Agreements or clauses that confer jurisdiction to a state court are of great importance in international litigation. The reason for parties to agree on a jurisdiction clause is to ensure legal certainty by making it possible to foresee which court will have jurisdiction to hear a dispute. In a request for a preliminary ruling, the European Court of Justice (ECJ) delivered a wise judgment with respect to a jurisdiction clause inserted in the general terms and conditions of tender contract (case C-222/15 of 7 July 2016, Höszig Kft v Alstom Power Thermal Services).
The facts of the case are as follows: Technos, a French company, wanted to take part in a public procurement procedure for works to be carried out in some power generating plants located in France. It invited Höszig, a Hungarian company, to submit various tenders as subcontractor. Prior to the tender being awarded, Technos sent to Höszig, by e-mail, a list of the technical documents as well as its general terms and conditions. The parties concluded several contracts remotely, the first of which stated that the documents were applicable as follows: (1) the order, (2) technical specification and (3) general terms and conditions of Technos. It was also specified that “the supplier declares that he has read and accepts the conditions of this order, the general terms and conditions in force as annexed and any conditions of framework agreements or contracts”.
The general terms and conditions provided for French law as governing law (with the exclusion of the 1980 UN Convention on the International Sale of Goods), and the exclusive and final jurisdiction of the courts of Paris for any dispute in relation to the order.
A dispute arose between the parties concerning the performance of the contracts. Höszig brought a legal action before a Hungarian court, considering that this court had jurisdiction according to the place of performance of the services and that Hungarian law should apply. Hőszig also argued that the jurisdiction clause did not meet the requirements of Article 23(1) of the Brussels I Regulation No 44/2001, given that the terms “courts of Paris” did not designate a State nor a specific court, but rather a collection of courts within the administrative limits of that city.
In its decision, the ECJ recalls some already established principles and adds clarifications:
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The jurisdiction of a court of a Member State, agreed by the contracting parties, is in principle exclusive;
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The concept of an “agreement conferring jurisdiction” is an independent agreement from the other terms of the contract;
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A court before which the case is brought has the duty of examining, in limine litis, whether the jurisdiction clause was in fact the subject of consensus between the parties, i.e., whether there is a valid agreement. Such consensus can be established where there is a particular legal relationship between the parties and where formal requirements of Article 23(1) of the Brussels I Regulation have been complied with. The formal requirements are that the agreement is 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 contracts of the type involved in the particular trade or commerce concerned;
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A jurisdiction clause inserted in general terms and conditions of contract is lawful where the text of the contract signed by the parties contains an express reference to general terms and conditions. An express reference means that such reference can be controlled by a party applying normal diligence and where it is demonstrated that the general terms and conditions have actually been communicated to the other party;
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The terms “courts of Paris” are sufficiently precise as the courts referred to are those of the capital of a Member State and that French law was chosen by the parties as applicable law. Therefore, the parties conferred exclusive jurisdiction on the courts belonging to the judicial system of France, whose rules of procedure will allow to establish the competent court.
Thus, according to the ECJ, a jurisdiction clause which is set out in the client’s general terms and conditions, referred to in the instruments witnessing the contracts between those parties and forwarded upon their conclusion, and which designates as courts with jurisdiction those of a city of a Member State, meets the requirements of Article 23(1) of the Brussels I Regulation.
What about the substantive validity of the jurisdiction clause (such as the formation of consent)? Although Brussels I Regulation does not address this issue, the Opinion of Advocate General Szpunar in this case indicates that the question of validity is for the law of the Member State the courts of which have been seised of the matter. He adds that there are no doubts as to the substantive validity of the jurisdiction clause in this case.
The Brussels Ibis Regulation (Recast) No 1215/2012 now covers the issue of substantive law: one will refer to the law of the designated forum, i.e., the law of the Member States the courts of which have been chosen, including the conflict-of-laws rules of that Member State. In addition, it should be noted that Article 31 of this new Regulation gives priority to the court chosen in the clause and orders the court of another Member State, seised despite the jurisdiction clause, to stay the proceedings, and to decline jurisdiction in favor of the court designated in the clause that has established jurisdiction. However, if the court of a Member State has been seised by a party which contests the validity of a clause conferring jurisdiction to a court of another Member State, the first court seised shall decide on the validity issue in accordance with the law of the designated forum, provided that the designated court has not been seised.
Dodo Chochitaichvili
Lawyer at the Brussels Bar
