OPINION OF ADVOCATE GENERAL
RICHARD DE LA TOUR
delivered on 12 October 2023 (1)
Case C‑566/22
Inkreal s. r. o.
v
Dúha reality s. r. o.
(Request for a preliminary ruling
from the Nejvyšší soud (Supreme Court, Czech Republic))
(Reference for a preliminary ruling – Judicial cooperation in civil matters – Jurisdiction and the recognition and enforcement of judgments in civil and commercial matters – Regulation (EU) No 1215/2012 – Scope – Article 25 – Jurisdiction clause – Parties to a contract domiciled in the same Member State and agreeing on the jurisdiction of another Member State to settle disputes arising out of that contract – International element)
I. Introduction
1. This reference for a preliminary ruling concerns, in essence, the interpretation of Article 25(1) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. (2)
2. The request has been made in proceedings between two companies domiciled in the same Member State concerning the designation of the court having territorial jurisdiction to hear an application for payment of claims arising from the non-performance of two loan agreements concluded in that Member State containing the designation of a court of another Member State in the event of a dispute.
3. The novel question referred to the Court is whether the existence of a jurisdiction clause constitutes, in itself, an international element sufficient to result in the application of Article 25(1) of Regulation No 1215/2012.
4. An analysis of the various arguments put forward in the legal literature and of those based on the case-law of various European courts lead me to propose to the Court an approach favouring a negative answer to that question and to clarify when the international nature of such a clause must be assessed.
II. Legal framework
A. European Union law
5. Recital 3 of Regulation No 1215/2012 states:
‘The [European] Union has set itself the objective of maintaining and developing an area of freedom, security and justice, inter alia, by facilitating access to justice, in particular through the principle of mutual recognition of judicial and extra-judicial decisions in civil matters. For the gradual establishment of such an area, the Union is to adopt measures relating to judicial cooperation in civil matters having cross-border implications, particularly when necessary for the proper functioning of the internal market.’ (3)
6. Article 25(1) of that regulation (4) provides:
‘If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. …’
B. Czech law
7. Article 11(3) of zákon č. 99/1963 Sb., občanský soudní řád (Law No 99/1963 establishing the Code of Civil Procedure; ‘the Code of Civil Procedure’) is worded as follows:
‘If the matter falls within the jurisdiction of the courts of the Czech Republic but the conditions for the determination of territorial jurisdiction are lacking or they cannot be established, the Nejvyšší soud [Supreme Court, Czech Republic] shall rule which court shall deliberate on the matter and decide on it.’
III. Facts of the dispute in the main proceedings and the question referred for a preliminary ruling
8. FD, resident in Slovakia, as the assignor, and Dúha reality s. r. o., a company domiciled (5) in Slovakia, as the assignee, concluded two loan agreements on 29 June 2016 and 11 March 2017 respectively.
9. By means of a voluntary assignment agreement dated 8 December 2021, FD assigned the claims arising from those loan agreements to Inkreal, a company domiciled in Slovakia.
10. In each of those agreements, the parties agreed that ‘any ambiguities or disputes arising from the agreement and in connection therewith shall be first resolved by negotiation aimed at reaching a solution acceptable for both parties. If the parties are unable to settle such a dispute, the dispute shall be settled by a court of the Czech Republic having substantive and territorial jurisdiction, in line with the [Code of Civil Procedure], as amended’.
11. Since Dúha reality did not repay the loans, on 30 December 2021 Inkreal brought an action before the Nejvyšší soud (Supreme Court) on the basis of that clause which, it maintains, is an agreement conferring jurisdiction on Czech courts to settle disputes arising from loan agreements. Inkreal seeks, first, to obtain payment, primarily, of its claims and, second, the designation of a Czech court having territorial jurisdiction to rule on the merits of the case pursuant to Paragraph 11(3) of the Code of Civil Procedure.
12. In support of the latter, Inkreal submits that it is acting in accordance with a valid jurisdiction clause in a private law relationship involving an international element, pursuant to Article 25(1) of Regulation No 1215/2012, in the knowledge that there is no special or exclusive jurisdiction of another court pursuant to that regulation.
13. In the light of the Court’s case-law, (6) the referring court is unsure whether, in a situation when the only aspect that could be deemed international is the fact that the contracting parties residing in the same Member State agree on the jurisdiction of courts of another Member State, Regulation No 1215/2012, and hence also Article 25(1) thereof, is applicable.
14. The main arguments in favour of the applicability of that regulation are, in particular, emphasis on the contractual autonomy of the parties, the uniform interpretation and harmonised application of Article 25 of the regulation, and the illogical and unreasonable outcomes if that article could not be applied.
15. The main reason opposing the applicability of that regulation, on the other hand, is the absence of an international element and, hence, the characterisation of the case as entirely national. That conclusion is based primarily on the opinion that the mere will of the parties to grant jurisdiction to a court of another Member State cannot make the situation concerned ‘international’.
16. In those circumstances and having regard to the differences in the legal literature and case-law resulting from consultation of certain supreme courts of other Member States, the Nejvyšší soud (Supreme Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘From the perspective of the existence of an international element, which is required for [that regulation] to apply, [can] the application of [Regulation No 1215/2012] be based solely on the fact that two parties with their seat in the same Member State agree on the jurisdiction of courts of another EU Member State?’
17. Written observations were submitted by Dúha reality, the Czech and Swiss Governments and the European Commission.
IV. Analysis
A. Preliminary observations
18. In the first place, it must be observed that the provisions of Article 25 of Regulation No 1215/2012 on prorogation of jurisdiction are, in part, equivalent to those contained in previous legal instruments. (7) Therefore, according to the Court’s settled case-law, the interpretation that it has provided in respect of one of them also applies to the others. (8)
19. In the second place, since the dispute in the main proceedings involves an assignment of claims, it appears to me relevant to point out, first, that the Court recalled that Article 25(1) of Regulation No 1215/2012 does not state whether a jurisdiction clause can be assigned, beyond the circle of the parties to a contract, to a third party, which is a party to a subsequent contract and successor, in whole or in part, to the rights and obligations of one of the parties to the initial contract. (9) Second, it held that only where the third party had succeeded to an original contracting party’s rights and obligations, in accordance with national substantive law, could that third party nevertheless be bound by a jurisdiction clause to which it had not agreed.(10) In the present case, it follows from the proceedings outlined by the referring court that Inkreal, a third party to the contract containing the jurisdiction clause, considers itself to be bound by that clause.
B. Substance
20. By its request for a preliminary ruling, the referring court seeks to ascertain, in essence, whether Article 25 of Regulation No 1215/2012 must be interpreted as meaning that, in a purely internal situation, it is applicable solely because the parties domiciled in the same Member State have designated a court or courts of another Member State as having jurisdiction to settle disputes which have arisen or may arise between them.
21. That court rightly set out the two opposing arguments put forward in the legal literature and adopted by the courts of the Member States in view of the absence of an international element condition in Article 25(1) of Regulation No 1215/2012 without any change in relation to the previous articles applicable in respect of jurisdiction clauses since the entry into force of the Brussels Convention, (11) which was succeeded by Regulation No 44/2001. (12)
22. No argument can be based on the wording of those provisions. It can be merely noted that the condition that at least one of the parties is domiciled in the territory of a Member State for them to be able to designate one or more of the courts of another Member State is not contained in Article 25(1) of Regulation No 1215/2012. Moreover, the scope of the jurisdiction clause is limited to disputes which arise from the legal relationship in connection with which the agreement was entered into. (13)
23. Therefore, in order to be able to designate a court of a Member State as the competent court, the choice of the parties is subject to no other requirement such as, in particular, the existence of a connection between the designated court and the dispute. (14) It is sufficient that the clause state the objective factors on the basis of which the parties have agreed to choose a court or the courts to which they wish to submit disputes which have arisen or which may arise between them. Those factors must be sufficiently precise to enable the court seised to ascertain whether it has jurisdiction. (15)
24. That flexibility is based, since the Brussels Convention, on the determination to give full effect to the independent will of the parties (16) in matters relating to prorogation of jurisdiction, without thereby constituting, in my view, an exception to the conditions for applying Regulation No 1215/2012, including the requirement of an international element. (17)
25. In that regard, it may be observed, first, that, unlike certain other regulations, (18) but like most of those relating to civil cooperation in family, maintenance or insolvency matters, Regulation No 1215/2012 contains no provision on the international nature of the situation at issue, which must exist in order for it to be applicable. (19)
26. Next, in that context, the Court has stated that ‘for the jurisdiction rules of the Brussels Convention to apply at all the existence of an international element is required’. (20) That principle has been reaffirmed in a number of other judgments in connection with Regulations No 44/2001 (21) and No 1215/2012. (22)
27. Finally, such an interpretation is required, having regard to the legal bases of that regulation, (23) even though the aim of its recasting of Regulation No 44/2001 is to facilitate the circulation and recognition of judgments within the European judicial area without this being limited by the international nature of the dispute (24) and, regarding jurisdiction agreements, their universal application, which is a new element. (25)
28. Article 81 TFEU, which constitutes the legal basis of Regulation No 1215/2012, provides, in the first sentence of paragraph 1 thereof, that ‘the Union shall develop judicial cooperation in civil matters having cross-border implications, based on the principle of mutual recognition of judgments and of decisions in extrajudicial cases’. (26)
29. Since that regulation seeks to unify the rules on conflict of jurisdiction and not to replace the internal rules of the Member States governing internal disputes, its applicability and hence that of Article 25 thereof assume that the situation at issue is international in nature within the limits of EU law. (27)
30. In those circumstances, what criteria are to be applied?
31. I am in favour of the argument developed by certain authors in German, (28) English (29) and French, (30) adopted by supreme courts of certain Member States, (31) which rules out the possibility that, at the mere will of the parties, the situation at issue in the dispute is international in nature, and for five main reasons.
32. In the first place, on the assumption that recourse to a provision of Regulation No 1215/2012 presupposes the existence of an international element, it would be illogical to accept that that condition is met a priori by the mere will of the parties in a purely internal situation. In other words, such an interpretation would mean renouncing any existence of an international element that would have to be established according to objective criteria. (32)
33. In the second place, in a cross-border situation, subject, by definition, to the special jurisdiction rules laid down in Regulation No 1215/2012, the prorogation of jurisdiction provided for in Article 25 thereof was conceived as a means for the parties to choose jointly to derogate from those binding rules. (33) In an internal situation, that prorogation of jurisdiction would then have as its object or effect to derogate from national rules on jurisdiction and choice of court. (34) Even if that regulation forms part of a context of strengthening mutual trust and of unifying the conflict-of-law rules, (35) it cannot have the effect of eliminating any distinction between the national and international rules of jurisdiction governed by EU law. (36)
34. Accordingly, four arguments to the contrary of a textual or teleological nature based on Article 25 of Regulation No 1215/2012 must, in my view, be dismissed. First, in view of the conditions for applying that regulation, (37) it cannot be inferred from the fact that a jurisdiction agreement can be concluded, without the domicile of one of the parties establishing a connection with a Member State, (38) that the only international element required by the EU legislature is the choice of a court of a Member State.
35. Second, the independence of the will of the parties, which traditionally justifies the prorogation of the jurisdiction rule where the parties choose the court, can no longer be relied on so extensively that it would amount to allowing the parties to call into question the scope of that regulation, which is limited to international and not purely internal situations.
36. Third, the clarification regarding the law applicable to the substantive validity of the agreement conferring jurisdiction introduced in Article 25 of Regulation No 1215/2012, although of major interest, cannot, however, justify its applicability (39) if an interpretation is not to be adopted which is based on the result of its application.
37. Fourth, although it is undeniable that the EU legislature’s objective when amending Article 23 of Regulation No 44/2001 by Regulation No 1215/2012 was to strengthen recourse to the choice of jurisdiction clauses (40) and their effectiveness in securing legal certainty for the parties, (41) it cannot, however, justify authorising the parties to derogate from national rules on jurisdiction without any limit or connecting factor. (42) It must be observed in that regard that, in the present case, although the situation at issue in the main proceedings may be compared with banking disputes, (43) the referring court has expressly noted the absence of any international element other than the choice of a court of another Member State. (44)
38. In the third place, as regards the case-law of the Court holding that the international element can result from the subject matter of the proceedings where the situation at issue is such as to raise questions relating to the determination of international jurisdiction, (45) I do not share the view of the Czech Government or that of the Commission on the consequences that they draw from it. That case-law is based on objective criteria (for example, the occurrence of the events at issue in a third State (46) or the foreign nationality of the defendant who has no known place of domicile) (47) to which may be added the place of performance of the obligation. (48)
39. Therefore, it cannot be inferred from this that the main proceedings are covered by that case-law solely on the ground that its purpose is to determine which court has jurisdiction where a court of a Member State is chosen other than the Member State in which the parties are domiciled. In my view, the application before the referring court requires the court to ascertain whether Article 25 of Regulation No 1215/2012 is applicable. In other words, it is for the referring court to assess whether the situation at issue has an international element and not to examine the legality of the clause at issue in the light, in particular, of the protective jurisdiction rules laid down in Regulation No 1215/2012, in order to rule on its international jurisdiction. (49)
40. In the fourth place, as regards comparison with other legal instruments, first, I share the view expressed by certain authors according to which, for the purposes of interpreting Article 25 of Regulation No 1215/2012, Article 3(3) of the Rome I Regulation, (50) which deals with the choice of the law applicable in an internal situation, does not have to be used as a benchmark. (51)
41. Thus, (i) in the latter regulation, the criterion stated in Article 1(1) thereof is that of a situation ‘involving a conflict of laws’ (52) which is not necessarily international, as is evident from the purpose of Article 3(3) of that regulation (53) and (ii) that provision does not alter the nature of the purely internal situations in which a foreign law was chosen, since they remain subject to mandatory national provisions. Article 25 of Regulation No 1215/2012 does not guarantee a particular forum. In summary, a distinction should be drawn, in internal situations, between the Rome I Regulation, which deals with conflicts of laws resulting from the will of the parties, and Regulation No 1215/2012 which, owing to the conditions for its applicability, does not deal with conflicts of jurisdiction arising from the choice of the parties.
42. Second, I support the idea that the Court’s interpretation should take into account the choices made in the Hague Convention concluded on 30 June 2005 on Choice of Court Agreements. (54) In view of the reciprocal effect of that convention on Regulation No 1215/2012 referred to in recitals 4 and 5 of Decision 2014/887, an approach should be adopted which is consistent with the rule stated in Article 1(2) of that convention according to which ‘a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State’ (55).
43. In the fifth place, I would add that, in those circumstances, since the international element may result from various factors, (56) they should be assessed by the court seised on a case-by-case basis in a flexible manner or according to a broad conception. (57)
44. All of those arguments lead me to propose that the Court’s answer to the referring court should be that the application of Article 25 of Regulation No 1215/2012 is subject to a condition that there is an international element which is not fulfilled solely by the choice of a court of a Member State.
45. Given the implications of such an interpretation in practice, that approach should, in my view, be supplemented in the statement of reasons for the Court’s decision by a clarification as to when the international nature of the situation must be assessed, (58) in order to fully meet the objective of providing the referring court with a helpful answer. (59)
46. The international nature of a situation may evolve over time. I have in mind here the case where the situation has an international element at the litigation stage. (60) I note that, on that point also, in the absence of clarification in Regulation No 1215/2012, (61) the analyses in the legal literature and the decisions of the courts of the Member States vary. (62)
47. I have noted that the vast majority of authors favour an assessment by the court being made when the jurisdiction agreement is concluded (63) rather than when the designated court is seised by the parties.(64) The arguments based on the contractual nature of the determination of jurisdiction (65) and on legal certainty (66) appear to me to be convincing, unlike the argument based on foreseeability. (67) I have also noted that the case-law of the Member States is divided on the matter. (68)
48. I exclude the criterion of assessing the international nature at the stage when the court is seised, which does not appear to me to meet the requirements of legal certainty and increases the risk of forum shopping even though, at the outset, the situation at issue was purely internal. (69)
49. However, in view of the procedural subject matter of the clause, namely, the choice of a court in the context of a European regulation and its objectives, I consider an alternative approach to be feasible. (70) Thus, it might be accepted that, in an internal situation with a prospect of becoming international, (71) the parties agree, when concluding their agreement, to designate a court of a Member State in sufficiently precise terms which express their intention (72) and provide for the exclusive jurisdiction of national courts where there is doubt as to the existence of a criterion requiring an international element. It is only on those conditions that I consider legal certainty to be preserved. (73) It would then be for the designated court to assess the realisation of the parties’ expectations when proceedings are brought before it.
V. Conclusion
50. In the light of all the foregoing considerations, I propose that the Court answer the question referred for a preliminary ruling by the Nejvyšší soud (Supreme Court, Czech Republic) as follows:
Article 25 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters
must be interpreted as meaning that in a purely internal situation, it is not applicable based solely on the fact that the parties domiciled in the same Member State have designated a court or courts of another Member State to settle any disputes between them which have arisen or which may arise.