Thursday, 7 August 2014

Greek Supreme Court on the interpretation of Art. 23 & 24 Brussels I Regulation

The Supreme Court was recently given the chance to give its valuable judgment with respect to the interpretation of Art. 23 & 24 Brussels I Regulation on two highly debated issues: First, whether a general choice of court agreement covers both contractual and tortious matters; and second, when the appearance of a defendant before the court should be considered as entered for the sole purpose of contesting its jurisdiction [Areios Pagos, Decision Nr. 1697/2013, published in: Private Law Chronicles 2014, pp. 371 et seq.].

THE FACTS: The parties are a Greek and a German entrepreneur. In 1988 they entered into an agreement for the distribution of goods of the German entrepreneur in the Greek territory. At the same time they concluded a choice of court agreement, which had the following content: “It is herewith agreed, that the present contractual relationship is governed by German law. In the event of disputes from the contractual relationship, it is agreed that German law will apply. Memmingen, Germany, is herewith declared as the place of performance of the obligation, and the territorially competent forum”. Years later, the Greek partner initiated legal proceedings against his counterpart before the Athens courts. Both the claim and the appeal were dismissed on the basis of the choice of court agreement. The claimant brought the case before the Supreme Court, challenging the instance courts judgments on two points:

a.      The choice of court agreement did not specifically mention that tortious claims are also included. His claim was of a similar nature; hence, the Athens courts should have proceeded with the hearing on the merits.

b.      The German defendant entered an appearance, challenging the court’s jurisdiction; however, at the same time he challenged the claimant’s standing to sue, and he even made statements on the merits of the case. Hence, Art. 24 a Brussels I Regulation should have been applied.

THE RULING: This is the first time the Supreme Court has been asked to rule on the aforementioned issues. The court examined the choice of forum clause, and reached the following conclusions:

a.      There is no reservation or exception to be found in the clause. Memmingen was explicitly and exclusively elected as the sole forum for future disputes. The wording of the clause suggests that the parties had the intention to include all thinkable disputes arising out of the distribution agreement, i.e. both contractual and tortious ones. This is actually the reason why they did not proceed to any explicit separation of the disputes in the choice of court agreement. Finally, by construing the clause in such a fashion, irreconcilable judgments are avoided.

b.      The Supreme Court made reference to four ECJ rulings (Elefantenschuh [C-150/80], Rohr [C-27/81], C.H.W [C-25/81), and Gerling [C-201/82], and based its interpretation on Art. 24 Brussels I Reg. on the European Court’s findings. It then referred to the specifics of the case at hand, and clarified the sequence of the defendant’s appearance. In particular, the latter mentioned in his pleadings the following: a) a list of the documents attached to the pleadings, b) a summary of the facts of the dispute, c) his objection to the court’s international jurisdiction, d) his objection to the claimant’s standing to sue, and e) his assertions and contentions on the substance. By following the above order, the defendant acted in accordance with the case law principles of the ECJ on Art. 24 b Brussels I Reg. 

COMMENTS: The ruling of the Supreme Court confirms what has been decided from the instance courts over the last decade. In particular:

a.      In regards to the issue under Art. 23 Brussels I Reg., initially (i.e. under Art. 17 Brussels Convention) there was a confusion as to the matter [see]. Since 2005 however, instance courts are following the approach opted by the Supreme Court.

b.      The same is the case for the issue under Art. 24 Brussels Reg. I (18 Brussels Convention).

Consequently, the result is a positive one, and it will surely boost confidence on prorogation agreements concluded by the parties in the course of EU transactions and business activities.

Still, there are two issues I would like to share with the followers of my blog:

a.      The appellant asked the Supreme Court to submit a preliminary question to the ECJ on the first point, i.e. whether a general choice of forum agreement is deemed to cover both contractual and tortious matters. The Supreme Court dismissed the request, stating that the issue has been already addressed by the ECJ, as already mentioned in the initial part of the Supreme Court’s ruling. This passage is somehow vague and quite probably inaccurate: First, there isn’t any reference to ECJ case law on the specific issue in the Supreme Court’s ruling; secondly, I haven’t been able to trace any ECJ judgment on the interpretation of the issue at stake. If any of you has come across such a judgment, please notify.

b.      It has become a tradition by the Greek Supreme Court, to omit any reference to instance court judgments and other legal authorities on the matter in question. I’m not suggesting that this is necessarily bad, or detrimental to the case under scrutiny; however, by reading the Supreme Court’s rulings, one could seriously believe that the matter is examined for the first time before a court of law in Greece, or that no books, essays, and articles have been tackling with the issue in the domestic legal press. I’m reluctant to believe that our Supreme Court judges haven’t studied the case law published on the matter. So I guess that the omission to refer to judgments rendered by inferior courts is dictated by other perceptions. As far as I’m aware of, the Supreme Courts in Germany and the UK have no problem to make references to instance court rulings and other legal authorities (from an annotated commentary to a thesis or a law review article). I’m really curious to know about the stance followed by other Supreme Courts; so, if you have some spare time, I urge you to post a short comment on the matter.