CJEC, June 21, 1978, No 150-77

The court

1 By judgment of 8 november 1977, which was received at the court registry on 15 december 1977, the french cour de cassation referred to the court of justice a question, pursuant to articles 1 to 3 of the protocol of 3 june 1971 (journal officiel l 204, p. 28) on the interpretation by the court of justice of the convention of 27 september 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (journal officiel l 299 of 31 december 1972, p. 32), hereinafter referred to as ' ' the convention ' ', for a preliminary ruling concerning the interpretation of articles 13, 14 and 28 of the said convention.

2 That question has been raised in the context of a dispute between two commercial undertakings, one having its registered office in germany, the other in france, concerning a contract, dated 12 february 1972, for the sale of a machine tool, the price of which, fixed at dm 74 205, was to be paid by the french company by way of two equal bills of exchange payable at 60 and 90 days, which were only partially discharged.

3 By judgment of 10 may 1974 the landgericht stuttgart ordered the french company, in its absence, to pay the sum of dm 7 139, plus interest.

4 That decision was declared to be enforceable in france, first by order of the tribunal de grande instance, le mans, of 30 june 1975, and then by conformatory judgment of the cour d ' appel, angers, of 20 may 1976.

5 An appeal was made against that judgment on a point of law.

6 The cour de cassation held that the judgment of the cour d ' appel, angers, ' ' would be valid under the third paragraph of article 28 of the brussels convention, by virtue of which the jurisdiction of the courts of the state in which the judgment was given may not be reviewed by the court before which enforcement is sought unless the sale can be held to be a sale of goods on instalment credit terms within the meaning of article 13 of the convention, in which case, under the second paragraph of article 14 and the first paragraph of article 28, proceedings may be brought only in the courts of the state in which the respondent company is domiciled, namely, the courts of france, and execution must be withheld from the decision of a german court ' '.

7 The cour de cassation deduced from this that the solution to the problem depended upon the status to be accorded to the contract and it therefore referred the case to the court of justice in order to ascertain by way of a preliminary ruling ' ' whether the sale of a machine which one company agrees to make to another company on the basis of a price to be paid by way of two equal bills of exchange payable at 60 and 90 days can be held to be a sale of goods on instalment credit terms within the meaning of article 13 of the brussels convention ' '.

8 In relation to the sale of goods on instalment credit terms, the second paragraph of article 14 of the convention provides that ' ' proceedings may be brought by a seller against a buyer... Only in the courts of the state in which the defendant is domiciled ' '.

9 In consequence of that imperative rule of juridiction the landgericht stuttgart, the court in which the original judgment was given, the tribunal de grande instance, le mans, and the cour d ' appel, angers, the courts in which enforcement was sought, refused, whether by implication or expressly, in defining their jurisdiction, to classify the contract of sale in question as a contract for the sale of goods on instalment credit terms.

10 The reservations of the cour de cassation regarding the precise status of the said contract persuaded it to refer the above-mentioned question to the court of justice.

11 By that question the court is asked whether a contract of sale such as that described is entitled to the privileged position with regard to jurisdiction created by the second paragraph of article 14 of the convention.

12 The concept of a contract of sale on instalment credit terms varies from one member state to another, in accordance with the objectives pursued by their respective laws.

13 Although all of those laws incorporate the idea of protection for the buyer ' ' on instalments ' ' because, in general, he is the weaker party in economic terms in comparison with the seller, certain of them are also based on considerations of economic, monetary and savings policy, which are intended to control the practice of sales on instalment credit terms, in particular in relation to consumer durable goods (cars, household electrical and audio-visual equipment, etc.), most often by the indirect expedient of provisions relating to minimum deposits or to the maximum duration of credit or by laying down minimum or maximum values for the total sale price.

14 Since these various objectives have led to the creation of different rules in the various member states it is necessary, for the purpose of eliminating obstacles to legal relations and to the settlement of disputes in the context of intra-community relations in matters of the sale of goods on instalment credit terms, to consider that concept as being independent and therefore common to all the member states.

15 In fact, it would not be possible to guarantee the harmonious operation of article 13 et seq. Of the convention if the expression in question were given different meanings in the various member states according to the court first seised of a dispute concerning a contract for the sale of goods on instalment credit terms or the court having jurisdiction to order enforcement.

16 It is therefore indispensable, for the coherence of the provisions of section 4 of the convention, to give that expression a uniform substantive content allied to the community order.

17 To this finding must be added the fact that the compulsory jurisdiction provided for in the second paragraph of article 14 of the convention must, because it derogates from the general principles of the system laid down by the convention in matters of contract, such as may be derived in particular from articles 2 and 5 (1), be strictly limited to the objectives proper to section 4 of the said convention.

18 Those objectives, as enshrined in articles 13 and 14 of the convention, were inspired solely by a desire to protect certain categories of buyers who, having been parties to contracts for the ' ' sale of goods on instalment credit terms ' ', may be sued by the seller only in the courts of the state on the territory of which the said buyers are domiciled, whereas sellers domiciled on the territory of a contracting state may be sued either in the courts of that state or in the courts of the contracting state in which the buyer is domiciled.

19 In order to reply to the question referred to the court an attempt must be made to elaborate an independent concept of the contract of sale on instalment credit terms in view of the general principles which are apparent in this field from the body of laws of the member states and bearing in mind the objective of the protection of a certain category of buyers.

20 It is clear from the rules common to the laws of the member states that the sale of goods on instalment credit terms is to be understood as a transaction in which the price is discharged by way of several payments or which is linked to a financing contract.

21 A restrictive interpretation of the second paragraph of article 14, in conformity with the objectives pursued by section 4, entails the restriction of the jurisdictional advantage described above to buyers who are in need of protection, their economic position being one of weakness in comparison with sellers by reason of the fact that they are private final consumers and are not engaged, when buying the product acquired on instalment credit terms, in trade or professional activities.

22 The answer to be given to the national court should therefore be that the concept of the sale of goods on instalment credit terms within the meaning of article 13 of the brussels convention of 27 september 1968 is not to be understood to extend to the sale of a machine which one company agrees to make to another company on the basis of a price to be paid by way of bills of exchange spread over a period.

Costs

23 The costs incurred by the commission of the european communities and by the governments of the federal republic of germany, the italian republic and the united kingdom of great britain and northern ireland, which have submitted observations to the court, are not recoverable.

24 Since these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

The court

In answer to the question referred to it by the french cour de cassation by judgment of 8 november 1977, hereby rules:

The concept of the sale of goods on instalment credit terms within the meaning of article 13 of the brussels convention of 27 september 1968 is not to be understood to extend to the sale of a machine which one company agrees to make to another company on the basis of a price to be paid by way of bills of exchange spread over a period.