European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

According to Recital 15 of Regulation No 1215/2012, “The rules of jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendant's domicile. Jurisdiction should always be available on this ground save in a few well-defined situations in which the subject-matter of the dispute or the autonomy of the parties warrants a different connecting factor”. The rules of jurisdiction laid down by Regulation No 1215/2012 are thus founded on the principle that jurisdiction is based on the defendant's domicile, complemented by the rules of special jurisdiction  or the exclusive jurisdictions which derogate from that principle. 

Article 4 of Regulation No 1215/2012  lays down the general principle of jurisdiction of the courts of the Member State in which the defendant is domiciled . By allowing both the plaintiff to identify easily the court he may seize and the defendant to reasonably plan the court in which he may be sought, Regulation No 1215/2012 pursues an objective of legal certainty which consists in strengthening the legal protection of persons established in the European Union. The objective of Article 4 is above all to protect the defendant as the party who, being the person sued, is generally in a weaker position : it is easier for a defendant to defend himself before the courts of the Member State in which he is domiciled . Thus the general jurisdiction precludes the “forum non conveniens” theory, which gives the national court that normally has jurisdiction to hear a case the possibility to decline to exercise jurisdiction and to suspend its decision, where it considers that another court located in another State, which also has jurisdiction, would objectively be a more appropriate forum for the trial of the action for the interests of all the parties and the ends of justice . According to the Court of Justice, that exception which was not initially set forth by the authors of the Brussels Convention cannot be admitted without undermining the predictability of the rules of jurisdiction laid down by the regulation, and consequently, the principle of legal certainty on which it is based. Furthermore, the uniform application of the rules of jurisdiction could no longer be ensured insofar as the “forum non conveniens” exception is recognized only in a limited number of Member States. It should however be noted that Articles 33 and 34 of Regulation No 1215/2012 apply the “forum non conveniens” exception by allowing the courts of the Member States to stay the proceedings in favor of the court of a third State where certain conditions are met . The rule of Article 4 is also a counterpoise to the facilities that the regulation provides with regard to the recognition and enforcement of foreign judgments . 

The rule laid down by Article 4 is mandatory in nature and there can be no derogation except in cases expressly provided for by the regulation . The jurisdiction of the courts in which the defendant is domiciled thus includes derogations, either in the form of a special jurisdiction, which constitutes concurrent jurisdiction, or in the form of exclusive jurisdiction which substitutes for it. The jurisdiction rules referred to as “lex specialis”, regarding insurance, consumer contracts and contracts of employment, however, just like all the other jurisdiction rules - except for the exceptions in Articles 18(1) and 21(2) and the rules of exclusive jurisdiction in Articles 24 and 25 - are subject to the condition that one defendant at least is domiciled in the territory of a Member State in order to be applied . Thus in a case concerning the termination of an agreement for the sale of goods, Article 4 precludes the application of a national rule of jurisdiction conferring jurisdiction on the court seized, where the plaintiff/distributor is established on the national territory and when the distribution agreement covers all or part of that territory, irrespective of the fact that the defendant/grantor of the exclusive distribution has its registered office on the territory of another Member State . Regulation No 1215/2012, which has been applicable since January 2015, extends its application to defendants not domiciled in a Member State where Articles 18(1) and 21(2) apply, i.e. respectively where the defendant is a trader sued by a consumer or an employer sued by an employee .

Article 4 lays down a general rule by referring without distinction to the courts of a Member State, the domestic law of which then determines which court has special jurisdiction, by opposition to the rules of special jurisdiction which directly and precisely determine the court of the Member State which has jurisdiction to hear the case . Account is taken neither of the defendant's nationality, nor of the location of the plaintiff's domicile, which is relevant only in cases exhaustively listed in the regulation . However, where the defendant is a foreign national and has no known place of domicile in the State of the court seized, the courts of the Member State of which the defendant is a national may also consider themselves to have jurisdiction under the rules of jurisdiction laid down by regulation .

Case C-533/07 Falco Privatstiftung and Rabitsch [2009] ECR I-3327, LawLex201100000254JBJ. Article 6 of the regulation, insofar as it lays down that the jurisdiction of the courts to rule on a dispute in which the defendant is domiciled in a non-Member State is not determined by the regulation, but by the law in force in the Member State in the territory of which the seized court is located, subject to application of the provisions of Articles [24 and 25], is a confirmation of the fundamental principle set forth in Article [4]; See on this issue, Case C-412/98 Group Josi [2000] ECR I-5925, LawLex200700001646JBJ.

"1. Subject to this regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. 2. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that Member State".

Case C-9/12 Corman-Collins SA, Judgment of 19 December 2013, LawLex201300001876JBJ.

Case C-412/98 Group Josi Reinsurance Company (SA) [2000] ECR I-5925, LawLex200700001646JBJ.

Case C-327/10 Hypotecní banka [2011] ECR I-11543, LawLex201300001513JBJ.

Regarding legal entities, the domicile must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdictions (Regulation No 1215/2012, recital 15).

Case C-295/95 Farrell v Long [1997] ECR I-1683, LawLex200900002153JBJ; Case C-412/98 Group Josi [2000] ECR I-5925, LawLex200700001646JBJ.

Case C-26/91 Handte v TMCS [1992] ECR I-3967, LawLex200900002082JBJ.

Case C-281/02 Owusu [2005] ECR I-1383, LawLex200900001376JBJ.

Regulation No 1215/2012, Art. 33 (in the event of a lis pendens): "1. Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and proceedings are pending before a court of a third State at the time when a court in a Member State is seized of an action involving the same cause of action and between the same parties as the proceedings in the court of the third State, the court of the Member State may stay the proceedings if: a)  it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and b) the court of the Member State is satisfied that a stay is necessary for the proper administration of justice(...)". Article 34 (related actions): "1. Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and an action is pending before a court of a third State at the time when a court in a Member State is seized of an action which is related to the action in the court of the third State, the court of the Member State may stay the proceedings if: a)  it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings b) it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and c) the court of the Member State is satisfied that a stay is necessary for the proper administration of justice. (...)".

Case 220/84 AS-Autoteile Service v Malhé [1985) ECR 2267, LawLex200900001678JBJ.

Case C-318/93 Brenner and Noller v Dean Witter Reynolds [1994] ECR I-4275, LawLex200900002122JBJ: in an action relating to a contract concluded by a consumer which, by essence, falls within the scope of application of the consumer 'lex specialis' in Section 4, Chapter II, of the regulation, the Court of Justice reminded that, insofar as the defendant is domiciled in a non-Member State and does not have a secondary establishment in a Member State, the jurisdiction does not fall within the regulation and can be determined only in view of the domestic law of the Member State of the court seized.

324. Courts of the Member State in which the defendant is domiciled