Report for the Hearing delivered in Case 9/87

I — Facts and procedure

1. Relevant legal provisions

Articles 2 and 5 of the Convention of 17 September 1968 on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters provide as follows:

Article 2 (1):

Article 5 (1) and (3) (in the version applicable on the date on which the main proceedings were instituted):

2. Background to the dispute

By a commercial agency agreement dated 30 November 1967 Haviland SA, a manufacturer of porcelain, appointed Agecobel SA its agent for the sale of porcelain in Belgium and Luxembourg. Agecobel's rights under the agreement were subsequently taken over by Arcado Spri.

Following the termination of that agreement by Haviland, Agecobel brought an action on 13 November 1978 against Haviland before the Tribunal de commerce (Commercial Court), Brussels, for payment of compensation for wrongful termination and for the balance of the commission owing to it. Haviland objected that the court had no jurisdiction ratione loci, maintaining that the action for compensation was founded on a quasi-delict committed at the place from which the termination of the agreement had been notified, that is to say its registered office.

By judgment of 26 May 1982 the Tribunal de commerce rejected that objection on the ground that the dispute was contractual in origin and that it therefore had jurisdiction by virtue of Article 5 (1) of the Convention. By judgment of 22 June 1983 the Tribunal de Commerce ordered Haviland to pay compensation for the sudden and premature repudiation of the agreement and to pay arrears of commission. Allowing Haviland's counterclaim, it also ordered Agecobel to pay a balance outstanding on invoices and compensation.

Agecobel appealed to the Cour d'appel, Brussels, seeking an increase in the compensation awarded by the court below and an order that Haviland pay statutory interest. In a cross-appeal Haviland, in reliance on Article 5 (3) of the Convention, claimed that the Belgian courts did not have jurisdiction. By a document lodged at the Registry of the Cour d'appel, Brussels, on 5 June 1985 Arcado Spri took over the proceedings instituted by Agecobel.

3. The preliminary question

By judgment of 11 September 1986 the Cour d'appel, Brussels, decided to stay the proceedings and to refer the following question to the Court:

In its judgment making the reference the Cour d'appel states that whilst the dispute concerning the payment of commission clearly suggests that the matters at issue are contractual in nature, the dispute concerning damages for the sudden and premature repudiation of the agency agreement is, according to Haviland, of a quasi-delictual nature and is covered by Article 5 (3) of the Convention.

For the purposes of determining whether or not the dispute is a matter relating to a contract, within the meaning of Article 5(1) of the Convention, the Cour d'appel refers to the judgment of the Court of Justice of 22 March 1983 (Case 34/82 Martin Peters Bauuntemehmung GmbH w Zuid Nederlandse Aannemers Vereniging [1983] ECR 987) according to which the expression matters relating to a contract should not be interpreted simply as referring to the national law but should be regarded as an independent concept which, for the purpose of the application of the Convention, must be interpreted by reference chiefly to the system and objectives of the Convention, in order to ensure that it is fully effective.

The Cour d'appel considers, however, that that judgment did not provide any general definition of the expression matters relating to a contractWhilst damages for wrongful repudiation of a contract are a question solely of contractual liability in Belgian and French law, it remains to be determined whether a Community interpretation leads to the same conclusion.

4. Procedure

The judgment making the reference was registered at the Court on 16 January 1987.

In accordance with Article 5 (1) of the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 27 September 1968 written observations were submitted by Haviland, represented by François-Xavier de Dorlodot, of the Brussels Bar, by Arcado, represented by Philippe van de Wiele, of the Brussels Bar, by the Commission of the European Communities, represented by G. Kremlis, a member of its Legal Department, assisted by G. Cherubini, an Italian official seconded to the Commission as part of the policy of exchanging national officials, by the Government of the Italian Republic, represented by Oscar Fiumara, Avvocato dello Stato, acting as Adviser to the Italian State, and by the United Kingdom, represented by H. R. L. Purse, of the Treasury Solicitor's Department, and by M. C. L. Carpenter, of the Lord Chancellor's Department.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

II — Written observations submitted to the Court

Arcado, the appellant in the main proceedings, maintains that in so far as the obligation in question must be regarded as being of a quasi-delictual nature the Convention confers jurisdiction on the Belgian courts since the place where the damage was suffered was the place where Arcado carried on its activities as selfemployed agent, namely Belgium.

In so far as the obligation in question must be regarded as being of a contractual nature, the determining factor is either the obligation to give notice (claim for compensation in lieu of notice) and the obligation to pay commission (claim for arrears of commission) or the services to be provided by the commercial agent, depending on whether the criterion adopted is that of the obligation forming the basis of the legal proceedings or that of the obligation which characterizes the contract.

In order to determine the place of performance of the obligation forming the basis of the legal proceedings or of the obligation which characterizes the contract on the basis of the law applicable to the substantive issue, determined in accordance with the rules of conflict of laws of the court before which the matter is brought (see the judgment of the Court of Justice of 6 October 1976 in Case 12/76 Tessili v Dunlop [1976] ECR 1473), the Belgian court finds that the place of the obligation in both cases is Belgium.

Haviland, the respondent to the appeal, observes that the expressions matters relating to a contract and matters relating to quasi-delict contained in Article 5 (1) and (3) of the Convention cannot be defined and interpreted by reference to the national law of the Member State concerned but are concepts of Community law the content of which must be defined by reference to the system and objectives of the Convention.

It follows from Article 15 (1) and Article 17 of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to selfemployed commercial agents (Official Journal 1986, L 382, p. 17) that the Community legislature took the view that the obligation to give notice springs from the contract itself and that therefore the contract forms the basis of the obligation. The coherence and uniformity of the Community legal order, which are objectives referred to in the Convention itself, lead to the conclusion that the right to be given notice is, from the agent's point of view, a matter relating to a contract within the meaning of Article 5 (1) of the Convention. The same is true of the right to compensation in lieu of notice in so far as that right arises from infringement of a contractual obligation. Consequently, a dispute concerning the wrongful repudiation of an independent agency agreement constitutes a matter relating to a contract within the meaning of Article 5 (1) of the Convention.

With regard to the determination of the obligation within the meaning of Article 5 (1) of the Convention, Haviland states that the Court has indicated in its decisions that the obligation to be taken into account is the obligation forming the basis of the legal proceedings commenced by the plaintiff (judgment of 6 October 1976 in Case 14/76 De Bloos v Bouyer [1976] ECR 1497). In the absence of special features associated with certain types of contractual relationship such as a contract of employment (see the Court's judgment of 26 May 1982 in Case 133/81 Ivenelv Schwab [1982] ECR 1891) it is necessary to take into account the contractual obligation whose performance is sought in the judicial proceedings (Court's judgment of 15 January 1987 in Case 266/85 Shenavai v Kreischer [1987] ECR 239). When, as in this case, the dispute is concerned with a number of obligations the national court must determine its jurisdiction by reference to the obligation which it considers to be the principal obligation and in order to determine that it must refer to the various claims made in the document originating the proceedings before it.

Haviland considers that according to the Court's case-law the place of performance of the obligation within the meaning of Article 5 (1) of the Convention is to be determined pursuant to the law governing the obligation at issue and in accordance with the rules on the conflict of laws of the court before which the matter was brought (Tessili v Dunlop cited above).

Haviland therefore proposes that the reply to the question referred to the Court for a preliminary ruling should be as follows:

According to the Commission of the European Communities the virtually unchanging rule adopted by the Court in all its decisions with regard to the expressions and concepts of the Convention is that they must be interpreted in an autonomous manner.

There is no doubt, in the first place, that the concept of matters relating to a contract is an independent concept. According to the considerations adduced by the Court in support of the autonomous interpretation of Article 5 (1) of the Convention, it is not possible to hive off contractual, tortious and quasi-delictual obligations if all those obligations originate in the performance or wrongful performance of the contract forming the basis of the proceedings between the parties.

Where the proceedings relate to a number of obligations the Court's interpretation leads in some cases to a breaking-up of the contract to some degree but solely for the purpose of ascertaining whether an independent contractual obligation or an obligation replacing the unperformed contractual obligation (De Bloos v Bouyer cited above), a principal obligation or a secondary obligation (Shenavai v Kreischer cited above) is involved. In all other cases the characterization of the legal relationship between the parties as contractual is sufficient for all obligations arising out of the relationship to be covered, even if some — whether or not independent — could be classified as tortious or quasi-delictual by the national law of one of the contracting States concerned.

Although the Court made a distinction in the De Bloos case between different types of obligation (the original obligation, an obligation replacing the original unperformed obligation and therefore subordinate to the provisional obligation, and finally, an independent contractual obligation) it took it for granted that all such obligations, regardless of their characterization for the purposes of determining the obligation to be taken into account, fall within the concept of matters relating to a contract.

The position cannot be any different in this case in view of the similarity between the questions referred to the Court in the two cases.

With regard to the determination of the obligations at issue the Commission states that the obligation to pay outstanding commission constitutes an independent contractual obligation consisting in the payment by the principal to the agent of commission in accordance with the agreement and that it is therefore the obligation forming the basis of the legal proceedings.

As regards the obligation to pay compensation for wrongful repudiation of the contract, the obligation to which reference must be made in the light of the judgment in the De Bloos case is the obligation the nonperformance of which is relied upon to support the claim for damages, in this case the obligation of the principal to give reasonable notice.

Once the two contractual obligations have been ascertained the Court making the reference to the Court of Justice must determine the place of performance of the obligations in accordance with the Court's judgment in the Tessili case which will indicate the court or courts having jurisdiction. If the places of performance are not identical two courts will necessarily have jurisdiction on the basis of the place of performance of each obligation. However, the Court's judgment in the Shenavai case is capable of remedying such a multiplication of forums because, in the case of a multiplicity of obligations at issue, it proposes that the national court should take account of the principal obligation. In this case it is the principal obligation at issue imposed on the defendant (Haviland) which also entails other secondary obligations.

On the basis of the foregoing considerations the Commission proposes that the reply to the question brought by the Cour d'appel, Brussels, should be as follows:

In the light of the Court's case-law the Government of the Italian Republic takes the view that the concept of matters relating to a contract should be regarded as an independent concept to be interpreted by reference principally to the system and objectives of the Convention, in order to ensure that it is fully effective.

It appears that the expression matters relating to a contract contained in Article 5 (1) of the Convention should be given a common and general meaning of the broadest type consistent with that of a lawful transaction of whatever type (unilateral, bilateral or multilateral) giving rise to civil obligations and that Article 5 (3) refers to obligations which do not originate in a legal transaction. Consequently, liability for contractual wrongs (failure to perform the contract) is confirmed as falling within Article 5 (1) whilst Article 5 (3) covers all forms of non-contractual liability (for unlawful acts or omissions, whether tortious or quasi-delictual).

As regards wrongful repudiation of a commercial agency agreement (and, naturally, the payment of commission), which is the subject-matter of the case before the Cour d'appel, Brussels, there appears to be no doubt that since the question relates to the obligation of one of the parties to the agreement the point at issue is nonperformance, that is to say a matter relating to a contract.

The Italian Government therefore proposes that the reply to the question put by the Cour d'appel, Brussels, should be as follows :

According to the United Kingdom, since the payment of commission due under an agreement fulfils an obligation arising in contract it must follow that an action for the recovery of commission is a matter relating to a contract for the purposes of Article 5 (1) of the Convention.

However, the Cour d'appel was not able to assume that a claim for wrongful repudiation of an agreement is a matter relating to a contract for the purposes of that provision on account of the possibility that in Community law a relationship which both the relevant legal systems (French and Belgian) classify as contractual might nevertheless not be treated as relating to a contract.

In the absence of any guidance on the meaning of that expression (other than in the special circumstances of the Peters case, cited above), a meaning must be given to the terms of Article 5 (1) chiefly by reference to the system and objectives of the Convention, in order to ensure that it is fully effective.

The Convention seeks to prevent the courts of Member States from exercising jurisdiction on unacceptable, or exorbitant, bases resulting in judgments which ought not to be recognized in the State in question. Conversely, judgments given on a fair and non-oppressive jurisdictional basis ought to run throughout the common market.

However, the assumption of jurisdiction by a national court may cease to be fair and reasonable depending on the substantive national laws applicable. Uniform legal concepts may be insensitive in that respect and lead to jurisdiction being improperly assumed or denied, to the introduction of legal uncertainty and to needless complexity in the operation of the law. The risk of harmful effects is high where the concept to be interpreted concerns a basis of jurisdiction which is linked with concepts of substantive law in issue in the proceedings.

In the view of the United Kingdom, an interpretation of a concept leading to different meanings for the purposes of establishing jurisdiction from those for substantive purposes must be approached with the utmost caution. The uniform interpretation of the concept of matters relating to a contract could lead in certain cases to a position where it will endow a set of circumstances or transaction with a classification or character for the purpose of the Convention which differs from that conferred by the substantive law applicable. Article 5(1) would confer jurisdiction on a court in respect of legal relationships which do not constitute any contract or give rise only to obligations of a non-contractual nature according to the substantive law applicable. On the other hand, Article 5 (1) would deny jurisdiction in respect of legal relationships which constitute contracts under the substantive law applicable and could therefore override the consequences which the parties could legitimately expect to flow from the transaction or relationships. Such consequences could be avoided only if the definition of matters relating to a contract includes a reference to the national law applicable.

Moreover, in identifying the special bases of jurisdiction, the Convention adopts close connecting factors between the dispute and the court called upon to hear it (see the Tessili case and the Peters case, both cited above). The connecting factor chosen in Article 5 (1) is the place of performance of the obligation since, on account of the close links created by a contract between the parties thereto, the difficulties arising on the occasion of the performance of the contract should be brought before the court of the place of performance. Such a special basis of jurisdiction is bereft of any justification if, under the law applicable to the transaction at issue, there was no contract.

In view of the wide differences between the national laws of the Member States with regard to defining the circumstances and transactions giving rise to contractual obligations, only the application of the law of the Member State which appropriately governs the particular circumstances of the case can determine whether or not there is a contract. Hence, in order to determine whether the circumstances before the Court constitute matters relating to a contract the national court must, in the first place, identify the legal system which governs those circumstances by applying its rules of conflicts of laws. It must then determine whether those circumstances constitute a contract under that law.

The United Kingdom is aware that the suggested solution would sometimes lead to the application of different provisions of the Convention to similar factual situations, depending on the law applicable to them. However, in the context of the Convention such diversity has no harmful effects since it would tend to accord with the expectations of the parties. The suggested solution may call on occasions for a complex appraisal by the national courts but that is a lesser difficulty than those which would arise from a uniform definition of matters relating to a contract.

Consequently, the United Kingdom proposes that the reply to the question referred to the Court should be as follows: Proceedings relating to the wrongful repudiation of a commercial agency agreement and the payment of commission due under such an agreement are proceedings in matters relating to a contract within the meaning of Article 5 (1) of the Convention if, by virtue of the law applicable to the legal relationship, repudiation of that relationship and payment of commission due under it are matters of contractual liability.

1 Language of the Case: French.