had been contracts between the joint venture and Essers to transport material from the site. However, this did not cover the costs charged for the storage of the material from January 1995 to November 1995. Further, Icos argued that the first instance judge exclusively based its jurisdiction on the terms of the invoices, which were only sent to the Italian company. Hence, this could not constitute a valid basis for determining the territorial jurisdiction of the court.
The Antwerp Court of Appeal stated that the place of performance of the obligation on which a claim is based must be determined according to the law designated by the conflict-of-laws rules of the forum state. If this forum is identified on the basis of a valid clause with regard to the law that governs the contract, the court of the place designated has jurisdiction, irrespective of compliance with Article 17 of the Brussels Convention on jurisdiction clauses.
The enforceability of an invoice against a party who did not receive it must be assessed on the basis of the applicable law as determined by the conflict-of-laws rules of the forum state. This is an issue of material law which is covered by Belgian law. In the absence of a choice of law by the parties, the court applied Article 4(2) of the Rome Convention,(4) leading to the designation of Belgian law.
As the invoice referred to a bank account held by a branch office in Brussels, the court concluded that the Brussels courts had jurisdiction under Article 624 of the Belgian Judicial Code, which contains a rule similar to that of Article 5.1 of the Brussels Convention.
Article 5 of the Brussels Convention implies that a defendant may be sued before the court of the place where the obligation that founds the claim must be performed. The place of performance of an obligation to pay must be determined according to the law that governs the disputed obligation according to the conflict-of-laws rules of the forum state.
If the parties choose the place where the contractual obligation must be performed in a clause that is valid under the law that governs the contract, then according to Article 5.1 of the Brussels Convention the court of that place has jurisdiction to handle any disputes that arise from that contractual obligation.
For further information on this topic please contact Luc Demeyere at Allen & Overy by telephone (+32 3 287 7222) or by fax (+32 3 287 7244) or by email ([email protected]).
Endnotes
(1) Brussels Convention of September 27 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.
(2) Council Regulation 44/2001 of December 22 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters.
(3) Court of Appeal June 25 2001, TBH 2003, 150.
(4) EU Convention on the Law Applicable to Contractual Obligations (Rome 1980).