When used properly contractual jurisdiction clauses are a key component of any cross-border transaction. But when the necessary formalities are ignored, the case law of the European Court of Justice shows that they may not be worth the paper they are written on. In this respect, the 8 March 2018 decision of the CJEU in Case C-67/17 Saey Home & Garden NV/SA v Lusavouga-Máquinas e Acessórios Industriais SA (EU: C: 2018:713) is a salutary reminder.
In Saey Home & Gardens, a Belgian manufacturer of kitchen equipment and utensils entered into an oral concession agreement with a Portuguese company to sell the former’s products in Spain. About 7 months later, the Belgians decided to terminate the relationship. The Portuguese claimant sued in Portugal, and the Belgian defendant challenged jurisdiction, inter alia, on the basis that a paragraph in their general terms and conditions which was referred to in invoices they had submitted to the Portuguese company contained a Belgian jurisdiction clause.
Was this jurisdiction clause valid and binding on the parties? Section 7 of the Brussels I (Recast) Regulation (1215/2012) is entitled "Prorogation of Jurisdiction". Article 25(1) makes express provision for the formal requirements needed to establish the existence of a jurisdiction agreement made by the parties in favour of the courts of an EU Member State. Article 25(1) provides that:
"The agreement conferring jurisdiction shall be either:
- in writing or evidenced in writing;
- in a form which accords with practices which the parties have established between themselves, or
- in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contract of the type involved in the particular trade or commerce concerned.
A question for the Court of Justice was whether a reference in commercial invoices issued by one party which mentions the existence of their general terms and conditions which themselves contain a jurisdiction clause is sufficient to satisfy the requirements of being "in writing or evidenced in writing" in Article 25(1) (a) of the Regulation?
The Court’s answer was a resounding "no". The Court had previously held in Hőszig that a jurisdiction clause stipulated in a party’s general terms and conditions could be lawful and binding on the parties where the text of the contract signed by both parties itself contains an express reference to the general conditions which includes a jurisdiction clause. But in Saey Home & Gardens the commercial concession agreement between the parties was concluded orally and not evidenced in writing, and the general terms containing the jurisdiction clause were only mentioned in the Belgian company’s invoices. As such, it could not satisfy the formal requirements of Article 25(1) (a). Whether either of the other limbs of Article 25 (1) (b) and (c) were satisfied was left to the national court to decide.
Saey Home & Gardens is a useful reminder to clients that, even though their standard terms and conditions may contain a jurisdiction clause, this, by itself, is not sufficient to satisfy the formal requirements of Article 25(1) (a). Something more is needed to show consensus between the parties on the choice of forum.