On 15 June 2017 the European Court of Justice held that disputes related to a credit agreement must be brought before the court of the state in which the credit institution is located. A credit institution can therefore bring a claim for repayment of a debt before the court of the state in which the credit institution is located. The same applies for recourse claims brought by jointly and severally liable debtors. The judgment is directly applicable in all member states of the European Union except Denmark.

The judgment is particularly relevant in cases where parties were originally located in the same jurisdiction, but later on moved to a different jurisdiction. If, for example, a bank registered in the Netherlands provides credit to debtors located in the Netherlands and the debtors subsequently move to Mexico and Germany, then the Dutch court would still be competent to hear disputes between the bank and the debtors. The Dutch court would also be competent to hear a claim for recourse of the Mexican debtor against the German debtor (and vice-versa) as such a claim is related to the credit agreement.

In making its judgment the court determined that a credit agreement constitutes a ‘contract for the provision of services’. In the absence of a choice for a specific jurisdiction,[1] the jurisdiction to which such a contract is subject must be ascertained by determining the ‘place where the contract is to be performed’.[2] The place where a credit agreement is to be performed is the place where the credit institution has its registered office, as this would be most in accordance with the objectives of predictability, unification and the proper administration of justice. The court further held that a claim for recourse between debtors that are jointly and severally liable for the credit constitutes a ‘matter relating to a contract’[3] i.e. relating to the underlying credit agreement. Thus, the court competent to hear such a claim is the same court that is competent to hear a dispute relating to the credit agreement itself.

The court did not make a ruling as to which court would be competent in the situation that where there are several different creditors located in different member states.

Read the judgment here.