JUDGMENT OF THE COURT (Sixth Chamber)

9 October 1997(1)

(Brussels Convention — Article 21 — Lis pendens — San Sebastian AccessionConvention — Article 29 — Transitional provisions)

In Case C-163/95,

REFERENCE to the Court pursuant to the Protocol of 3 June 1971 on theinterpretation by the Court of Justice of the Convention of 27 September 1968 onJurisdiction and the Enforcement of Judgments in Civil and Commercial Mattersby the House of Lords for a preliminary ruling in the proceedings pending beforethat court between

Elsbeth Freifrau von Horn

and

Kevin Cinnamond

on the interpretation of Article 21 of the said Convention (OJ 1978 L 304, p. 36),as amended by the Convention of 9 October 1978 on the Accession of the Kingdomof Denmark, Ireland and the United Kingdom of Great Britain and NorthernIreland (OJ 1978 L 304, p. 1) and the Convention of 25 October 1982 on theAccession of the Hellenic Republic (OJ 1982 L 388, p. 1) and the Convention of26 May 1989 on the Accession of the Kingdom of Spain and the PortugueseRepublic (OJ 1989 L 285, p. 1), and of Article 29 of the Convention of 26 May1989,

THE COURT (Sixth Chamber),

composed of: H. Ragnemalm, President of the Chamber, G.F. Mancini(Rapporteur), P.J.G. Kapteyn, J.L. Murray and G. Hirsch, Judges,

Advocate General: F.G. Jacobs,

Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

• Freifrau von Horn, by Messrs Forsyte, Saunders and Kerman, Solicitors,
  
  
• Mr Cinnamond, by Nicholas Forwood QC and Peter Brunner, Barrister,instructed by David Henshall, Solicitor,
  
  
• the United Kingdom Government, by Lindsey Nicoll, of the TreasurySolicitor's Department, acting as Agent, and David Lloyd Jones, Barrister,
  
  
• the Commission of the European Communities, by Nicholas Khan, of itsLegal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Mr Cinnamond, the United KingdomGovernment and the Commission at the hearing on 24 April 1996,

after hearing the Opinion of the Advocate General at the sitting on 14 May 1996,

gives the following

Judgment

1. By order of 25 May 1995, received at the Court on 29 May 1995, the House ofLords referred to the Court for a preliminary ruling under the Protocol of 3 June1971 on the interpretation by the Court of Justice of the Convention of 27September 1968 on Jurisdiction and the Enforcement of Judgments in Civil andCommercial Matters (OJ 1978 L 304, p. 36, hereinafter 'the Brussels Convention‘)two questions on the interpretation of Article 21 of that Convention, as amendedby the Convention of 9 October 1978 on the Accession of the Kingdom ofDenmark, Ireland and the United Kingdom of Great Britain and Northern Ireland(OJ 1978 L 304, p. 1) and the Convention of 25 October 1982 on the Accession ofthe Hellenic Republic (OJ 1982 L 388, p. 1) and the Convention of 26 May 1989on the Accession of the Kingdom of Spain and the Portuguese Republic (OJ 1989L 285, p. 1, hereinafter 'the San Sebastian Convention‘), and of Article 29 of theSan Sebastian Convention.
   
   
2. Those questions were raised in proceedings between Freifrau von Horn, domiciledin Portugal, and Mr Cinnamond, domiciled in the United Kingdom, concerning thepayment of a sum of money which she claims from him as constituting payment forthe sale to a Gibraltar company of shares in a property company.
   
   
3. On 27 August 1991 Mr Cinnamond brought proceedings against Freifrau von Hornin the Tribunal de Círculo (Circuit Court), Portimão, Portugal, for a declarationthat he did not owe the sum of £600 000 or the equivalent in escudos. In thoseproceedings Freifrau von Horn counterclaimed for a declaration that MrCinnamond owed her £600 000 and an order for payment.
   
   
4. On 9 November 1992 Freifrau von Horn issued a writ in the High Court of Justice,served on Mr Cinnamond on 18 November 1992, for payment of £600 000 as thebalance due for the shares or, in the alternative, for damages. On 27 November1992 Mr Cinnamond issued a summons for a declaration that that court lackedjurisdiction. On 5 March 1993 the proceedings were stayed. On 21 April 1993 ajudge of the High Court allowed Freifrau von Horn's appeal against the stay. MrCinnamond appealed against the judge's decision to the Court of Appeal, whichdismissed his appeal by judgment of 25 February 1994. On 19 July 1994 the Houseof Lords granted Mr Cinnamond leave to appeal.
   
   
5. Since it considered that the dispute raised questions of the interpretation of theBrussels and San Sebastian Conventions, the House of Lords stayed proceedingsand referred the following questions to the Court:
   
   'In a case where:
   
   (a)    there are pending proceedings in two different Contracting States involvingthe same cause of action and between the same parties;
   
   (b)    the first such proceedings in time were initiated in Contracting State Abefore the Brussels Convention and/or any applicable accession conventioncame into force in that State;
   
   (c)    the second such proceedings are initiated in Contracting State B inaccordance with Article 2 of the Brussels Convention after the BrusselsConvention and/or any applicable accession convention has come into forcein both State A and State B;
   
   and having regard to Article 29(1) of the San Sebastian Convention and thecorresponding articles in any other applicable accession convention and Article 21of the Brussels Convention (as amended):
   
   (1)    Does the Brussels Convention (as amended) and/or any applicable accessionconvention lay down any, and if so what, rules as to whether theproceedings in State B may or must be stayed, or jurisdiction declined, onthe ground of pending proceedings in State A
   
   and in particular
   
   (2)    Is the Court second seised required or permitted, for the purpose ofdeciding whether or not to decline jurisdiction in respect of, or to stay, theproceedings before it, to conduct any and, if so, what examination of thebasis upon which the court first seised assumed jurisdiction?‘
   
   
6. In answering those questions, which should be taken together, it must be noted thatunder Article 21 of the Brussels Convention, as amended by Article 8 of the SanSebastian Convention,
   
   'Where proceedings involving the same cause of action and between the sameparties are brought in the courts of different Contracting States, any court otherthan the court first seised shall of its own motion stay its proceedings until suchtime as the jurisdiction of the court first seised is established.
   
   Where the jurisdiction of the court first seised is established, any court other thanthe court first seised shall decline jurisdiction in favour of that court.‘
   
   
7. Article 29 of the San Sebastian Convention reads as follows:
   
   '1.    The 1968 Convention and the 1971 Protocol, as amended by the 1978Convention, the 1982 Convention and this Convention, shall apply only to legalproceedings instituted and to authentic instruments formally drawn up or registeredafter the entry into force of this Convention in the State of origin and, whererecognition or enforcement of a judgment or authentic instrument is sought, in theState addressed.
   
   2.    However, judgments given after the date of entry into force of thisConvention between the State of origin and the State addressed in proceedingsinstituted before that date shall be recognized and enforced in accordance with theprovisions of Title III of the 1968 Convention, as amended by the 1978 Convention,the 1982 Convention and this Convention, if jurisdiction was founded upon ruleswhich accorded with the provisions of Title II of the 1968 Convention, as amended,or with the provisions of a convention which was in force between the State oforigin and the State addressed when the proceedings were instituted.‘
   
   
8. In accordance with Article 32(2) thereof, the San Sebastian Convention enteredinto force between Portugal and the United Kingdom on the first day of the thirdmonth following the deposit of the last instrument of ratification, namely 1 July1992.
   
   
9. The rule which governs the temporal application of Article 21 of the BrusselsConvention is therefore that laid down in Article 29(1) of the San SebastianConvention. However, that provision does not allow it to be determined withcertainty whether the lis pendens provisions of Article 21 of the Brussels Conventionapply where the first proceedings were brought in a Contracting State before thedate of entry into force of the San Sebastian Convention and the secondproceedings were brought in another Contracting State after that date, or whetherboth sets of proceedings must have been brought after the entry into force of theSan Sebastian Convention.
   
   
10. First, while Article 21 is included in Title II of the Brussels Convention among theprovisions which determine jurisdiction of the court seised, it requires that court tostay the proceedings before it and, as the case may be, decline jurisdiction becauseof the existence of proceedings before a court of another Contracting State. Incontrast to other procedural rules, it thus necessarily implies the taking into accountof other proceedings, which may have been brought before or after the entry intoforce of the Convention.
    
    
11. While Article 29(1) of the San Sebastian Convention states that the BrusselsConvention is to apply to legal proceedings instituted after its entry into force, itdoes not specify whether, in the case, referred to in Article 21 of the BrusselsConvention, where several actions are pending before the courts of differentContracting States, it is necessary that all the proceedings should have beeninstituted after the date of entry into force or whether it is enough that theproceedings pending before the court last seised were so instituted.
    
    
12. Most of the language versions of Article 21 of the Brussels Convention admittedlyrefer to the institution of the proceedings and thus appear to suggest that Article29(1) of the San Sebastian Convention is to be interpreted as providing that Article21 is to apply only if all the proceedings were commenced after the entry into forceof the Convention. However, the German ('werden ... anhängig gemacht‘) andDutch ('aanhangig zijn‘) versions refer to the situation where the proceedings arepending, so that they permit the interpretation that by reason of Article 29(1) therule in Article 21 applies where that situation is shown to exist before the courtsecond seised after the entry into force of the San Sebastian Convention.
    
    
13. Second, the two interpretations mentioned in paragraph 9 above are both capableof leading to consequences which are unsatisfactory and contrary to the aims of theBrussels Convention as set out in its preamble, which are, in particular, to facilitatereciprocal recognition and enforcement of judgments of courts and tribunals andto strengthen the legal protection of persons established in the Community. Withrespect more particularly to Article 21, the Court has repeatedly observed that thatprovision, together with Article 22 on related actions, is contained in Section 8 ofTitle II of the Brussels Convention, a section which is intended, in the interests ofthe proper administration of justice within the Community, to prevent parallelproceedings before the courts of different Contracting States and to avoid conflictsbetween decisions which might arise therefrom. Those rules are therefore designedto preclude, in so far as possible and from the outset, a situation such as thatreferred to in Article 27(3), namely the non-recognition of a judgment on accountof its irreconcilability with a judgment given between the same parties in the Stateaddressed (see Case 144/86 Gubisch Maschinenfabrik v Palumbo [1987] ECR 4861,paragraph 8, and Case C-351/89 Overseas Union Insurance and Others v NewHampshire Insurance [1991] ECR I-3317, paragraph 16).
    
    
14. The view that Article 21 applies where the second proceedings have been broughtafter the date of entry into force of the San Sebastian Convention, even if the firstaction was commenced before that date, could make it impossible for the partiesto the proceedings to obtain a judgment enforceable in the Contracting State inwhich the second proceedings take place. The court second seised would have tostay the proceedings and, as the case may be, decline jurisdiction by reason of theexistence of proceedings before a court of another Contracting State, even thoughrecognition and enforcement of the judgment given in those proceedings mightprove impossible in the State addressed. That would be the case in particular,under Article 29(2) of the San Sebastian Convention, if the jurisdiction of the courtof the Contracting State of origin was founded on rules which did not accord withTitle II of the Brussels Convention or with the provisions of a convention whichwas in force between the State of origin and the State addressed when theproceedings were instituted.
    
    
15. The contrary view, namely that Article 21 applies only if the two sets ofproceedings were instituted after the entry into force of the San SebastianConvention, on the other hand, would lead to their continuing, in the twoContracting States, and possibly resulting in two different judgments beingdelivered. If those decisions were irreconcilable, neither of them could berecognized in the other State, in accordance with Article 27(3) of the BrusselsConvention.
    
    
16. In those circumstances, it may be seen that it is essential to interpret Article 29(1)of the San Sebastian Convention in the light of the structure and aims of thatConvention and the Brussels Convention.
    
    
17. That provision should therefore be construed in such a way as to make it possiblefor the legal protection of persons established in the Community to be strengthenedand recognition and enforcement of judicial decisions to be facilitated, in particularby reducing the danger of irreconcilable judgments being delivered, that being aground for refusing recognition and enforcement under Article 27(3) and thesecond paragraph of Article 34 of the Brussels Convention (see Case C-220/88Dumez France and Tracoba v Hessische Landesbank and Others [1990] ECR I-49,paragraph 18, and Overseas Union Insurance, paragraph 15).
    
    
18. In accordance with Article 29(2) of the San Sebastian Convention, judgmentsdelivered in a Contracting State after the date of entry into force of thatConvention in proceedings brought before that date must be recognized andenforced in accordance with Title III of the Brussels Convention if jurisdiction wasfounded on rules which accorded with the provisions of Title II of that Conventionor with the provisions of a convention which was in force between the State oforigin and the State addressed when the proceedings were instituted.
    
    
19. In such a case, therefore, the court second seised should, in accordance with Article21, stay the proceedings of its own motion until the jurisdiction of the court firstseised is established and, where the jurisdiction of the court first seised isestablished, decline jurisdiction in favour of that court. The production of parallel,potentially conflicting judgments which might prevent recognition and enforcementwill thereby be avoided.
    
    
20. If, on the other hand, the jurisdiction of the court first seised is founded on ruleswhich do not accord with the provisions of Title II of that Convention or with theprovisions of a convention which was in force between the State of origin and theState addressed when the proceedings were instituted, its judgment could not berecognized in the Contracting State of the court second seised.
    
    
21. In such a case, the court second seised should disapply Article 21 and continue withthe proceedings before it. In that way a judgment can be given in the ContractingState of the court second seised, in which the judgment of the court first seisedcannot be recognized or enforced. Moreover, the judgment of the court secondseised can be recognized and enforced in the Contracting State of the court firstseised, provided always that it is not incompatible with a judgment given betweenthe same parties in that State.
    
    
22. Further, if the court first seised has not yet ruled on whether it has jurisdiction, itis for the court second seised to apply Article 21 of the Brussels Conventionprovisionally and stay its proceedings. However, those proceedings may later beresumed if the court first seised declines jurisdiction or the rule on which it hasfounded its jurisdiction does not accord with the rules of Title II of the BrusselsConvention or with a convention which was in force between the State of originand the State addressed when the proceedings were instituted.
    
    
23. That interpretation does admittedly mean that a court of a Contracting State willreview the jurisdiction of a court of another Contracting State outside the casesexpressly listed in Article 28 and the second paragraph of Article 34 of the BrusselsConvention, even though, as the Court held in Overseas Union Insurance, paragraph24, apart from those limited exceptions, the Convention does not authorize such areview. However, an exception to that principle appears justified in the situationreferred to by the national court.
    
    
24. First, by virtue of the transitional provision contained in Article 29(2) of the SanSebastian Convention, application of the rules of that convention which concern therecognition and enforcement of judgments specifically depends on the basis of thejurisdiction of the court first seised.
    
    
25. Second, the court second seised must restrict itself to determining whether thejurisdiction of the court first seised accords with the rules of the BrusselsConvention, or a convention concluded between the two States concerned, whichare common to both courts and may be interpreted with equal authority by thecourts of both Contracting States (see Overseas Union Insurance, cited above,paragraph 23). In the particular case where the jurisdiction of the court first seisedderives, in accordance with Article 4 of the Brussels Convention, from the law ofthe State of that court, which would thus undeniably be better placed to rule on thequestion of its own jurisdiction, the court second seised should restrict itself toascertaining whether the conditions for the application of that provision aresatisfied, namely that the plaintiff is domiciled in a Contracting State and thedefendant is not domiciled in such a State. In no case, therefore, may the courtsecond seised assess the jurisdiction of the court first seised in the light of the lawof the State of that court.
    
    
26. Lastly, it must be emphasized that the above rules apply only on a transitional basisto resolve the difficulties deriving from the entry into force of the BrusselsConvention and only for so long as proceedings brought before that entry into forceare still pending in a Contracting State. Consequently, the principle referred to inparagraph 23 above suffers no lasting injury.
    
    
27. The answer to the national court's questions must therefore be that Article 29(1)of the San Sebastian Convention must be interpreted as meaning that whereproceedings involving the same cause of action and between the same parties arepending in two different Contracting States, the first proceedings having beenbrought before the date of entry into force of the Brussels Convention betweenthose States and the second proceedings after that date, the court second seisedmust apply Article 21 of the Brussels Convention if the court first seised hasassumed jurisdiction on the basis of a rule which accords with the provisions ofTitle II of that Convention or with the provisions of a convention which was inforce between the two States concerned when the proceedings were instituted, andmust do so provisionally if the court first seised has not yet ruled on whether it hasjurisdiction. On the other hand, the court second seised must not apply Article 21of the Brussels Convention if the court first seised has assumed jurisdiction on thebasis of a rule which does not accord with the provisions of Title II of thatConvention or with the provisions of a convention which was in force betweenthose two States when the proceedings were instituted.
    
    Costs
    
    
28. The costs incurred by the United Kingdom Government and by the Commissionof the European Communities, which have submitted observations to the Court, arenot recoverable. Since these proceedings are, for the parties to the mainproceedings, a step in the proceedings pending before the national court, thedecision on costs is a matter for that court.
    
    On those grounds,

    THE COURT (Sixth Chamber),

    in answer to the questions referred to it by the House of Lords by order of 25 May1995, hereby rules:
    
    Article 29(1) of the Convention of 26 May 1989 on the Accession of the Kingdomof Spain and the Portuguese Republic to the Convention on Jurisdiction and theEnforcement of Judgments in Civil and Commercial Matters must be interpretedas meaning that where proceedings involving the same cause of action and betweenthe same parties are pending in two different Contracting States, the firstproceedings having been brought before the date of entry into force of the BrusselsConvention between those States and the second proceedings after that date, thecourt second seised must apply Article 21 of the latter Convention if the court firstseised has assumed jurisdiction on the basis of a rule which accords with theprovisions of Title II of that Convention or with the provisions of a conventionwhich was in force between the two States concerned when the proceedings wereinstituted, and must do so provisionally if the court first seised has not yet ruledon whether it has jurisdiction. On the other hand, the court second seised must notapply Article 21 of the Convention on Jurisdiction and the Enforcement ofJudgments in Civil and Commercial Matters if the court first seised has assumedjurisdiction on the basis of a rule which does not accord with the provisions ofTitle II of that Convention or with the provisions of a convention which was inforce between those two States when the proceedings were instituted.
    
    
    

RagnemalmMancini Kapteyn Murray Hirsch

Delivered in open court in Luxembourg on 9 October 1997.

R. Grass

H. Ragnemalm

Registrar

President of the Sixth Chamber

1: Language of the case: English.