Porta-Leasing GmbH v Prestige International SA (784/79)

Contents

In Case 784/79REFERENCE to the Court under the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 17 September 1968 in Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, by the Oberlandesgericht [Higher Regional Court] Koblenz (Second Civil Senate), for a preliminary ruling in the action pending before that court betweenPorta-Leasing GmbH, Trier,andPrestige International S.A., Senningerberg, Luxembourg,THE COURT (Third Chamber)composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart, Judges,Advocate General: G. ReischlRegistrar: A. Van Houttegives the following

Judgment

Facts and Issues

The facts and the arguments of the parties in the course of the written procedure may be summarized as follows:

I —Facts and procedure

The plaintiff in the main action, whose registered office is at Trier, entered into a series of leasing contracts for motor vehicles with the defendant in the main action, whose registered office is at Senningerberg, Luxembourg.The contracts were drawn up in advance as standard printed contracts and contain a clause concerning jurisdiction which reads as follows:“The place of performance and of jurisdiction for all the obligations arising under this contract shall be the place where the lessor has its seat”.After terminating the contracts at issue the plaintiff instituted proceedings against the defendant in the Landgericht [Regional Court] Trier for payment of rental due and damages, but the court declared that it had no jurisdiction because the clause conferring jurisdiction, on which the proceedings had been brought before it, did not meet the conditions laid down in the second paragraph of Article I of the Protocol annexed to the Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (hereinafter referred to as “the Convention”), according to which: “An agreement conferring jurisdiction, within the meaning of Article 17 (of the Convention), shall be valid with respect to a person domiciled in Luxembourg only if that person has expressly and specifically so agreed”.In the opinion of that court the provision should be interpreted as meaning that the clause conferring jurisdiction is binding on a person domiciled in Luxembourg only if it is contained in a separate document apart from the other terms in the contract.When the case was brought before it on appeal, the Oberlandesgericht Koblenz referred the following question to the Court of Justice for a preliminary ruling:“Does an agreement conferring jurisdiction which is contained in a standard form contract concluded with and signed by a person resident in Luxembourg but to which his attention has not specifically been brought satisfy the requirements as to validity contained in the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters?”.The order making the reference to the Court was lodged at the Court Registry on 23 October 1979. Written observations were submitted, under Article 5 of the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 27 September 1968, by the Commission of the European Communities represented for this purpose by its Legal Adviser, Mr Bebr, acting as Agent, assisted by W.-D. Krause-Ablaß, Advocate of the Düsseldorf Bar.

II —Written observations submitted under the Protocol of 3 June 1971

Observations of the Commission

According to the Commission, the agreement conferring jurisdiction referred to by the national court is only effective :(a) If the general conditions laid down in Article 17 of the Convention are met, that is to say, that there is an agreement in writing or an oral agreement evidenced in writing. It is irrelevant, however, whether the contract is a standard one or not (judgment of 14 December 1976, Cases 24/76 and 25/76 Estasis Salotti and Galeries Segoura [1976] ECR 1831 and 1851);(b) If the clause concerning jurisdiction has been “expressly” agreed by the person domiciled in Luxembourg;(c) If the clause conferring jurisdiction has been specifically so agreed.If the condition regarding express agreement excludes any tacit or implied agreement, and also excludes the type of case in which the contract signed by both parties expressly refers to the general conditions of sale of one of them, there is no reason why the contract signed should not be a standard contract provided that it contains in express terms the clause conferring jurisdiction.The outcome of the dispute therefore depends on the interpretation of the words “specifically so agreed”. In this connexion the Commission submits, as it were, two preliminary observations. The first is that the words “expressly” and “specifically” are joined by the conjunction “and”, which means that specific agreement constitutes a third condition to be added to the two others referred to above. The second is that the expression “specifically so agreed” may be understood in two ways. It might be sufficient for the clause conferring jurisdiction to be identified in a particular manner, for example, by underlining it or by printing it in heavy type in the text of the contract. A more restrictive interpretation is however possible: it would require the agreement conferring jurisdiction to be accepted by the Luxembourg party in a separate written declaration containing no other contractual provision, that is to say, independent of the contract. That requirement would accord with the rules relating to the form of arbitration agreements between persons other than traders under paragraph 1027 of the German Code of Civil Procedure.It is the Commission's view that the second interpretation should be adopted and it submits the following arguments in this connexion:

(a)The wording of the provision in question

The expression “specifically so agreed”, in the various language versions, denotes a method of agreement which differs from that whereby the other contractual provisions are agreed to. A declaration which is distinct from the agreement to the clause conferring jurisdiction, separate from the agreement to the other provisions in the contract, best accords with that concept. It is not therefore sufficient for the clause conferring jurisdiction to be specially distinguished from the other provisions in the contract; there must be a separate document.

(b)The meaning and purpose of the provision in question

Drawing support from the Jenard Report (Official Journal 1979 C 59, p. 63), the Commission comments that in view of the large number of international contracts entered into by persons domiciled in Luxembourg, the provision in question is designed to prevent far more actions being brought against them in foreign courts than against parties domiciled in other Contracting States. That objective has already been partly achieved in so far as the validity of an agreement conferring jurisdiction is subject to its being expressly agreed to by the party domiciled in Luxembourg. Because there are many international standard contracts which contain an express clause conferring jurisdiction, there was a need to provide some protection, and therefore also a further restriction to operate in favour of the Luxembourgish party, and this implies that there must be a separate document.In conclusion, the Commission is of the opinion that the Court should reply to the question which it has been asked as follows:“An agreement conferring jurisdiction entered into with a person domiciled in Luxembourg and merely inserted among the clauses of a standard contract which has also been signed by that person does not satisfy the requirements as to validity contained in the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. In order to satisfy those requirements as to validity, there must be a written, separate declaration whereby the contracting party resident in Luxembourg expressly accepts the agreement conferring jurisdiction and that declaration must not contain any other contractual provision”.

III —Oral procedure

At the sitting on 20 March 1980 the plaintiff in the main action, represented by H. Cremer, Advocate at the Koblenz Bar, and the Commission of the European Communities, represented by its Agent, G. Bebr, Legal Adviser at the Commission of the European Communities, assisted by W.-D. Krause-Ablaß, Advocate at the Düsseldorf Bar, presented oral argument.The plaintiff in the main action claimed that it was proper to interpret the second paragraph of Article I of the Protocol restrictively in view of the principle of freedom of contract and that that provision was a repetition of Article 17 of the Convention. A specific document was not in any event necessary; it was sufficient that a clause in the contract related expressly to the prorogation of jurisdiction.The Commission put forward the arguments which it had set out in its written observations and insisted on the need for a specific document.The Advocate General delivered his opinion at the sitting on 20 March 1980.

Decision

1By an order of 12 October 1979 which was received at the Court on 23 October 1979 the Oberlandesgericht [Higher Regional Court] Koblenz asked the Court under Article I of the Protocol 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 (Official Journal 1975, L 204, p. 28) for a preliminary ruling on the interpretation of the second paragraph of Article I of the Protocol annexed to the above-mentioned Convention of 27 September 1968.

2This question arises out of a dispute between a leasing undertaking, the plaintiff in the main action, whose registered office is at Trier, Federal Republic of Germany, and one of its customers, the defendant in the main action, whose registered office is in the Grand Duchy of Luxembourg. The contracts made between the parties were drawn up in advance as standard printed contracts and contain a clause conferring jurisdiction on the courts of the place where the plaintiff in the main action has its seat. When sued by the plaintiff in the Landgericht [Regional Court] Trier the Luxembourg firm disputed the jurisdiction on grounds of locality of the German court by relying on the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968.

3The second paragraph of Article I provides that: “An agreement conferring jurisdiction within the meaning of Article 17 (of the Convention) shall be valid with respect to a person domiciled in Luxembourg only if that person has expressly and specifically so agreed”.

4In order to enable it to resolve the problem of jurisdiction which thus arose the Oberlandesgericht Koblenz, having been asked to rule on appeal, put the following question:“Does an agreement conferring jurisdiction which is contained in a standard form contract concluded with and signed by a person resident in Luxembourg but to which his attention has not specifically been brought satisfy the requirements as to validity contained in the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters?”

5In order to reply to this question the provision which it is sought to interpret should be put in perspective in regard to Article 17 of the Convention. According to Article 17 a prorogation of jurisdiction (Vereinbarung über die Zuständigkeit) agreed to between the parties must be by agreement in writing or by an oral agreement evidenced in writing. It follows from the judgments given by the Court of Justice on 14 December 1976 (Case 24/76 Estasis Salotti and Case 25/76 Segoura ECR 1831 and 1851) that the purpose of the requirement of a writing under Article 17 serves to ensure that the consensus between the parties, who, by a prorogation of competence, depart from the general rules for determining jurisdiction laid down in Articles 2, 5 and 6 of the Convention, is clearly and precisely demonstrated and has actually been reached. The second paragraph of Article I of the Protocol which it is sought to interpret goes further. By expressly providing that an agreement conferring jurisdiction shall be valid with respect to a person domiciled in Luxembourg only if that person has “expressly and specifically so agreed” that provision imposes more special and more strict conditions which are superimposed on those in Article 17 of the Convention.

6This interpretation accords with the purpose of the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968. Indeed, in view of the fact that many contracts concluded by persons resident in the Grand Duchy of Luxembourg are international contracts, the authors of the Convention of 27 September 1968 thought that it was absolutely necessary to make clauses conferring jurisdiction which were likely to be used against persons domiciled in Luxembourg subject to more stringent conditions than those contained in Article 17 of the Convention. This aim can only be completely achieved if the clause in question has been accepted both expressly and specifically by the person domiciled in Luxembourg.

7In regard to persons domiciled in Luxembourg there are therefore two requirements in addition to the conditions contained in Article 17 of the Convention; these must be cumulatively fulfilled, that is to say, first, express agreement and, secondly, specific agreement. A comparison between the words used in Article 17 and those used in Article I of the Protocol indicates that the first of these conditions is not satisfied unless the agreement conferring jurisdiction is contained in a provision which is specially and exclusively devoted to it.

8In order to meet the requirement of specific agreement it is further necessary for the Luxembourg party specifically to sign the clause conferring jurisdiction as an indication of his agreement; his mere signing of the contract is not sufficient to secure the safeguards which the second paragraph of Article I of the Protocol has in view. It is not, however, necessary for that clause to be mentioned in a document separate from the one which constitutes the written instrument of the contract.

9.On the basis of the foregoing considerations it is appropriate to answer that the second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968 must be interpreted as meaning that a clause conferring jurisdiction within the meaning of that provision may not be considered to have been expressly and specifically agreed to by a person domiciled in Luxembourg unless that clause, besides being in writing as required by Article 17 of the Convention, is mentioned in a provision specially and exclusively meant for this purpose and specifically signed by the party domiciled in Luxembourg; in this respect the signing of the contract as a whole does not in itself suffice. It is not however necessary for that clause to be mentioned in a document separate from the one which constitutes the written instrument of the contract.

Costs

10The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. 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.

Operative part

On those grounds,THE COURT (Third Chamber),in answer to the question referred to it by the Oberlandesgericht Koblenz (Second Civil Chamber) by order of 12 October 1979, received at the Court on 23 October 1979, hereby rules: The second paragraph of Article I of the Protocol annexed to the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgment in Civil and Commercial Matters must be interpreted as meaning that a clause conferring jurisdiction within the meaning of that provision may not be considered to have been expressly and specifically agreed to by a person domiciled in Luxembourg unless that clause, besides being in writing as required by Article 17 of the Convention, is mentioned in a provision specially and exclusively meant for this purpose and specifically signed by the party domiciled in Luxembourg; in this respect the signing of the contract as a whole does not in itself suffice. It is not however necessary for that clause to be mentioned in a document separate from the one which constitutes the written instrument of the contract.

Delivered in open court in Luxembourg on 6 May 1980.