On March 30 2012 the Dutch Supreme Court ruled that a jurisdiction clause contained in the FENEX conditions - used by almost all forwarders in the Netherlands - was ineffective, even though there had been an ongoing business relationship between the forwarder and its client and that the invoices between the two parties had contained references to these general conditions.(1)
The FENEX conditions state that damages shall be settled at the forwarder's place of business.
The forwarder and its underwriters initiated proceedings before the court located in the forwarder's place of business (ie, the Roermond District Court). The German client disputed the court's jurisdiction. The court declined jurisdiction.
On appeal, the Den Bosch Court of Appeal overturned the first instance judgment and accepted jurisdiction. The court referred to a 2001 Supreme Court ruling,(2) which held that:
"The appeal court has apparently and understandably decided that the pre-printed Dutch text (referring to the applicability of the FENEX Conditions) at the bottom of the stationery of the forwarder (containing the quotation) should have warned the (German) principal who as internationally active trading company is aware that these kind of references may contain reference to general conditions, to ask for clarification in case he was unsure what the reference meant. The court of appeal could therefore decide that, by instructing the forwarder without reservation to act as forwarder, the principal gave the forwarder the justified belief that he agreed to the applicability of the conditions."
This case dealt with an arbitration clause which was mentioned in the FENEX conditions. The question considered by the court was whether general trading conditions applied by way of reference. This was indeed found to be the case.
In 1997 the Court of Justice(3) previously decided that a party is considered to have agreed to the applicability of a jurisdiction clause in cases where it did not protest against referrals thereto in standard terms, provided that the conditions of Article 23(1) of the EU Brussels I Regulation (44/2001), which deals with jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, were met.(4)
As a jurisdiction clause was involved in the case at hand, the court of appeal correctly applied Article 23(1) of the Brussels I Regulation.
The court of appeal considered whether there was an agreement "in a form which accords with practices which the parties have established between themselves"(5) and concluded that this was indeed the case.
However, the mere fact that invoices going back a number of years referring to the FENEX conditions were produced as evidence did not suffice to assume that the parties had agreed on the choice of forum "in a form which accords with practices which the parties have established between themselves".
The question to be answered was not whether the FENEX conditions were considered to have been accepted, but rather whether the choice of forum clause contained therein was considered to have been accepted. In order to determine this, it was necessary that either the FENEX conditions which contained the choice of forum had been 'advised' to the principal or the pre-printed reference explicitly mentioned the particular choice of forum.
This decision will impact on Dutch practice because it is generally believed that repeated references on invoices to terms and conditions containing a choice of forum are sufficient. While such references suffice for the applicability of the conditions and also for arbitration clauses contained therein, on the basis of this decision it appears that they will not suffice for jurisdiction clauses to apply. For that, either a clear reference to the forum or an 'advising' of the general trading conditions (eg, by way of a physical exchange or some other means of advice which is customary in the specific trade) is required.
The reason for this strict approach to jurisdiction clauses lies solely in the protective nature of Article 23 of the Brussels I Regulation. Article 23 requires that the jurisdictional clause be subject to mutual consent between the parties in order to have procedural effect. This requirement must also be met when parties are involved in an ongoing business relationship which is based on the FENEX conditions. A party (in this case, the forwarder) must sufficiently establish that the other party (in this case, the principal) had or could have had knowledge of the jurisdiction clause and agreed with it, albeit implicitly (eg, by accepting invoices containing a printed version of the clause). Repeated references to the FENEX conditions, in which a jurisdictional clause is included, are insufficient to establish this mutual consent - as the Supreme Court ruled in these two judgments.
As mentioned, this approach differs from that applied with respect to the validity and enforceability of arbitration clauses. Arbitration falls outside the scope of application of the Brussels I Regulation(6) and, thus, the strict requirements of Article 23 do not apply.
However, the question arises as to whether the distinction in treatment between these two types of clause is justified. Both clauses have the effect of a derogation of jurisdiction from the (non-chosen) courts. From a legal point of view, it would be desirable to decide the issue of enforceability of an arbitration clause and a jurisdictional clause contained in the FENEX conditions on the basis of the same standards and conditions.
For further information on this topic please contact Carel JH Baron Van Lynden at AKD by telephone (+31 88 253 5000), fax (+31 88 253 5400) or email ([email protected]).
(1) LJN BV2355, HR 11/02227 and LJN BV2356, HR 10/05443.
(3) Case C-106/95, Mainschiffahrts-Genossenschaft eG (MSG) v Les Gravières Rhénanes SARL.
(4) This dealt with Article 17(1)(c) of the EU Convention on the Law Applicable to Contractual Obligations.