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European Business Law

Although Article 25 of the regulation requires compliance with certain forms in order to establish the parties' consent and guarantee legal certainty, this provision also emphasizes on the independent will of the parties and contractual freedom . The prorogation of jurisdiction in a contract enables the parties to confer jurisdiction on courts which would not have jurisdiction under the general or special provisions of Regulation No 1215/2012 or exclude the jurisdiction of courts which would normally have jurisdiction under those rules . It may thus be made in favor of the plaintiff's court although the two parties to the contract are domiciled in two distinct States.

The prorogation by contract does not only confer jurisdiction but also results in a foreclosure effect, which may have significant consequences for the position of the parties in the court proceedings, insofar as such a provision results in excluding both the general jurisdiction principle laid down in Article 2 of the regulation and the special jurisdiction rules set forth in Articles 7 and 8 . 

A court designated under Article 25 of Regulation No 1215/2012 has exclusive jurisdiction, unless otherwise agreed upon by the parties . Thus, a clause conferring jurisdiction concluded under Article 25 and referring to all disputes relating to the contract, gives jurisdiction to the court designated by the parties, even for actions which seek to challenge the validity of the contract providing for it. The jurisdiction of the designated court may also be extended to a claim for a set-off connected with the legal relationship in dispute if the court considers that course to be compatible with the letter and spirit of the clause conferring jurisdiction . The jurisdiction of the designated court is however set aside by the exclusive jurisdiction rules laid down in Article 24, which prevail in case of conflict of jurisdiction . Likewise, the fact that an agreement conferring jurisdiction exists does not preclude the application of Article 26, which entails prorogation of jurisdiction in favor of the court of the Member State before which the defendant is voluntarily appearing . On the other hand, in matters of lis pendens, Regulation No 1215/2012 now provides that where actions come within the exclusive jurisdiction of several courts (without specifying whether under the terms of Article 24 or 25), any court other than the court first seized shall decline jurisdiction in favor of that court (Article 31(1)). Further, the jurisdiction of the court elected by the parties, even if second seized, now has priority over another EU court (Art. 31(2)) . 

The designated court must verify whether the clause which gives it jurisdiction has actually been the subject of a consensus between the parties , without being forced to review the case as to the substance, since the legal certainty which the regulation seeks to secure could be jeopardized if one party to the contract could frustrate the application of Article 25 simply by claiming that the whole of the contract was void on grounds derived from the applicable substantive law . The final paragraph of Article 25 moreover expressly stipulates that “The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid”. Generally, only the national court before which such a jurisdiction clause is invoked has jurisdiction to interpret it and determine the disputes falling within its scope of application , but does not have to review the validity of the clause conferring jurisdiction or the intention of the party which inserted it . 

Lastly, in principle, a clause conferring jurisdiction is binding only on the parties to the contract. Thus, a jurisdiction clause in a contract between two companies cannot be relied upon by the representatives of one of them to dispute the jurisdiction of a court over an action for damages which aims to render them jointly and severally liable for supposedly tortious acts carried out in the performance of their duties insofar as such clauses in a contract may, in principle, produce effects only in the relations between the parties to the contract . Likewise, a victim entitled to bring a direct action against the insurer of the party which caused the harm which he has suffered is not bound by an agreement on jurisdiction concluded between the insurer and that party . However, in certain cases, the clause may have effects with respect to third parties . Thus, a jurisdiction clause in the contract concluded between the manufacturer of goods and the buyer thereof cannot be relied on against a sub-buyer who, in the course of a succession of contracts transferring ownership concluded between parties established in different Member States, purchased the goods and wishes to bring an action for damages against the manufacturer, unless it is established that that third party has actually consented to that clause . This is the case for the insured third party to whom the European Court has given the possibility to rely on the benefit of the clause conferring jurisdiction provided in favor of the insured as against the insurer , whereas the insurer cannot rely on such a clause as against the third party who is the beneficiary of insurance . Likewise, the Court of Justice accepts, under certain conditions , the possibility to rely on a clause conferring jurisdiction with respect to a third party where that clause is contained in a bill of lading having been assigned. Lastly, a clause conferring jurisdiction in the by-laws of a company is enforceable as against all the shareholders, even if the shareholder against whom the clause in dispute is invoked opposed to its adoption or became a shareholder after the clause was adopted, insofar as by becoming and by remaining a shareholder, he agrees to be subject to the provisions appearing in the by-laws of the company and to the decisions adopted by the organs of the company, even if he does not agree with some of those provisions or decisions .

In effect, Article 25 is based on a recognition of the independent will of the parties to a contract in deciding which courts are to have jurisdiction to settle disputes falling within the scope of the regulation: Case 23/78 Meeth v Glacetal [1978] ECR 2133, LawLex200900001695JBJ.

Case 22/85 Anterist v Credit lyonnais [1986] ECR 1951, LawLex200900001674JBJ.

Case C-214/89 Powell Duffryn v Petereit [1992] ECR I-1745, LawLex200900002079JBJ. Along the same lines, Case C-269/95 Benincasa v Dentalkit [1997] ECR I-3767, LawLex200900001340JBJ: the national court designated by a clause conferring jurisdiction which is validly concluded under Article 25, has exclusive jurisdiction to decide whether that clause, which relates on any dispute relating to the interpretation, performance or other aspects of the contract, also refers to a dispute relating to the validity of the contract. 

Case C-159/97 Castelletti [1999] ECR I-1597, LawLex200900001569JBJ.

Case C436/16 Georgios Leventis, Nikolaos Vafeias v Malcon Navigation Co. Ltd, Brave Bulk Transport Ltd, LawLex201700001143JBJ.

Case C-368/16 Assens Havn, Judgment of 13 July 2017, LawLex201800001764JBJ.

Case C-366/13 Profit Investment SIM SpA Judgment of 20 April 2016, LawLex201600000854JBJ: enforceability of a jurisdiction clause contained in a prospectus produced by the bond issuer concerning the issue of bonds against a third party who acquired those bonds from a financial intermediary if it is established that (i) that clause is valid in the relationship between the issuer and the financial intermediary, (ii) the third party, by acquiring those bonds on the secondary market, succeeded to the financial intermediary's rights and obligations attached to those bonds under the applicable national law, and (iii) the third party had the opportunity to acquaint himself with the prospectus containing that clause.

Case C-543/10 Refcomp, Judgment of 7 February 2013, LawLex201300000137JBJ.

Case 201/82 Gerling Konzern Speziale Kreditversicherung AG and others v Amministrazione del Tesoro dello Stato [1983] ECR 2503, LawLex200900001653JBJ. 

Case C-112/03 Société financière et industrielle du Peloux [2005] ECR I-3707, LawLex200900000382JBJ: the fact of accepting that a clause conferring jurisdiction which conforms with Article 15(3) is enforceable with respect to the third party beneficiary of the insurance domiciled in a Member State other than the State of the policy-holder and the insurer, is contrary to the objectives sought by the regulation insofar as that measure would amount to the acceptance of a conferral of jurisdiction for the benefit of the insurer and to disregard the aim of protecting the economically weakest party, by depriving the beneficiary of the opportunity to bring proceedings before the court of the place where the harmful event occurred and to bring proceedings before the court of his own domicile.

Case 71/83 Tilly Russ v Nova [1984] ECR 2417, LawLex200900002207JBJ: a clause conferring jurisdiction incorporated in a bill of lading is effective with respect to the third party holding the bill of lading where that clause is valid, under Article 25, as between the shipper and the carrier and, under the relevant national law, the holder of the bill of lading has succeeded to the shipper's rights and obligations. However, if, under the national law applicable to the bill of lading, the third party holding it did not succeed to the rights and obligations of one of the original parties, it is for the court to ascertain, having regard to the requirements laid down in Article 25, whether he actually accepted the jurisdiction clause relied on against him, see Case C-387/98 Coreck Maritime [2000] ECR I-9337, LawLex200600002027JBJ. 

Case C-214/89 Powell Duffryn v Petereit [1992] ECR I-1745, LawLex200900002079JBJ.

Case 25/76 Segoura v Bonakdarian [1976] ECR 1851, LawLex200900001735JBJ.

A jurisdiction clause, in derogation from the general rules on jurisdiction, confers exclusive jurisdiction to the court of the Member State designated by the parties : Case C-214/89 Powell Duffryn v Petereit [1992] ECR I-1745, LawLex200900002079JBJ.

Case 23/78 Meeth v Glacetal [1978] ECR 2133, LawLex200900001695JBJ. 

Article 27 of Regulation No 1215/2012:"Where a court of a Member State is seized of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 24, it shall declare of its own motion that it has no jurisdiction".

Case 48/84 Spitzley v Sommer Exploitation [1985] ECR 787, LawLex200900002211JBJ: questioned on any implied prorogation of jurisdiction of the court seized to hear a claim for a set-off which only the court designated by the parties should 'normally' hear, the Court answered that the existence of such a clause conferring jurisdiction does not preclude the court of the place where the defendant appear from having its jurisdiction extended to a claim based on a contract or a factual situation other than that on which the action is based and for which exclusive jurisdiction in favor of another court has been validly agreed upon under Article 25.

These provisions annul the Gasser case law (Case C-116/02 Erich Gasser GmbH). 

Case C-269/95 Benincasa v Dentalkit [1997] ECR I-3767, LawLex200900001340JBJ. Likewise, the designated court does not have to take the provisions of its national law on liability into account to assess the validity of the clause conferring jurisdiction: Case C-159/97 Castelletti [1999] ECR I-1597, LawLex200900001569JBJ.

357. Effects of the clause