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

In case of dispute arising out of the operations of a branch, an agency or other establishment, Article 7(5) of Regulation No 1215/2012 makes it possible to sue the defendant in the courts of the place in which the branch, agency or other establishment is situated. 

The concept of agency or branch was first used by the Court of Justice in the event of entities being subject to the direction and control of a parent company. Thus, the grantee of an exclusive sales concession cannot be regarded as being at the head of a branch, an agency or an establishment of the grantor where it is not subject either to the control or to the direction of that grantor . The Court of Justice has then ruled that it was necessary to adopt an independent definition, common to all Member States and which shows, without difficulty, the link . 

The concept of “branch, agency or other establishment” implies an effective place of business which has the appearance of permanency, such as the extension of a parent body but which has a management and is materially equipped to negotiate business with third parties, without those third parties having to deal with that parent body . This is not the case for a commercial agent who is an independent intermediary and cannot be regarded as the extension of a parent body insofar as he is free to organize his work, to determine his hours of work, to represent several rival firms and is restricted to transmitting orders to the head office without effectively participating in the completion and execution of those orders . When negotiating contracts, a branch or an agency must be an entity capable of being the principal, or even exclusive, interlocutor of third parties , which should be able to rely on the appearance thus created, even if, from a legal standpoint, the two companies in question are independent from one another . The place of establishment of the branch and the place where the commitments at issue taken by the branch in the parent body's name should be performed do not however have to be the same .

The concept of “operations” of a branch, an agency or other establishment includes “actions relating to rights and contractual or non-contractual obligations concerning the management properly so-called of the agency, branch of other establishment itself such as those concerning the situation of the building where such entity is established or the local engagement of staff to work there” and “those relating to undertakings which have been entered into […] in the name of the parent body and which must be performed in the [Member] State where the place of business is established and also actions concerning non-contractual obligations arising from the activities in which the branch, agency or other establishment […] has engaged at the place in which it is established on behalf of the parent body” . Disputes specific to the internal organization of the other establishment and disputes relating to undertakings entered into by the other establishment in the name of its parent body and with respect to third parties therefore fall within Article 7(5) , as does an action seeking compensation for damage allegedly caused by abuse of a dominant position consisting of the application of predatory pricing, where a branch of the undertaking which holds the dominant position actually and significantly participated in that abusive practice . However, this does not apply to a dispute concerning a claim for compensation against an airline established in the territory of another Member State, where that company has a branch within the territorial jurisdiction of the court seized, which was not involved in the legal relationship between the airline and the passenger concerned .

Case 14/76 De Bloos v Bouyer [1976] ECR 1497, LawLex200900001547JBJ.

Case 33/78 Somafer SA v Saar-Ferngas AG [1978] ECR 2183, LawLex201100000625JBJ.

Case C-464/18 ZX v Ryanair DAC, Judgment of 11 April 2019, LawLex201900000715JBJ.

Case 139/80 Blankaert & Willems v Trost [1981] ECR 819, LawLex200900001546JBJ.

Case C-439/93 Hauptzollamt Heilbronn v Temic Telefunken [1995] ECR I-1687, LawLex200900000828JBJ.

Case 218/86 SAR Schotte v Parfums Rothschild [1987] ECR 4905, LawLex200900001671JBJ. 

Case C-439/93 Hauptzollamt Heilbronn v Temic Telefunken [1995] ECR I-1687, LawLex200900000828JBJ: the concept of claim arising out of the operations of a branch, agency or other establishment within the meaning of Article [7(5) of Regulation No 1215/2012] does not presuppose that the undertakings in question entered into by the branch in the name of its parent body are to be performed in the Member State in which the branch is established. 

Case C-27/17 AB "flyLAL-Lithuanian Airlines", Judgment of 25 July 2018, LawLex201800001095JBJ.

335. Concept of "branch, agency or other establishment"