CJEC, January 17, 1980, No 56-79

1 By order of 15 March 1979, received at the Court registry on 11 April 1979, the bundesgerichtshof (federal Court of justice) referred to the Court, under article 3 of the protocol of 3 June 1971 on the interpretation of the convention of Brussels of 27 September 1968 (hereinafter referred to as ''the convention ''), a question concerning the interpretation of article 5 (1) and 17 of the said convention.

This question has been raised in the course of litigation between two merchants, one domiciled in Munich, in the federal republic of Germany, and the other in Mascari, in Italy, relating to the repayment by the defendant in the main action of a loan said to have been made to him by the plaintiff in the main action. The latter, relying upon an oral agreement under which Munich is said to have been fixed as the place of repayment, instituted proceedings before the landgericht munchen (munich regional Court) which held that it had no jurisdiction on the grounds that, on the one hand, a mere oral agreement on the place of performance was not sufficient to establish international jurisdiction and, on the other hand, that that agreement could only have the effect of conferring jurisdiction if the form prescribed by article 17 of the convention had been observed. That decision was upheld by the oberlandesgericht munchen (munich higher regional Court) and the plaintiff in the main action appealed on a point of law to the bundesgerichtshof which posed the followning question:

''Does an informal agreement which is effective under national - in this case German - law between full-scale merchants (vollkaufleute) concerning the place of performance of the obligation which is at issue in the proceedings suffice to found jurisdiction in that place under article 5 (1) of the convention, or is the capacity of such an agreement to found jurisdiction dependent upon observance of the form laid down in article 17 of the convention?

''

2 It follows from the wording of this question that the national Court is asking whether an agreement such as that described, in order to found jurisdiction under article 5 (1) of the convention, is dependent upon observance of the form prescribed by article 17 of the convention, according to which provision the Court of the contracting state specified by the parties - of whom at least one must have his domicile in the territory of a contracting state - as having jurisdiction to settle any disputes which have arisen or may arise in connexion with a particular legal relationship shall have exclusive jurisdiction, provided that it has been specified by an agreement in writing or an oral agreement evidenced in writing.

3 It is appropriate to point out that article 5 (1), which occurs in section 2 of title ii of the convention intitled ''special jurisdiction '', creates a ground of jurisdiction which is an exception to the general rule of jurisdiction provided for in article 2 of the convention ; the provisions of article 5, which provide that in matters relating to a contract a defendant domiciled in a contracting state may be sued in the Courts for the place of performance of the obligation in question, introduce a criterion for jurisdiction, the selection of which is at the option of the plaintiff and which is justified by the existence of a direct link between the dispute and the Court called upon to take cognizance of it.

4 By contrast, article 17, which occurs in section 6 of the convention intitled ''prorogation of jurisdiction ''and which provides for the exclusive jurisdiction of the Court designated by the parties in accordance with the prescribed form, puts aside both the rule of general jurisdiction - provided for in article 2 - and the rules of special jurisdiction - provided for in article 5 - and dispenses with any objective connexion between the legal relationship in dispute and the Court designated. It thus appears that the jurisdiction of the Court for the place of performance (provided for in article 5 (1)) and that of the selected Court (provided for in article 17) are two distinct concepts and only agreements selecting a Court are subject to the requirements of form prescribed by article 17 of the convention.

5 Consequently, if the parties to the contract are permitted by the law applicable to the contract, subject to any conditions imposed by that law, to specify the place of performance of an obligation without satisfying any special condition of form, an agreement on the place of performance of the obligation is sufficient to found jurisdiction in that place within the meaning of article 5 (1) of the convention.

6 The answer to the question put by the bundesgerichtshof must therefore be that if the place of performance of a contractual obligation has been specified by the parties in a clause which is valid according to the national law applicable to the contract, the Court for that place has jurisdiction to take cognizance of disputes relating to that obligation under article 5 (1) of the convention of Brussels of 27 September 1968, irrespective of whether the formal conditions provided for under article 17 have been observed.

Costs

7 The costs incurred by the government of the United Kingdom and the commission of the European Communities which have submitted observations to the Court are not recoverable.

8 As 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 bundesgerichtshof by order of 15 March 1979, hereby rules: