| EXPLANATORY REPORT by Professor Fausto Pocar
23. The general rule of jurisdiction in the new Convention is the same as it was in the 1988 Convention. It is based on the principle of actor sequitur forum rei, and remains anchored to the domicile of the defendant in a State bound by the Convention. It confirms that the defendant’s nationality plays no role in jurisdiction (for reasons explored in detail in the Jenard report, pp. 14 ff.). Persons domiciled in a State bound by the Convention must therefore be sued in the courts of that State, whether they are citizens of that State or not (paragraph 1). As paragraph 2 reaffirms, persons who do not have the citizenship of the State in which they are domiciled are subject to the same jurisdiction as citizens of that State. It should be noted that, as in the 1988 Convention, the general rule assigns jurisdiction to the State in whose territory the defendant is domiciled without prejudice to the determination of a specific court with jurisdiction in that State on the basis of the national law of that State. 24. In the light of the Commission proposal [1], the ad hoc working party re-examined the question whether rather than domicile it would be preferable to look to the habitual residence of the defendant, as is done in many conventions, in particular those drawn up within the framework of the Hague Conference on Private International Law, and in Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and the enforcement of judgments in matrimonial matters and the matters of parental responsibility (‘the Brussels II bis Regulation’) [2]. The working party concluded that the criterion of domicile should be retained, for several reasons: because of the difficulties that would have been faced by some States, such as the United Kingdom, which had adopted a specific definition of domicile in their domestic law for the purposes of applying the Brussels and Lugano Conventions; because habitual residence was considered by some experts to be more appropriate to personal and family relationships rather than to those of a commercial nature; because habitual residence did not appear to be an appropriate connecting factor in the case of companies and legal persons; and because habitual residence would in any event have needed an independent definition, on which it might have been difficult to reach agreement. 25. The possibility that the place of habitual residence might have been added to the notion of domicile, as an alternative criterion for establishing jurisdiction, was also discarded, because it would have multiplied the possible jurisdictions in cases where domicile and habitual residence were located in two different States [3] . It was also pointed out that the use of domicile as the principal criterion for establishing jurisdiction had not met with any particular difficulties in the practical application of the Brussels and Lugano Conventions, notwithstanding the different interpretations of domicile offered by national laws, at least in proceedings in which the defendant was a natural rather than a legal person. 26. The ad hoc working party considered the possibility of providing an independent definition of ‘domicile’ in the Convention, instead of referring the matter to national law, as had the Brussels Convention and the Lugano Convention of 1988. Some experts had suggested that a common definition of the domicile of natural persons might be based in particular on the length of time the defendant had been present in the State of the court before which the case was brought; but in view of the fact that the existing Conventions had been working well, the working party did not think it advisable to provide such a definition. While it recognised the potential benefits of a common definition, the working party preferred to leave to national laws the task of defining the meaning of domicile in terms of the length of time the defendant had been in the territory, if such a definition was found to be necessary. The provision of Article 59 is therefore unchanged from the corresponding provision of Article 52 of the 1988 Convention, and the domicile of natural persons continues to be determined by the domestic law of the State in which they are domiciled. 27. The case of companies and legal persons is different, since the determination of their ‘seat’, treated as its domicile for this purpose, was entrusted by Article 53 of the 1988 Convention to the rules of private international law of the State of the court hearing the case. Reference to the domestic rules on conflict of laws, which are based on widely varying criteria, has not given rise to many problems in practice, but it may nevertheless create difficulties in the future. The Commission therefore proposed the adoption of a common definition of domicile for companies, which would be the place of their central management or, failing that, their registered office [4] , so that a company could be linked to one legal system on the basis of factual elements. The arrangement set out in the new Article 60 of the Convention takes account of the Commission’s proposal, but ensures that the courts of the States bound by the Convention have jurisdiction even if the company’s seat is not located in any State bound by the Convention, provided that the central administration is within one of those States, and vice versa. This solution thus goes further than the Commission’s proposal.
28. The new definition lists as alternatives the statutory seat, the central administration, or the principal place of business of the company or other legal person. The fact that these are listed as alternatives means that if just one of them is in a State bound by the Convention the company can be sued before the courts of that State, even if the others are in a State outside the Convention altogether or in another State bound by the Convention. In the latter case, under the system of the Convention, there will be competing jurisdictions, and the choice of the forum will be left to the plaintiff. This definition is open to a degree of forum shopping, which is also possible to some extent in relation to the domicile of natural persons. In justification it may be pointed out that if a company decides to keep its central administration in a place separate from its principal place of business, it chooses to expose itself to the risk of being sued in both places. 29. Above all, however, the definition answers the need for a connecting factor that will ensure that if a company is incorporated in a State bound by the Convention, or does business there, any dispute regarding its activities will fall within the jurisdiction of the States bound by the Convention, so that the plaintiff will not be deprived of a ‘Convention’ court. It also offers the plaintiff the possibility of suing in the courts of the place where the judgment will probably have to be enforced. None of the criteria considered would have answered these needs on its own. The statutory seat does offer a significant degree of certainty, since it is easy to identify, but it is often situated somewhere other than the location of the company’s assets, and does not lend itself to the enforcement of a judgment; it would, moreover, allow a company to have its central administration in a State bound by the Convention, or to carry on its principal business there, while having its statutory seat elsewhere, and thereby escape the jurisdiction of the States bound by the Convention. In turn, the central administration provides a link with a place that is useful for the purpose of enforcing judgment, but it is a factor internal to the company, often not immediately identifiable, which makes it harder to determine the court with jurisdiction; and if the central administration is located in a State outside the Convention, this criterion would not allow the company to be sued in a State bound by the Convention even if it had its statutory seat or its principal place of business there. Finally, the principal place of business is certainly easier to identify and verify, but if taken as the only connecting factor it would not allow jurisdiction to be exercised against a company which had its principal place of business outside the States bound by the Convention, even if that company had its statutory seat and central administration inside one of these States and conducted a significant amount of business there. 30. These considerations taken together underpin the choice of a broad definition that allows a company or other legal person to be summoned before a court in the State bound by the Convention with which it has a significant connection, in the shape of its central administration, its principal place of business, or its statutory seat. The concept of the ‘statutory seat’, however, is not an appropriate connecting factor for a company or legal person in the United Kingdom or Ireland, where the legal systems refer instead to the place where a company is entered in the register that exists for the purpose, or to the place in which it was incorporated. The registration criterion allows for the fact that the rule concerns not just companies or firms as such but also any body that is not a natural person, so that a registered office is of greater relevance than a ‘seat’ indicated in the founding documents. Article 60(2) therefore specifies that for purposes of those two countries the term ‘statutory seat’ means the registered office or, if there is no registration, the place of incorporation, or, if there is no place of incorporation, the place under the laws of which the formation took place. This last reference to the law applied to determine the place of formation that is treated as the statutory seat takes account in particular of the case of a partnership in Scottish law, where the only criterion looked at is the law under which the partnership was formed, regardless of the place of formation. 31. The working out of the concept of the domicile of companies and legal persons in Article 60 was also guided by the desirability of harmonising the general criterion of jurisdiction regarding companies with the connecting factors used in Article 48 of the EC Treaty for the purpose of recognising the right of establishment of companies or firms in the territory of the Community: Article 48 lists the ‘registered office’, the ‘central administration’ and the ‘principal place of business’ within the Community. Even if the need addressed by Article 48 is different – its purpose is to identify the companies or firms entitled to operate in all Member States - it appeared justified to use the same connecting factors to allow companies or firms to be sued in the courts of one of the States bound by the Convention. In other words, if one of the connecting factors referred to in Article 48 is enough to make a company a Community company, enjoying the advantages conferred by that status, it should be treated as a Community company for all purposes, and should therefore be subject to the civil jurisdiction of the Member States in which it operates and is entitled to operate. 32. The concept of domicile under consideration here relates to the forum generale of companies and legal persons, without prejudice to the definition of the domicile of a company for purposes of the forum speciale for particular categories of dispute, such as those which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons having their seat in a State bound by the Convention, or the validity of the decisions of their organs, which are the subject of Article 22(2) of the Convention (and which will be discussed below). For disputes relating to insurance contracts, consumer contracts and individual contracts of employment, Articles 9, 15 and 18 of the Convention make specific provision, unchanged from the 1988 Convention. Nor does the concept explained above affect jurisdiction in disputes arising out of the operations of a branch, agency or other establishment of a company, which are covered by Article 5(5) of the Convention (where the rules likewise remain unchanged).
33. The new text of the Convention also leaves unchanged the determination of the domicile of a trust, which it refers to the private international law of the court seised. While the application of this provision does not present particular problems in States whose legal systems recognise the trust as an institution, difficulties can arise in States in which this institution is unknown; in the absence of appropriate conflict rules for determining the domicile of trusts in the legal system of the court seised, the question may be made to depend on the law to which the trust is subject (Schlosser report, paragraphs 109- 120). 34. As in the 1988 Convention, the general rule of jurisdiction founded on the domicile of the defendant may be departed from only in accordance with the rules of jurisdiction set out in the Convention, specifically in Sections 2 to 7 of Title II. This means that it is only by virtue of those rules that a person domiciled in a State bound by the Convention, whether a natural or legal person, can be sued in the courts of another State bound by the Convention. It should be observed that, though Article 3(1) refers in general terms to the ‘courts’ of another State bound by the Convention, this reference does not necessarily leave the internal jurisdiction of the courts of that State untouched: in many cases, the rules of jurisdiction set out in Title II have implications not only for the jurisdiction of a particular State, but also for the distribution of territorial jurisdiction among its courts, and may confer jurisdiction on a specific court. 35. As this is an exception to the general rule, the reference to the rules of jurisdiction set out in the Convention must be taken as definitive, and exclusive of any other national rules of jurisdiction, whether they are exorbitant or not (for example, a national rule of jurisdiction that refers to the defendant’s place of residence, if different from the domicile). The system of the Convention is based on the unification of the rules of jurisdiction, rather than the mere exclusion of exorbitant jurisdictions, even though the national rules whose application is excluded are in fact often of this nature. 36. In this context, Article 3(2), together with Annex I, to which it refers and in which national rules that cannot be invoked are listed (for the reasons for moving the list of national rules from Article 3 to an annex, see below, in the discussion of Article 77), is intended merely as a description and guide for operators indicating the main national rules whose application is not permitted. Paragraph 1 provides that proceedings cannot be brought in courts other than those referred to in Sections 2 to 7 of Title II, and it follows that any other criterion of jurisdiction is excluded, whether or not the rule that provides for it is listed in Annex I. Thus, it appears to be irrelevant that not all the linguistic versions of paragraph 2 reproduce the words ‘in particular’ that preceded the list of national rules in the 1988 Convention [1]. The list in Annex I is exemplary only, and does not restrict the effect of paragraph 1, according to which all national rules that do not comply with the rules of the Convention must be considered inapplicable. 37. If the defendant is not domiciled in a State bound by the Convention, jurisdiction, according to the system of the Convention, is governed by national law, and this is confirmed in Article 4 of the new Convention. Here the Convention does not furnish its own rules of jurisdiction, but regulates the matter only indirectly, by referring it to the legal system of the State of the court seised. Thus the defendant’s domicile is also a criterion delimiting the scope of the rules in the Convention that govern jurisdiction directly and independently, but it is not a general criterion delimiting the regulation of jurisdiction by the Convention. The correctness of this understanding of the matter, which had already been asserted in the literature on the 1988 Convention, was confirmed by the Court of Justice in Opinion 1/03, where the Court, speaking of Regulation No 44/2001, said that ‘That regulation contains a set of rules forming a unified system which apply not only to relations between different Member States … but also to relations between a Member State and a non-member country’, and in particular that ‘Article 4(1) … must be interpreted as meaning that it forms part of the system implemented by that regulation, since it resolves the situation envisaged by reference to the legislation of the Member State before whose court the matter is brought’ [2]. 38. This reference to the national law of the court seised also encounters a limit in the rules laid down directly by the Convention which apply irrespective of the defendant’s domicile. These are the rules on exclusive jurisdiction in Article 22 and the rules on the prorogation of jurisdiction in Article 23, which are now also mentioned in Article 4, though they already restricted the reference to national law in the past. Leaving these two provisions aside, the reference to national law means that where the defendant is domiciled in a State not bound by the Convention, the rules of jurisdiction listed in Annex I may be applied even if they constitute exorbitant jurisdiction. It is worth pointing out, lastly, that Article 4(2) confirms that foreign plaintiffs have the same entitlement as nationals of the State of the court seised to avail themselves of the rules of jurisdiction there in force, the only condition being that they be domiciled in that country (see the Jenard report, pp. 21-22).
39. Alongside and as an alternative to the general rule of the domicile of the defendant in a State bound by the Convention, the Convention keeps unchanged the existing structure that provides for special jurisdictions which, at the plaintiff’s choice, allow the plaintiff to bring the action in another State bound by the Convention. These jurisdictions are governed by Articles 5 to 7 of the Convention (corresponding to Articles 5, 6 and 6A of the 1988 Convention). While the general rule hinges on a factor connecting the defendant to the court, the special rules recognise a link between the dispute itself and the court which may be called upon to hear it. These jurisdictions reflect a principle of the efficacious conduct of proceedings, and will be justified only when there is a sufficient connection in terms of the proceedings between the dispute and the court before which the matter is to be brought, from the point of view of the gathering of evidence or the conduct of the proceedings [1], or in order to secure better protection of the interests of the parties against which the proceedings are directed. Given the comprehensive system of jurisdiction in the Convention, these rules apply whether or not they correspond to jurisdictions provided for by the national laws of the States bound by the Convention [2]. 40. In part, the special jurisdictions provided for by the 1988 Convention remain as they were, although the wording sometimes undergoes minor changes of a purely editorial nature. The changes considered in what follows, therefore, are those that go beyond purely editorial modification, those where an editorial modification in fact reflects a substantive issue, and those where the development of the case-law of the Court of Justice requires further comment. There is no significant change, and no need for further comment here over and above what was said in the reports on previous Conventions, regarding the rules on the jurisdiction of the courts of a State in which a trust is domiciled when a settlor, trustee or beneficiary of the trust is sued (Article 5(6), see the Schlosser report, paragraphs 109-120), or on the jurisdiction of a court arresting cargo or freight to hear disputes regarding the payment of remuneration for assistance or salvage, if it is claimed that the defendant has an interest in the cargo or freight and had such an interest at the time of the salvage (Article 5(7), see the Schlosser report, paragraphs 121- 123). 41. The same can be said of the special rules conferring jurisdiction on the court in which the original claim is pending in the case of a counter-claim arising from the same contract or facts on which the original claim was based (Article 6(3), see the Jenard report, p. 28), or conferring jurisdiction in matters relating to a contract on the courts of the State bound by the Convention in which the property is situated, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property (Article 6(4), see the Jenard-Möller report, pp. 46-47, and the Almeida Cruz-Desantes Real-Jenard report, paragraph 24). 42. Of the special jurisdictions provided for in Articles 5 to 7 which allow the plaintiff to bring an action in a State bound by the Convention other than the State of the domicile of the defendant that would be called for by the general rule, the one that has given rise to most discussion is certainly the jurisdiction in matters of contract. Article 5(1) of the Lugano Convention of 1988, like the corresponding provision in the Brussels Convention, permits a person domiciled in a State bound by the Convention to be sued in another State bound by the Convention ‘in matters relating to a contract, in the courts for the place of performance of the obligation in question’; it has been the source of a number of problems of interpretation, regarding the definition of ‘matters relating to a contract’, the determination of the obligation to be performed, and the determination of the place of performance. These problems have generated a large body of case-law of the Court of Justice, which has arrived at independent solutions or referred the matter back to national law as appropriate, without overcoming all the difficulties generated by the Convention. 43. On the definition of ‘matters relating to a contract’, the national laws of the Contracting States differ, and the Court has taken the approach that the concept is an independent one; it has not provided any general or abstract definition, but in individual cases has given pointers indicating when there is a contractual obligation and when there is not [3] . The existence or validity of a contract is a matter relating to a contract [4] . If an action relates both to breach of a contractual obligation and to non-contractual liability, there is no accessory jurisdiction: for the first claim jurisdiction is to be determined in accordance with Article 5(1), and for the second it is to be determined in accordance with Article 5(3), on liability arising out of a tort or delict, even if that might face the plaintiff with the prospect of separate actions before different courts [5] , a prospect that can always be avoided by falling back on the general rule of the domicile of the defendant.
44. Concerning the determination of ‘the obligation in question’, Article 5(1) expressly allows a number of jurisdictions in respect of one and the same contract, preferring a genuine connection between the court and the specific dispute over a single method of treatment of the contract. The search for a fair balance between the two requirements – a genuine link with the dispute and the unity of the contract – has led the Court of Justice to hold that the expression ‘the obligation in question’ refers to the contractual obligation on which the action is based, the obligation on whose non-performance the plaintiff’s action relies, rather than to the obligation whose performance is expressly sought by the plaintiff [1]. In the same way the Court has held that where several obligations arising out of one contract are relied upon in the application, the court before which the matter is brought can determine whether it has jurisdiction by referring to the principal obligation [2]; the question whether obligations are accessory or equivalent is a question to be determined by the court hearing the case, ordinarily on the basis of the law applicable to the contract [3] . Despite these judgments, it is still regularly the case that one contract will be subject to more than one jurisdiction, particularly when claims are based on obligations arising out of the same contract that are equal in rank [4] . It has been pointed out that this situation is not always satisfactory, especially since an obligation to pay can be severed from the rest of the contract and the matter brought before the court of the place where that obligation is to be performed, which is often the forum of the plaintiff. 45. Regarding the determination of the place of performance of the obligation in question, though other solutions might have been possible – an independent solution, or a reference to the lex fori – the Court of Justice has opted for reference to the lex causae of the disputed obligation, determined according to the rules of conflict of laws of the court before which the matter is brought [5] , even in cases where the parties themselves decide the place in a clause which is valid according to the law applicable to the contract [6] . This interpretation, which did not initially offer any uniform solution to the lack of harmonisation of the rules of conflict of laws of the Contracting States, and which left open the possibility of forum shopping, was subsequently underpinned by the Rome Convention of 19 June 1980 on the law applicable to contractual obligations: although the Rome Convention uses a flexible, objective connecting factor, nevertheless the law applicable to the contract, and hence the place of performance of the obligations arising under it, can as a rule be foreseen by the parties. But reference to the applicable law, as a means of determining the place of performance of the obligation, leaves intact the considerable disparity between national laws on financial obligations, and does not solve the problem that when the obligation relied on before the court is the obligation of payment, the place of performance frequently coincides with the forum of the plaintiff, thus providing scope for forum shopping. 46. Notwithstanding the interpretation provided by the caselaw, which has smoothed out some of the difficulties, the rules described above have been judged unsatisfactory by many, and numerous proposals have been put forward for their amendment by the Commission and by the Contracting States. The proposals are varied, but all move in the direction of reducing the role of the reference to the place of performance of the obligation, safeguarding the unity of jurisdiction over the contract at least to some extent, and making it easier to ascertain and foresee the place of performance which is to serve as the basis of jurisdiction in the case. The proposals and the debate to which they gave rise in the ad hoc working party are described below to the extent that may be useful for an understanding of the origins of the present text. 47. The most radical proposal, which also has authoritative support in the literature [7] , was that the forum of performance of the obligation should be removed, so that contractual matters would be left to the ordinary forum of the defendant, or alternatively the jurisdiction chosen by the parties. This solution was rejected by the ad hoc working party on the grounds that the forum of the defendant may not be the most appropriate if inspections have to be carried out in the place where goods were to be delivered or services provided, and that the parties may fail to select a forum for their disputes. The working party therefore turned to other proposals that would retain a forum of the contract, while avoiding, or at least limiting, the difficulties of the existing text. 48. Among these was a proposal to refer to the place of enforcement of the obligation characteristic of the contract, the intention being to avoid the fragmentation of jurisdiction over the contract, and to prevent jurisdiction based on the ...
... obligation to make payment, unless, of course, the financial debt was the characteristic obligation of the contract. The proposal was not accepted, on several grounds: international contracts are often complex, and it is not always easy to identify the characteristic obligation; establishing the characteristic obligation requires an overall evaluation of the contract which is premature at the stage when jurisdiction is being determined; the determination of the place of performance of the characteristic obligation depends on the applicable law, so that it does not avoid the need to refer to the rules on conflict of laws; and, lastly, the characteristic obligation does not necessarily represent a sufficient connecting factor between the dispute and a particular court if the dispute turns on a different contractual obligation. It may be pointed out that it is one thing to determine the applicable law by seeking to define an overall contractual relationship in a homogeneous manner, even though some parts may be clearly less closely linked and jurisdiction may be fragmented, and quite another to define the connecting factor between a dispute and the court in the best position to decide it. 49. Having discarded the possibility of reference to the characteristic obligation of the contract, the ad hoc working party considered the possibility of restricting the scope of Article 5(1) to certain contracts only, more specifically to contracts of sale, as the Commission had proposed, with the place of performance being the place where the delivery was or should have been carried out, except in cases where the goods were delivered, or deliverable, to more than one place; this would deny any relevance to the obligation of payment [1]. Against a restricted solution of this kind it was pointed out that a forum of the contract was desirable not only in the case of contracts of sale but also, and just as strongly, in the case of contracts for the provision of services. On the other hand it was in contracts of these kinds that the obligation to make payment was in most cases not the significant aspect on which jurisdiction could be based, except of course in the case of contracts for money services. After mature reflection, the ad hoc working party decided not to make any radical change to the existing text, but to adjust it so as to indicate, in the case of a contract of sale or a contract for the provision of services, which obligation was the one whose place of performance could provide a basis for a jurisdiction alternative to the forum of the defendant, and to exclude any reference to the place of payment under such contracts, while leaving the existing provision unchanged for all other contracts and for cases in which the specific rules described proved inapplicable [2]. 50. Article 5(1)(a) of the new Convention takes over the corresponding provision of the 1988 Convention, conferring jurisdiction on the court of the place of performance of the obligation in question. The scope of the rule is not left entirely to the interpretation of whoever is called upon to apply it, as it was before: for the application of point (a), point (b) specifies that in the case of contracts for the sale of goods or the provision of services the place of performance of the obligation in question is to be the place - in a State bound by the Convention – where, under the contract, the goods were delivered or should have been delivered, or the services were provided or should have been provided. Thus point (b) identifies the obligation whose place of performance serves as a basis for establishing jurisdiction in respect of such contracts independently, irrespective of the obligation whose performance is the subject of the dispute. Without using the word, it adopts the principle of the characteristic obligation, and consequently excludes a reference to the obligation to make payment, even when that obligation is relied upon in the application. The ad hoc working party did not incorporate into the text the Commission’s initial proposal that point (b) should expressly exclude cases where under a contract of sale the goods were delivered, or deliverable, to more than one place. In such a case, if all the obligations to deliver are relied upon in the application at the same time, various solutions may be suggested in appropriate cases, without prejudice to any future interpretation this provision will be given by the Court of Justice, such as a reference to the principal place of delivery, a plaintiff’s choice as to the place of delivery where to bring his action entirely or limited to the partial delivery in that place, or even a reference to the place of performance of the monetary obligation, if that obligation is relied upon in the application. The Court of Justice has already pronounced on the parallel provision enshrined in Article 5(1)(b) of the Brussels I Regulation, and has ruled that, ‘where there are several places of delivery within a single Member State’, ‘the court having jurisdiction to hear all the actions based on the contract for the sale of goods is that in the area of the principal place of delivery, which must be determined on the basis of economic criteria. In the absence of determining factors for establishing the principal place of delivery, the plaintiff may sue the defendant in the court for the place of delivery of his choice’ [3] . The questions that arise, and the solutions that may be the more appropriate ones, where there are several places of delivery in different Member States have been deliberately left open by the Court of Justice [4] . It goes without saying that similar problems will also arise where there are several places of provision of services in different States. 51. For the determination of the place of performance, point (b) adopts a factual test intended to avoid recourse to private ...
... international law, stating that unless the parties have agreed otherwise the place of delivery of the goods or of provision of the services must be identified ‘under the contract’. It has to be pointed out that this provision applies ‘unless otherwise agreed’ by the parties; under these terms, party autonomy is explicitly preserved also as concerns the determination of the place of performance. The question remains open whether this provision may entirely prevent the rules of conflict of laws of the court hearing the dispute from coming into play where the parties have not indicated with sufficient precision the place of delivery or of provision of the service, and this may be established with the help of the law applicable to the contract, or where the subject of the dispute is in fact the place where the goods were delivered or should have been delivered, or the place where the services were provided or should have been provided. Point (b), then, acts as a special rule, limited to contracts of sale and contracts for the provision of services, for the application of the general principle of the place of performance of the obligation in question laid down in point (a). It does not apply to contracts that do not fall into either of those categories, and it does not apply even to those categories when the place of performance of the contract is in a State not bound by the Convention. Whenever point (b) is found to be inapplicable, point (a) applies; this is in fact stated in point (c), which clarifies and confirms a conclusion that could be drawn from points (a) and (b) even without it. In the case, for example, of a sales contract where the obligation to deliver the goods is to be performed in a State bound by the Convention, the place of performance of an obligation to make payment cannot be made the basis for establishing jurisdiction; but if the obligation of delivery is to be performed in a State not bound by the Convention, the plaintiff could invoke the place where payment was to be made, always supposing that that place was located in a State bound by the Convention, as point (a) would then be applicable, and it allows the specific obligation relied upon to be taken into account. 52. Regarding jurisdiction over individual contracts of employment, which figure in Article 5(1) of the 1988 Convention, several proposals for amendment were put forward; the ad hoc working party chose to deal with this matter separately in Title II (see below, in connection with Section 5). 53. The first limb of the provision, in (a) and (b), remains unchanged with respect to the provision in the 1988 Convention, which in its turn was identical to the provision in the Brussels Convention following the Accession Convention of 1978. For commentary, therefore, please refer to the previous reports (Jenard report, pp. 24-25; Schlosser report, paragraphs 90-108). 54. The Court of Justice has considered this provision on a number of occasions, and has clarified several aspects. The Court has held that the concept of a maintenance obligation is to be interpreted broadly, to include any obligation designed to enable a person to provide for himself or herself, whether or not payments are periodic and whether or not the obligation is determined on the basis of resources and need. It may, therefore, consist of the payment of a lump sum, if the amount of the capital has been arrived at in order to guarantee a predetermined level of income, or the transfer of ownership of property intended to enable a person to provide for himself or herself. Where such a provision is designed to enable one spouse to provide for himself or herself, or if the needs and resources of each of the spouses are taken into consideration in the determination of its amount, the payment relates to a maintenance obligation, and not to rights in property arising out of a matrimonial relationship, which would be outside the scope of the Convention [1]. If these characteristics of a maintenance obligation are present, the obligation is governed by Article 5(2), and falls within the scope of the Convention, even if it is ancillary to a proceeding, such as a divorce proceeding, which is itself excluded [2]. 55. The concept of ‘maintenance creditor’ is an independent concept that has to be determined in the light of the purpose of the rules of the Convention, without reference to the national law of the court seised. Article 5(2) does not make it possible to distinguish between a person whose right to maintenance payments has been recognised and a person whose right has not yet been established, and the concept consequently covers not only a person whose right to maintenance has already been established by a previous judgment, but also a person who is applying for maintenance for the first time, irrespective of whether national law restricts the notion of maintenance creditor to persons in the first category [3] . In the light of the Court’s case-law, the ad hoc working party felt that there was no need to change Article 5(2) by replacing the expression ‘maintenance creditor’ with the expression ‘applicant for maintenance’, as the Commission had suggested [4] . The concept of ‘maintenance creditor’ does not include a public body that brings an action to recover sums it has paid to the maintenance creditor, to whose rights it is subrogated against the maintenance debtor, since in that case there is no need to deny the maintenance debtor the protection offered by the general rule in Article 2 of the Convention [5] .
56. There is a new provision in point (c), which concerns matters relating to maintenance that are ancillary to proceedings concerning parental responsibility: it confers jurisdiction on the court which, according to its own law, has jurisdiction to entertain the proceedings concerning parental responsibility, unless that jurisdiction is based solely on the nationality of one of the parties. But it should be noted that this does not in any way modify the provision of Article 5(2) as it currently stands in the 1988 Convention and in the Brussels I Regulation [1]. The aim of point (c) is only to ensure parallelism between European Community law and the Lugano Convention. Recital No 11 to the Brussels II bis Regulation (Council Regulation (EC) No 2201/2003 of 27 November 2003) [2], in particular, clarifies the meaning of the rule of jurisdiction for maintenance claims where the maintenance claims are ancillary to parental responsibility proceedings, stating that jurisdiction with regard to such claims should be determined on the basis of Article 5(2) of the Brussels I Regulation. In order to avoid any doubt in the Lugano Convention, it was thought opportune to insert a provision clarifying the issue. 57. In matters of ‘tort, delict or quasi-delict’, the jurisdiction of ‘the courts for the place where the harmful event occurred’, provided for in Article 5(3) of the 1988 Convention (and earlier in the Brussels Convention), has given rise to a large body of Court of Justice case-law, prompted in part by the Jenard report, which limited itself to saying that the committee of experts for which Mr Jenard served as rapporteur ‘did not think it should specify where the event which resulted in damage or injury occurred, or whether it is the place where the damage or injury was sustained. The Committee preferred to keep to a formula which has already been adopted by number of legal systems’ [3] , leaving open the meaning to be to be ascribed to the formula itself. The question came before the Court of Justice, which held that the wording of Article 5(3) must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it, and that the defendant could be sued, at the option of the plaintiff, in the courts of either of the two places [4] . This interpretation does not choose between the different solutions accepted under national laws, which in order to determine where unlawful acts committed ‘remotely’ are deemed to have occurred base themselves sometimes on the theory of the place of the act and sometimes on the theory of the place of the result; it thus increases the scope for forum shopping. It should be noted, however, that reference exclusively to the place of the act would in many cases have removed any significance from this special jurisdiction for the place of the tort, given that the place of the act frequently coincides with the domicile of the defendant liable for the tort, while reference exclusively to the place where the damage occurred would in any event not have prevented a fragmentation of the legal action in many cases. 58. The Commission proposed that the case-law of the Court of Justice should be confirmed in the wording of Article 5(3), which should refer both to ‘the place where the event giving rise to the damage occurred’ and to ‘the place where the damage or part thereof was sustained’ [5] . The ad hoc working party did not accept this proposal: it felt that to confirm clear and uncontested case-law in a legislative act was unnecessary, and perhaps dangerous, since the words used, if they were inserted into a legislative text, might lend themselves to new interpretations. Furthermore, from the standpoint of reference to the place where the damage occurred, the proposal to confer jurisdiction on the courts of ‘the place where the damage or part thereof was sustained’ had several drawbacks. It did not incorporate into the legislation the clarification supplied by the Court of Justice in judgments subsequent to the initial ruling. In these, the Court made clear that the place of the damage was the place where the event giving rise to the damage, and entailing tortious, delictual or quasi-delictual liability, directly produced its harmful effects upon the person who was the immediate victim of that event [6] , and did not cover the place where the victim claimed to have suffered financial damage following upon initial damage arising and suffered by him in another Contracting State; so that it could not be construed so extensively as to encompass any place where the adverse consequences could be felt of an event which had already caused damage actually arising elsewhere [7] . To codify part of the Court’s case-law, but not all of its later developments, might have raised doubts regarding the legislature’s intention as to the scope of the rule. 59. Furthermore, to confer jurisdiction on the court of ‘the place where the damage or part thereof was sustained’ would have meant that if there was damage in more than one State, the plaintiff could sue for the total damage in each of these States, which was contrary to the case-law of the Court: in a case of libel by a newspaper, the Court resolved the problem of plurality of damage caused by the same act by giving the courts of each of the States in which injury was suffered jurisdiction to rule on the harm caused in that State: the only courts with jurisdiction to rule on all the harm caused were those of the domicile of the defendant [8] .
It is true that the solutions offered by Court of Justice oblige plaintiffs who suffer damage in several States to bring multiple proceedings, and given the different laws that are applicable this may lead to contradictory rulings regarding the same causal act [1]. Conferring jurisdiction over the entire damage on the court in each place where part of the damage occurred, on the other hand, would increase the scope for forum shopping and favour the plaintiff excessively. The ad hoc working party examined the alternative proposal that jurisdiction should be attributed to the court of the State in which the major part or a decisive part of the damage occurred. However, this solution was also eventually rejected, in view of the risk that a test of this nature might lead to frequent disputes regarding the determination of the major or decisive part of the damage, obliging the parties and the court to resolve questions of substance at the stage at which jurisdiction was being determined. 60. Having decided not to amend Article 5(3) in the manner proposed by the Commission, the ad hoc working party gave lengthy consideration to the possibility of clarifying the provision’s scope with regard to its applicablity not only to claims for injury that had already occurred, as a literal reading of the 1988 Convention might suggest, but also to claims based on the threat of injury in the future. The ad hoc working party had in mind in particular those cases in which an action brought by a public or private consumers’ organisation led to an injunction protecting the collective interests of consumers, since such an action concerned behaviour likely to cause harm, and would otherwise be outside the objective scope of Article 5(3). Actions of this nature are common practice in Scandinavian countries, and especially in Swedish law, and require uniform treatment in terms of jurisdiction and the enforcement of judgments in order to ensure that commercial operators who engage in fraudulent practices to the detriment of consumers in Member States of the Community – such as misleading marketing practices or unfair terms in standard contracts – are not beyond the reach of any action or remedy once their firm is based in a State other than the State where they are actually operating. The ad hoc working party noted that this situation was covered by Article 31, which allowed application to be made to a court for provisional or protective measures available under national law, because that rule applied even where the measures in practice had final effect [2]. It also considered the protection extended to consumers by Community directives, such as Directive 93/13/EEC on unfair terms in consumer contracts, Article 7(1) and (2) of which oblige Member States to ensure that adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers, and specify that the means referred to must include provisions whereby persons or organisations, having a legitimate interest in protecting consumers, may take action according to the national law concerned, before the courts or before competent administrative bodies, for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms [3] , or Directive 98/27/EC on injunctions for the protection of consumers’ interests, Article 2 of which obliges Member States to designate courts or administrative authorities competent to require the cessation or prohibition of any infringement of a series of Directives on consumer protection listed in the Annex, and, where appropriate, to order measures such as the publication of the decision or the publication of a corrective statement, with a view to eliminating the continuing effects of the infringement, and the payment of fines to ensure compliance with the decisions [4] . 61. Notwithstanding the possibility of resorting to these various legal provisions, the ad hoc working party also took account of the fact that these directives contained no rules of jurisdiction and that their application in the various Member States might not be uniform, the possibility that doubts might arise as to whether certain actions for cessation under national law were covered, and, lastly, the fact that such actions might be brought in cases that did not concern consumer protection, for example where a plaintiff sought to prevent a defendant from infringing the plaintiff’s intellectual property rights; these considerations led the working party to include a specific provision in Article 5(3) conferring jurisdiction on the courts of the place of the harmful event in respect of threatened future harm as well. The amendment is intended to clarify the scope of the law, and not to change it substance, as the inclusion of actions for cessation can clearly be derived by interpretation from the previous wording [5] . It should be remembered in this regard that the rationale for the special jurisdiction of the court of the place of a harmful event lies in the fact that that court is usually best placed to decide the case, owing to its proximity to the dispute and the ease with which evidence can be produced, and that this rationale applies not only to claims for compensation for damage already sustained but also to actions aimed at preventing damage from occurring. The Court of Justice subsequently took this view with regard to the Brussels Convention, though its reasoning was guided partly by the amendment made to Article 5(3) of the Brussels I Regulation, which was in the same terms as those now inserted into the Lugano Convention [6] .
62. The provision conferring jurisdiction in respect of harmful events that may occur in the future means that they are governed by the findings of the Court of Justice allowing the plaintiff to bring proceedings either in the place where the action generating the harm is to be avoided or in the place where the harmful event itself is to be prevented. Determining the place where the harm ‘may occur’ is essentially a matter of fact, and thus a matter for the court hearing the case. In line with the approach taken by the Court of Justice, however, it must be the place where there is a danger of immediate damage, and not a place where there may be indirect financial damage. The existence of a danger that may justify the grant of an injunction depends on the law of the State in which the injunction is sought: the rule here merely regulates jurisdiction, and does not specify the injunctions that may be issued, so that their character and content, the conditions on which they may be granted, and the persons entitled to seek them are to be determined by the law of the court seised or by Community provisions aimed at harmonising the relevant national laws. 63. As mentioned earlier, the special jurisdiction to issue injunctions that is under consideration here is concerned only with claims relating to conduct likely to cause damage which is not a breach of a contractual obligation; in the case of a breach of a contractual obligation, a remedy may be sought, as an alternative to the forum of the defendant, in the forum of the contract, as provided in Article 5(1). It should be borne in mind that the concept of ‘tort, delict or quasi-delict’, like that of ‘matters relating to a contract’, is to be interpreted independently, primarily by looking at the system and scope of the Convention, and is not a question that is referred to national law. In particular, the Court of Justice has held that the concept of ‘matters relating to tort, delict or quasi-delict’ covers all actions which seek to establish the liability of a defendant and which are not related to a contract with an obligation freely assumed by one party towards another [1]. 64. The provision conferring jurisdiction on the criminal court to hear actions for compensation or recovery arising out of a crime has been retained in the new Convention. The ad hoc working party discussed whether this provision should remain in the same terms, or should be amended or even deleted. It would indeed have been deleted by a proposal that criminal courts should be able to hear civil actions only if civil courts of the same place could hear actions originating from the same crime under the Convention. The working party decided to retain the rule, in view of the usefulness of the special jurisdiction conferred on criminal courts where national law allowed civil actions to be brought in the context of a criminal trial, which did not necessarily coincide with the jurisdiction for the place of a tort under Article 5(3). 65. The proposal for the amendment of Article 5(4) was in part connected to a redrafting of the other provision regarding the bringing of civil actions within a criminal context, in Article II of Protocol 1 to the 1988 Convention, which allows persons domiciled in a Contracting State who are being prosecuted in the criminal courts of another Contracting State of which they are not nationals, for an offence which was not intentionally committed, to be defended by a lawyer without having to appear in person. If the court orders their appearance, and they fail to appear, a judgment in the civil action given in the criminal trial need not be recognised in the other States bound by the Convention [2]. It was proposed, on the one hand, that this rule should be extended to include intentional offences, and on the other hand that it should be restricted, so that it would say only that if the criminal court was also hearing the civil action, the defendant was entitled to be represented with respect to the civil action without appearing in person, without the provison specifying the implications of this provision for the recognition of the judgment. These proposals were rejected, partly in order to avoid forceful interference in the criminal law of the States in a Convention dealing with civil and commercial matters. 66. Article II of the Protocol thus remained unchanged [3] , and in view of the parallelism with the Brussels I Regulation was transferred to the text of the Convention, now becoming Article 61. However, it should be noted that the decision not to extend the rule to intentional offences has been tempered by the Court of Justice, which has held that Article II of the Protocol is not to be interpreted as preventing the court of the State in which enforcement is sought from taking account, in relation to the public policy clause in Article 34(1), of the fact that in an action for compensation founded on an intentional criminal offence the court of the State of origin refused to allow that person to have his defence presented unless he appeared in person [4] . Which is the equivalent of saying that the provision in the present Article 61, which expressly refers to unintentional offences, applies to intentional ones as well, failing which recognition of judgments may be refused on the ground that they are contrary to public policy [5] . 67. The provision regulating the forum of a branch, agency or other establishment for disputes arising out of their operations has not undergone any modification. Article 5(5) confers special and terrritorial jurisdiction on the courts of the place where they are situated, with the aim of avoiding reference to national law. The concept of a branch, agency or ...
... other establishment is thus an independent one, which is common to the States bound by the Convention and ensures legal certainty. The Court of Justice has indicated that the concept of a branch, agency or other establishment implies a place of business which presents itself as the extension of a parent body, and has a management and is materially equipped to negotiate business with third parties, so that the latter know that they can establish a legal relationship with the parent body abroad without having to deal directly with it [1]. These characteristics are present even where the place of business is run by a company independent of the parent from the point of view of national company law, which has the same name and identical management, and which negotiates and conducts business as an extension of the parent, because third parties must be able to rely on the appearance thus created [2]. Protection of third parties in such a case requires that the appearance be deemed equivalent to the existence of a branch without legal independence. On the basis of the concept described, it falls to the court to verify the evidence for the existence of a genuine secondary establishment in the case before it. 68. The disputes that have arisen regarding branches, agencies and other establishments, for which this Article provides a special jurisdiction that may replace the ordinary forum of the defendant, have been concerned with contractual and extra-contractual rights and obligations related to the management of the establishment (rent, relationships with staff, etc.), contractual obligations which have been entered into by the establishment in the name of the parent company and which are to be performed in the State in which the place of business is situated, and non-contractual obligations arising out of the activities engaged in by the establishment in the place in which it is situated on behalf of the parent [3] . Here too it is for the court before which the matter is brought to verify and classify the relationship relied upon, in the light of the concept of a dispute arising out of the operations of a branch, agency or other establishment as described here. 69. Of the various situations where jurisdiction may be founded on a connection between the action brought and another action where jurisdiction is regulated by the Convention, the need has been felt for clarification of the case where there is more than one defendant, allowing the plaintiff to bring proceedings in the court of the domicile of any of them, as the effective scope of the provision has been considered uncertain. In the absence of any indication in the original text of the Brussels Convention, the Jenard report pointed out that jurisdiction that derived from the domicile of one of the defendants had been adopted because it made it possible to obviate the handing down in the Contracting States of judgments which were irreconcilable with one another, and was not justified where the application was brought solely with the object of ousting the jurisdiction of the courts of the State in which the defendant was domiciled [4] . The Court of Justice has held that Article 6(1) requires that the actions brought by the plaintiff be related in such a way that dealing with them separately might result in irreconcilable judgments [5] . The ad hoc working party considered it advisable to codify the case-law on this point, and to define what the relationship between the actions should be if it was to confer jurisdiction with respect to all the defendants on the courts of the domicile of one of them. It may be noted that the concept of relatedness accepted coincides with that in Article 28(3), although the premisses and purposes of that provision are different: it is aimed at coordinating the jurisdiction of the States bound by the Convention, rather than identifying the court or courts of one of those States that has jurisdiction. 70. Contrary to the view put forward by the Commission [6] , the ad hoc working party did not believe it necessary to codify the other principle stated in the Jenard report, according to which jurisdiction is justified only if the claim does not have the exclusive purpose of removing one of the defendants from their proper court. It felt that the close relation that must exist between the claims, together with the requirement that the court before which the matter was brought be the court of the domicile of one of the defendants [7] , was sufficient to avoid the misuse of the rule [8] ; this was not the case with an action on a warranty or guarantee or other third party
proceedings regulated by Article 6(2), where the principle was expressly referred to in order to prevent a third party from being sued in an unsuitable court. It may be pointed out that where there is more than one defendant, jurisdiction is based objectively on the close link between the actions, which has to be shown by the plaintiff, whereas in the case of an action on a warranty or guarantee or other third party proceedings no such close link is required. In its place, ‘the related nature of the main action and the action on a warranty or guarantee’ [1]is enough, irrespective of the basis on which the court has jurisdiction in the original proceedings, and this makes it advisable that there should be a provision safeguarding the defendant’s right to be sued in the court which would be competent in his case, even though it places on the defendant himself the burden of proving that he has been removed from it. 71. Nor did the ad hoc working party consider it necessary to include a provision in Article 6(1) aimed at preventing the provision from being applied to defendants who have agreed a choice of forum clause with the plaintiff in accordance with Article 23 of the Convention. The Commission had made a proposal to this effect, but the exclusive jurisdiction provided for in Article 23 has precedence over any other jurisdiction regulated by the Convention, subject only to the provisions indicated in Article 23(5), so that there is no room for doubts of interpretation, and there is no reason to repeat the principle in a specific rule conferring jurisdiction. The fact that the report refers to such precedence only in the comment on Article 6(2) is no evidence to the contrary, as this rule of jurisdiction takes precedence over all the rules of jurisdiction in the Convention, with the exception of those listed in Article 23 itself. Of course this does not apply to a choice of forum clause to which the parties did not intend to give an exclusive character (for which see below, in connection with Article 23). 72. It should be noted, finally, that the pecularities in matters of actions on a warranty or guarantee of some States bound by the Convention, which had been made subject to a special rule under which Article 6(2) of the Brussels Convention was declared inapplicable, a rule repeated in Article V of Protocol 1 to the 1988 Convention, are treated in the same way once again in the new Convention, and specifically in Article II of Protocol 1. That Article provides that the jurisdiction specified in Articles 6(2) and 11 may not be fully resorted to in the States bound by the Convention referred to in Annex IX to the Convention (Germany, Austria, Hungary and Switzerland [2], while persons domiciled in another State bound by the Convention may be sued in the courts of those States pursuant to the rules on third party proceedings there provided for. But decisions taken in other States under Articles 6(2) and 11 will be recognised and enforced in the States concerned under the special provision in Title III of the Convention (for comment on the reasons for this special provision for some States, see the Jenard report, pp. 27-28; the Schlosser report, paragraph 135; and the Jenard-Möller report, paragraph 105) [3] . Article II of Protocol 1 adds a new paragraph (paragraph 2) which provides that at the time of ratification the European Community may declare that proceedings referred to in Articles 6(2) and 11 may not be resorted to in some other Member States, and in that event is to provide information on the rules that are to apply instead [4] . The inapplicability of Articles 6(2) and 11 in Germany, Austria and Hungary is also recognised in the Brussels I Regulation (Article 65).
73. In matters of insurance, the Convention maintains an independent and complete scheme, with the exception of a reference to Articles 4 and 5(5); Article 9(2) gives more extensive scope to the forum of a branch, agency or other establishment, which makes it possible to base jurisdiction on the existence of a branch, agency or other establishment even when the insurer is not domiciled in a State bound by the Convention. In order to protect the weaker party in an insurance relationship, the Convention keeps the previous structure, distinguishing between the position of the insurer on one side, and that of the policyholder, the insured or a beneficiary, on the other, and providing various criteria for jurisdiction depending on whether one or other assumes the position of plaintiff or defendant (see the Jenard report, pp. 30-33, and the Schlosser report, paragraphs 136-152). 74. Under the 1988 Convention, the insurer could be sued not only in the courts of the State of domicile – and other courts in particular cases – but also in the courts of the policyholder’s domicile, on an action brought by the policyholder; but the insurer could sue the policyholder, the insured or a beneficiary only in the courts of their State of domicile. This rule of jurisdiction gave a distinctive position to the policyholder, who enjoyed greater protection than the insured or the beneficiary: They could likewise be sued only in the courts of the State in which they were domiciled, but as plaintiffs they could not sue the insurer before the courts of their own domicile, which was a right reserved to the policyholder. The Jenard report explained
that the distinction was motivated by the consideration that only the policyholder was in a business relationship with the insurer and that ‘it would be unreasonable to expect the insurer to appear in the court of the insured or of a beneficiary, since he will not necessarily know their exact domicile at the time when the cause of action arises’ [1]. The ad hoc working party took the view that this argument no longer reflected the needs of the insurance business as it had developed in recent decades, with greater competition, new forms of insurance, and above all a higher level of legislative harmonisation as a result of the adoption of Community single market directives, which made it less difficult for an insurer to appear before a court of another country in the single market. Despite the development of European judicial cooperation, on the other hand, it is still quite difficult for a private person to sue a company in a different country, in the courts of the company’s State of domicile. These considerations have led to the removal of the distinction described, and the insertion of the insured and the beneficiary alongside the policyholder in Article 9(1)(b), thus putting them on an equal footing [2]. 75. In addition to the entitlement given them to sue the insurer in the courts of their own domicile, policyholder, insured and beneficiary are protected by restricting the general principle that allows the parties to depart from the rules of jurisdiction of the Convention except in the case of exclusive jurisdiction. Article 13 states that an agreement on jurisdiction can be entered into only in specified and limited circumstances, which include that of an insurance contract covering one or more of the risks listed in Article 14, essentially connected with sea, air and combined transport of goods and passengers. This restriction on choice of forum clauses in contracts ensures a high level of protection, and applies to insurance contracts entered into not just by private consumers, but also by businesses and professionals. There was some doubt, however, whether such wide protection was justified with respect to commercial insurance contracts. The ad hoc working party, therefore, looked at the option of increasing the role of the freedom of the parties by distinguishing between insurance contracts concluded by consumers and contracts entered into in the course of industrial, commercial or professional activities, and allowing the latter a choice of forum. The preferred option, however, was that the contracts in respect of which the parties could be allowed greater freedom should be identified by reference not to the policyholder, but to the risks covered by the contract, with additional risks being added to those that already appeared in Article 12A of the 1988 Convention. This solution has the advantage that it does not modify the structure of the Convention, so that the section on insurance remains separate from the section on consumer contracts. Furthermore, it avoids any reference to a policyholder who is a consumer, so that it continues to offer protection not just to consumers but to individual entrepreneurs, to small and medium-sized enterprises, and to professionals who, even though they carry on an industrial, commercial or professional activity, deserve the same protection in matters of insurance as that given to consumers. 76. By a cumulative approach, therefore, the risks already listed in Article 14 (to which reference is made in Article 13(5)) remain as they are, and to these the new Convention adds ‘all large risks’. The expression used to define the risks which, when they are covered by an insurance contract, allow the parties to depart from the otherwise compulsory provisions of the section, differs from the corresponding Article 14(5) of the Brussels I Regulation. The latter speaks of all large risks ‘as defined in Council Directive 73/239/EEC, as amended by Council Directives 88/357/EEC and 90/618/EEC, as they may be amended’, and thus refers to Community legislation both present and future. The wording is different here because it would not have been appropriate to make a precise reference to Community rules in a Convention to which States that are not members of the European Community are party. Effectively, however, the general reference to ‘large risks’ in Article 14(5) of the Convention is to be understood to designate the same risks as those referred to in the Directives listed. These large risks are defined in Article 5 of Directive 1988/357/CEE [3] , which refers to point A in the Annex to Directive 73/239/EEC [4] , and specifically to risks classified under classes 4 to 7 (damage to or loss of railway rolling stock, aircraft, sea, lake and river and canal vessels, and goods in transit or baggage, irrespective of the form of transport), and under classes 11 and 12 (aircraft liability and liability for sea, lake and river and canal vessels including carrier’s liability); risks classified under classes 14 and 15 (credit and suretyship), where the policyholder is engaged professionally in an industrial or commercial activity or in one of the liberal professions, and the risks relate to such activity; and risks classified under classes 8 and 9 (fire and natural forces and other damage to property), 13 (general liability) and 16 (miscellaneous financial loss), in so far as the policyholder exceeds the limits of at least two of three criteria relating to balance-sheet total, net turnover and average number of employees during the financial year.
Of the risks classified under point A of the Annex, therefore, those considered ‘large risks’ are essentially those where the policyholder is a business of a certain size, or at any rate one that is engaged in an industrial, commercial or professional activity, and exclude the risks classified under the classes accident, sickness, motor vehicles and legal expenses, where the policyholder is usually acting as a private individual. Thus although it does not do so expressly, as the Brussels I Regulation does, the Convention establishes a connection between jurisdiction and the freedom to provide services, for firms and for the classes of insurance other than life assurance covered by the First Directive, even in the States bound by the Convention that are not members of the European Community. 77. As has been pointed out, the Brussels I Regulation defines large risks by making an express reference to Community directives which includes potential future amendments. There is no such reference in the Convention, but the bare words ‘all large risks’ in Article 14(5) have to be interpreted in the light of the Community rules, present and future, at least in so far as the Community rules do not make radical changes to the approach to the handling of large risks. This view is supported by the recital in the preamble that states that the Convention is based on the extension of the principles laid down in the Brussels I Regulation to the contracting parties, and by Protocol 2, which seeks to arrive at as uniform an interpretation as possible of the Convention and of the Brussels I Regulation. Any problems that may emerge as a result of changes in the Community rules are to be considered within the context of the Standing Committee set up under Protocol 2 (paragraph 203 below). 78. In matters of consumer contracts, the Convention confirms the preceding rules protecting the weaker party to a contract in the same terms as the 1988 Convention, and lays down an independent scheme, without prejudice to Articles 4 and 5(5). While the consumer may sue the other party to the contract not just before the court of the State in which the other party is domiciled, but also before the court of the consumer’s own domicile, the other party may bring an action only in the courts of the State bound by the Convention in whose territory the consumer is domiciled (Article 16). The Convention permits an agreed choice of forum, but only after the dispute between the parties has arisen, or if it allows the consumer to bring proceedings in other courts, or if the choice of forum agreement confers jurisdiction on the courts of a State in which the consumer and the other party both have their domicile or habitual residence at the time of the conclusion of the contract, provided that such an agreement is not contrary to the law of that State (Article 17). For these provisions, therefore, please refer to the earlier reports (Jenard report, pp. 33-34; Schlosser report, paragraphs 159-161). 79. While the system of protection does not change, the Convention further widens the range of the contracts falling under it. The 1988 Convention, which took over the wording of the Brussels Convention then in force, provided that the protection offered by the Convention covered the sale of goods on instalment credit terms, loans repayable by instalments, or any other form of credit made to finance the sale of goods, and any other contract for the supply of goods or contract for the supply of services, if in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and the consumer took in that State the steps necessary for the conclusion of the contract (Article 13(1)). This last part of the provision considerably broadened the scope of the protection provided by comparison with that in the original Brussels Convention, which was confined to sales on instalment credit terms and loans repayable by instalments, but nevertheless it was not considered sufficient to guarantee adequate protection of consumers by the courts, parallel to the substantial protection offered by the Community directives. The 1988 Convention lacks a definition of the parties to a consumer contract, and in particular a definition of the other contracting party, it does not cover all consumer contracts, and its wording does not make it certain that it covers contracts concluded in non-traditional and especially digital formats. 80. Regarding the definition of the consumer, Article 15 of the Convention essentially reproduces the definition in the 1988 Convention, under which the consumer is a natural person who concludes a contract ‘for a purpose which can be regarded as being outside his trade or profession’. This corresponds to the definition used in other Community legislation [1], in particular in the Regulation on the law applicable to contractual obligations (Rome I) [2]. But the 1988 Convention lacks a definition of the other party to a consumer contract, which has given rise to doubt whether a contract which is concluded for a purpose outside the trade or profession of both contracting parties falls under the special rules on consumer contracts or the general rules of the Convention. It should be observed that the application of the special rules in Articles 15 to 17 is justified only where there is an imbalance between the positions of the parties such as to require that steps be taken to reduce or to eliminate it so as to protect the weaker party. This is the case only when the other party is engaged in a commercial or professional activity. Nevertheless, in order to avoid doubts of interpretation, Article 15(1)(c), which applies to most consumer contracts, expressly states that it is applicable to contracts concluded by the consumer with ‘a person who pursues commercial or professional activities’. This clarification was not considered necessary in the specific cases of contracts for the sale of goods on instalment credit terms or for loans repayable by
instalments, where it is difficult to imagine that the seller or lender is acting outside the scope of a trade or profession. 81. Article 15 of the Convention also considerably widens the range of consumer contracts to which it refers. While Article 13(1)(3) of the 1988 Convention speaks of ‘any other contract for the supply of goods or a contract for the supply of services’, Article 15(1)(c) of the new Convention uses the words ‘in all other cases’, referring to any contract, other than a contract for the sale of goods on instalment credit terms or for a loan repayable by instalments, which is concluded with a person who pursues commercial or professional activities, provided the contract falls within the scope of such activities. This broad concept of consumer contracts extends the scope of the protection offered, and simplifies the determination of the contracts covered, in line with the protection provided by the Community directives on consumer protection. It encompasses all the contracts regulated as consumer contracts by the Community directives, including contracts whereby a creditor grants or promises to grant to a consumer credit in the form of a deferred payment, loan or other similar financial accommodation, in so far as they are regulated by Directive 87/102/EEC on consumer credit [1]. There is no longer any doubt that the concept includes contracts relating to the purchase of the right to use immovable properties on a timeshare basis, which are the subject of Directive 94/47/EC [2]; it would not otherwise have been certain that these were to be classified with consumer contracts, rather than with contracts for the purchase of rights in rem in immovable property, which are the subject of Article 22(1), given the disparity among the various national laws of the States bound by the Convention. This conclusion has been confirmed by the Court of Justice, which has held that timeshare contracts that are subject to Directive 94/47/EC are also covered by Directive 85/577/EC if the conditions for the application of that directive are otherwise fulfilled [3] , and that that interpretation must be taken into account for the purposes of the interpretation of the Convention, given the link between the Convention and the Community legal order [4] . 82. The Convention also extends the scope of the rules on consumer contracts as regards the connection with the State in which a consumer is domiciled. It does not innovate with regard to the sale of goods on instalment credit terms or loans repayable by instalments, where there is no need for proximity between the contract and the State in which the consumer is domiciled. For other contracts, however, the extension of protection to all consumer contracts, and the extension of the forum actoris that that brings with it, would not be justified without a factor connecting the other contracting party and the State of domicile of the consumer. The 1988 Convention required certain links in the case of contracts for the supply of goods or services – the requirement that in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to the consumer or by advertising, and the requirement that the consumer took in that State the steps necessary for the conclusion of the contract – but the ad hoc working party considered that these were insufficient, and unsuited to the present requirements of consumer protection. The new Convention therefore requires that the commercial or professional activities of the person with whom the consumer concludes a contract be pursued in the State of the consumer’s domicile, or that they be directed to that State or to several States including that State. 83. The new connection with the State of domicile of the consumer can be applied to a contract of any kind, and is intended in particular to meet the need for protection arising out of electronic commerce [5] . It does not depend on the place where the consumer acts, or on the place where the contract is concluded, which may be in a country other than that of the consumer’s domicile: it attaches importance only to the activities of the other party, which must be pursued in the State of the consumer’s domicile, or directed to that State, perhaps by electronic means. In the case of an Internet transaction, for example, the fact that the consumer has ordered the goods from a State other than the State of his own domicile does not deprive him of the protection offered by the Convention if the seller’s activities are directed to the State of his domicile, or to that State among others; in that case too the consumer may bring proceedings in the courts of his own domicile, under Article 16 of the Convention, regardless of the place where the contract was concluded and regardless of the place where a service supplied electronically was enjoyed. The connection exists only if the commercial or professional activities are indisputably directed towards to the State where the consumer is domiciled. Whether a website is considered active or passive is irrelevant here. As the EU Council and the EU Commission have stated on Article 15 of the Brussels I
Regulation, ‘for Article 15(1)(c) to be applicable it is not sufficient for an undertaking to target its activities at the Member State of the consumer’s residence, or at a number of Member States including that Member State; a contract must also be concluded within the framework of its activities. This provision relates to a number of marketing methods, including contracts concluded at a distance through the Internet. In this context, the Council and the Commission stress that the mere fact that an Internet site is accessible is not sufficient for Article 15 to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means. In this respect, the language or currency which a website uses does not constitute a relevant factor’ [1]. 84. The sphere of application of the rules of jurisdiction protecting consumers has been further expanded to include contracts of transport, which were excluded from it by the 1988 Convention, where they were made subject to the general rules on contracts. The exclusion of all contracts of transport appeared unjustified given the practice of concluding contracts for a combination of travel and accommodation for an inclusive price. To continue to exclude contracts of transport here would also have meant that different rules of jurisdiction would have to be applied to the different services combined in a single contract which in economic terms represents a single commercial transaction. Article 15(3) therefore limits the exclusion from the rules in Section 4 of Title II to contracts of transport that do not provide for a combination of travel and accommodation for an inclusive price; this provision is thereby aligned on the provision for consumer contracts in the Convention on the law applicable to contractual obligations [2]. 85. Individual contracts of employment were completely ignored in the original Brussels Convention, and were consequently subject to the general rules and to the special rule on contractual obligations in Article 5(1), without any special restriction on the choice of forum; they were made the subject of special rules in the 1988 Convention (the second part of Article 5(1) and Article 17(5)); and they are now dealt with by special rules in Section 5 of Title II, which comes after the sections on insurance and consumer contracts, completing the rules protecting the weaker party to a contract. The new section follows the same scheme and the same solutions as the others, departing in some respects from the arrangements in the 1988 Convention. 86. Like the provisions in the other sections, Article 18(1) affirms the independent and comprehensive nature of the rules of jurisdiction for individual contracts of employment contained in the section, without prejudice to Article 4 if the defendant is domiciled in a State not bound by the Convention, and without prejudice to Article 5(5) for disputes concerning a branch, agency or other establishment. Like Article 9(2) and Article 15(2), Article 18(2) treats the existence of a branch, agency or establishment in a State bound by the Convention as equivalent for questions arising out of their operation to a domicile of the employer in that State, even if the employer is domiciled in a State not bound by the Convention. 87. Jurisdiction in proceedings against an employer domiciled in a State bound by the Convention is governed by Article 19, which, for the most part, reproduces the provision in the second part of Article 5(1) of the 1988 Convention. This means that an employer can be sued not only in the courts of the State where he is domiciled, but also in the courts of the place where the employee habitually carries out his work or the last place where he did so (paragraph 2(a)). The last phrase was missing from the 1988 Convention, and has been inserted because it has frequently been observed that proceedings are brought by an employee against an employer only after the employment relationship comes to an end or the employee is no longer working. It would not be appropriate to deprive the employee of the alternative forum of his place of work in such cases. There is also the fact that in the place of his employment, whether during the employment relationship or after it has ended, the employee can usually turn to a trade union that can help him to assert his rights before the courts. If an employee works or has worked habitually in different countries, an action may be brought in the courts of the place where the business which engaged the employee is or was situated (paragraph 2(b)). The solution adopted corresponds to that of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations [3] . It should be noted that this solution is necessary only when it is not possible to determine a country of reference meeting the two requirements that a significant link be established between the dispute and a place whose courts are in the best position to decide the case in order to afford proper protection to the employee as the weaker party to the contract, and that multiplication of the courts having jurisdiction be avoided. Even when the employee works in more than one State, if he actually performs the essential part of his duties vis-à-vis his employer in one place, it is in that place that he must be judged habitually to carry out his work, and Article 19(2)(a) of the Convention will consequently apply [4] .
88. The ad hoc working party examined a proposal to add a jurisdiction to those provided for in Article 19 so as to allow an employee who has been posted for a limited period in another State bound by the Convention, for the purpose of work, to bring legal proceedings concerning the work and the conditions under which it is carried out in the courts of that State. The proposal was considered in the light of Directive 1996/71/EC on the posting of workers [1], Article 6 of which provides that ‘In order to enforce the right to the terms and conditions of employment guaranteed in Article 3, judicial proceedings may be instituted in the Member State in whose territory the worker is or was posted, without prejudice, where applicable, to the right, under existing international conventions on jurisdiction, to institute proceedings in another State’. Obviously this provision, interpreted in the context of the Directive, has a scope different from that of a provision in the Convention conferring general jurisdiction, in favour of the employee, on the courts of the State in which he is posted. The Directive gives a series of definitions of the terms used – such as ‘posted employee’, ‘terms and conditions of employment’, etc. – which would need to be referred to in interpreting the provisions of the Convention. Furthermore, the jurisdiction of the court of the employee’s place of posting is limited by the Directive to ‘the terms and conditions of employment guaranteed in Article 3’ of the Directive, and is not of a general nature. To confer general jurisdiction on this court would not include all of the matters covered by Article 3 of the Directive, since the terms and conditions of employment it refers to cover such subjects as health, safety and hygiene at work, which are matters of public law, and could not be included in the Lugano Convention, confined as it is to civil and commercial matters. Lastly, an additional forum inserted into the Convention would be available exclusively to employees, while Article 6 of the Directive does not distinguish between the positions of the parties, and also provides a basis for jurisdiction over proceedings brought by an employer. So to confer jurisdiction on the courts of a State in which a worker is posted would not regulate jurisdiction in the same way as the Directive, and would create two systems subject to different rules of interpretation and application, which might undermine legal certainty in areas where protection ought to be ensured. These considerations persuaded the ad hoc working party not to accept the proposal to confer general jurisdiction on the court of the place where a worker is posted, and not to amend the rules of jurisdiction regarding employment, though the Directive continues to operate within its own sphere of application, and in any event allows proceedings to be brought under existing international conventions on jurisdiction, among them the Lugano Convention, whose sphere of application remains unchanged. 89. As with the other protective jurisdictions, actions may be brought by an employer against an employee only in the courts of the State bound by the Convention in which the employee is domiciled, except in the case of a counter-claim before the court dealing with the principal claim under the rules in the section on contracts of employment. In providing accordingly, Article 20 follows the same criterion as that adopted for insurance and consumer contracts, and thus modifies Article 5(1) of the 1988 Convention, which also allows the employer to bring proceedings before the court of the place where the employee habitually carries out his work, and, if he works in more than one country, the place of the business which engaged the employee. The decision to remove the employer’s option here was taken after careful evaluation of the role played by this criterion of jurisdiction. The reference to the place where the work is carried out is intended to offer the employee an alternative forum if the employee takes the view that it will be easier to prove his claim there, even after the relationship of employment has ended, and not to offer the employer an expedient forum actoris for disputes with an employee. 90. The rules on choice of forum are also aligned on the system for insurance and consumer contracts. In line with what is provided in Article 5(1) of the 1988 Convention, Article 21(1) states that a different jurisdiction can be agreed only after the dispute has arisen, so that the employee is in a position to assess whether it is desirable. Article 21(2) adds that a choice of forum clause may also depart from the general rules if it allows the employee to bring proceedings in courts other than those indicated in Article 19. By contrast with the other sections, however, there is no reference to the validity of a clause conferring jurisdiction on the courts of a State where both the employer and the employee have their domicile or habitual residence, as this would conflict with Article 3 of the abovementioned Community Directive on the posting of workers in the framework of the provision of services. 91. For some classes of subject-matter the jurisdiction provided for is exclusive, for reasons that require no particular comment, all related to the special closeness between the court and the type of situation. In certain matters the sound administration of justice suggests that exclusive jurisdiction should be conferred on the courts that are best placed to consider the dispute and to apply the local rules and customs. The new Convention confirms the characteristics of exclusive jurisdiction: exclusive jurisdiction applies regardless of where the parties are domiciled in the States bound by the Convention (Article 22); it cannot be departed from by agreement between the parties (Article 23) or implied submission to jurisdiction (Article 24); a court before which the main proceedings in a dispute are brought must decline jurisdiction of its own motion if exclusive jurisdiction vests in the courts of another State bound by the Convention (Article 25); and judgments will not be recognised if they conflict with the provisions on exclusive jurisdiction (Article 35), and may not be enforceable (Article 45).
Only the exclusive jurisdictions referred to in Article 22(1), (2) and (4) have been modified and require specific comment. Those in Article 22(3) and (5) are unchanged from the 1988 Convention, and the reader is asked to refer to previous reports (Jenard report, pp. 35-36). 92. There is no change to the rule that rights in rem in immovable property or tenancies of immovable property are within the exclusive jurisdiction of the courts of the State bound by the Convention in which the property is situated, for reasons which have already been explained with regard to the 1988 Convention (Jenard-Möller report, paragraphs 49-54) and the Brussels Convention (Jenard report, pp. 34-35; Schlosser report, paragraphs 162-165), and need not be gone into here. Nor is it necessary to specify the scope of the provision in relation to the other rules of jurisdiction in the Convention, which has been the subject of repeated examination in the Court of Justice’s case-law with regard to the Brussels Convention. Let us merely note that the Court has accepted that the exclusive jurisdiction in respect of tenancies is confined to disputes which are clearly concerned with the rental of property, and fall within the raison d’être of the exclusive jurisdiction conferred on the courts of the country of the property. A contract that concerns a range of services provided in return for a lump sum paid by the customer is not a tenancy within the meaning of the provision [1]. The provision does apply, however, to an action for damages for taking poor care of premises and causing damage to accommodation which a private individual has rented for a few weeks’ holiday, even where the action is not brought directly by the owner of the property but by a professional tour operator from whom the person in question had rented the accommodation and who has brought legal proceedings after being subrogated to the rights of the owner of the property [2]. Finally, the question whether and to what extent a time-sharing interest in property should be subject to the exclusive jurisdiction over matters of immovable property has been resolved by the ad hoc working party in accordance with the Community rules and their interpretation by the Court of Justice, without the need for any special provision (see paragraph 81 above). 93. At the Commission’s suggestion, the ad hoc working party examined the question whether Article 22(1) should be considered to have a reflex effect by which the courts of the States bound by the Convention would also be deprived of jurisdiction if the property was located in a State outside the Convention. As indicated in the Jenard-Möller report [3] , Article 16(1) of the 1988 Convention ‘applies only if the property is situated in the territory of a Contracting State’; if the property is situated in a non-Convention State, Article 2 of the Convention, and possibly the special jurisdictions which the Convention provides for, apply if the defendant is domiciled in a Contracting State, and Article 4 applies if the defendant is domiciled in a State outside the Convention. After close examination, the ad hoc working party decided that it would not be advisable to modify this reading of the scope of exclusive jurisdiction in matters of property, or to clarify the point in the text of the Convention, even taking into account the fact that in cases where the property was located in a non- Convention country Article 4 would probably be invoked frequently, and that there were significant differences in the relevant national laws [4] . Following the observations of the Court of Justice in its Opinion 1/03 [5] , the question whether Article 22(1) has a reflex effect, and the implications of any such effect, can best be reconsidered if the national provisions on jurisdiction in property cases where the defendant is domiciled in a non-Community country were to be unified within the European Community. 94. Particularly close attention was paid to the question of conferring jurisdiction on the courts of the State of domicile of the defendant, as an alternative to the courts of the State in which the property was located, for tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months. In this regard the Brussels Convention differs from the 1988 Convention. The Brussels Convention makes the possibility dependent on two conditions, namely that both parties must be natural persons and both must be domiciled in the same State, but the 1988 Convention makes the concurrent jurisdiction of the courts of the State of the defendant’s domicile wider, the conditions here being only that one of the parties, the tenant, must be a natural person and that neither of them be domiciled in the country in which the property is situated, regardless of whether or not they are domiciled in the same State. As the ad hoc working party’s terms of reference called upon it to align the texts of the two
Conventions as far as possible, the working party considered whether the Lugano Convention should be aligned on the Brussels Convention in this respect or vice versa. The solution adopted – which was also followed in the Brussels I Regulation – takes something from both: it requires that only the tenant need be a natural person, but that the contracting parties must be domiciled in the same State. In support of that solution, it should be pointed out in particular that it would have been excessive to require both contracting parties to be natural persons, since the purpose of the provision is to also to provide protection in the very frequent cases where holidaymakers rent accommodation from a company which owns property abroad. Moreover, the requirement that the contracting parties must be domiciled in the same State covers most cases in which it is appropriate to abandon the exclusive jurisdiction of the State in which the property is situated, without extending the scope of the exception too far. 95. Article Ib of Protocol 1 to the 1988 Convention allowed a State to declare that it would not recognise a judgment on a tenancy of immovable property if the property was situated in its territory, even if the tenancy was of a kind contemplated by the rule, and the jurisdiction of the court of the State of origin was based on the domicile of the defendant; this provision was no longer felt to be necessary, and it has not been included in the new Convention. 96. There is no change to the provision in the 1988 Convention regarding exclusive jurisdiction in proceedings which have as their object ‘the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the decisions of their organs’ – or more precisely ‘the validity of the decisions of their organs’, as the new wording puts it, confirming the interpretation that the reference to ‘the decisions of their organs’ was intended to be linked to the first part of the preceding phrase. The provision, in Article 16(2) of the old Convention, conferred jurisdiction on the courts of the seat of the company, legal person or association, in line with the provision that made the seat the equivalent of the domicile. The new provision has maintained the connection with the ‘seat’, but the link is no longer necessarily the same as the one in the general rule. In the new Convention the domicile of a company is in fact defined by reference to the statutory seat, or the central administration or the principal place of business. That definition is an independent one that makes it easier to bring proceedings before a court of a State bound by the Convention against a company that has some significant link with the States to which the Convention applies, but it was not felt to be a proper basis for exclusive jurisdiction over disputes in the areas considered here. The jurisdictions referred to in Article 22 are exclusive, and this is difficult to reconcile with a definition of domicile that applies alternative tests, which might create uncertainty surrounding the law applicable to the validity of the constitution of companies. In other words, the ordinary forum for companies can properly be based on a broad concept of domicile, but for the validity of the constitution of companies the concept applied has to be a narrow one, based on just one connecting factor. The working party opted to maintain the reference simply to the ‘seat’, as in the 1988 Convention, to be determined, as it was under that Convention, by reference to the rules of private international law of the court before which the matter is brought. It should be emphasised, therefore that the ‘seat’ of the company here is not an independent concept, as the ‘statutory seat’ is in Article 60. A reference simply to the ‘statutory seat’ might have avoided the possibility that where the ‘statutory seat’ and the real seat were situated in different countries there might be more than one court with supposedly exclusive jurisdiction; but it was decided that for the resolution of that problem the provisions in the Convention on the coordination of jurisdictions would be enough. 97. The agreed solution will as a rule ensure that forum and jus will coincide, and is motivated by the desirability of ensuring that when the validity of the constitution of a company is at issue there is a single jurisdiction that is predictable and certain. It was pointed out in the working party that the desirability of such a jurisdiction was less evident when the dispute was concerned with decisions of a company’s governing bodies. But the working party decided to keep the exclusive jurisdiction of the court of the seat of the company here too, on the ground that that court is usually best placed to decide on the validity of such decisions. To prevent the possibility that this jurisdiction might be widened by interpretation, the new Convention, as we have seen, refers explicitly to the ‘validity’ of decisions, rather than, as in the previous wording, to the ‘decisions’ themselves, thus making it quite clear that the exclusive jurisdiction does not extend to the decisions’ substance or effects. 98. On the subject of the validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the rule governing jurisdiction is generally the one laid down in the 1988 Convention. Exclusive jurisdiction is conferred on the courts of the State bound by the Convention in whose territory the deposit or registration has been applied for, has taken place or is deemed to have taken place under the terms of an international convention or, as the new wording makes clear, a Community instrument. This last point has been added to remove any doubt about the equivalence of Community law concerning intellectual and industrial property rights with the law of the international conventions in force.
99. Exclusive jurisdiction also applies with respect to patents granted on the basis of the Convention on the grant of European patents, signed in Munich on 5 October 1973. The rule according to which the courts of each State bound by the Convention are to have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that State, without prejudice to the jurisdiction of the European Patent Office, which was contained in Article Vd of Protocol 1 to the 1988 Convention, has now been incorporated into Article 22(4). The last part of the provision as it stood in the Protocol has been omitted: it made an exception to the exclusive jurisdiction of the courts of the States bound by the Convention where the patent was a Community patent under Article 86 of the Convention for the European patent for the common market, signed in Luxembourg on 15 December 1975 [1]. The Luxembourg Convention, amended by a subsequent Agreement relating to Community patents signed in Luxembourg on 15 December 1989, provided for the grant of a Community patent similar to national patents, but independent of them and with equivalent effects in all Contracting States. It declared the Brussels Convention to be applicable to all actions concerning Community patents, while establishing a special jurisdiction for disputes concerning validity and infringement. The Luxembourg Convention never came into force, and no reference has been made to it in the new Lugano Convention. 100. The question of an exception to the exclusive jurisdiction conferred by Article 22(4) on the courts of the Member States has remained a live issue, however, as a result of efforts to pursue the creation of a Community patent by means of Community legislation; the Commission presented a proposal for a Council Regulation on the Community patent in 2000 [2], followed by the Commission’s 2003 proposals for a Council Decision conferring jurisdiction on the Court of Justice in disputes relating to the Community patent and a Council Decision establishing the Community Patent Court and concerning appeals before the Court of First Instance [3] . The general approach is to give broad jurisdiction to the Court of Justice, more especially in disputes concerning infringement, including declarations of non-infringement, disputes concerning the validity of a Community patent, whether challenged in the main action or by way of counter-claim, and disputes concerning the use of the invention after publication of the Community patent application or regarding rights based on prior use of the invention, with exclusive jurisdiction to order provisional measures in cases within these areas, leaving the courts of the States with exclusive jurisdiction under Article 22(4) only in cases not expressly reserved to the Community court. 101. The diplomatic conference held from 10 to 12 October 2006 discussed whether it would be advisable to append to the Lugano Convention a protocol conferring exclusive jurisdiction on the Court of Justice in matters of Community industrial property rights [4] . Such a protocol would have the advantage of assigning to a single court disputes on the validity of patents and disputes on infringement, which under the Lugano Convention would otherwise have to be brought before different courts. But against the proposed protocol it was argued that it did not circumscribe the disputes concerned with sufficient precision, leaving their definition to Community legislation to be enacted later, and that to include actions for infringement was a major departure from the rules of jurisdiction in the Lugano Convention and would compromise its overall harmony. It proved impossible to arrive at a satisfactory formulation, and the diplomatic conference consequently preferred to defer consideration of such a protocol to a later date, when a Regulation on the Community patent had been adopted. 102. The protocol conferring exclusive jurisdiction on the Court of Justice in industrial property matters drew attention to certain needs which have in fact been at least partially satisfied by the subsequent case-law of the Court of Justice: before the signature of the new Convention, the Court found itself called upon to decide the question whether the rule of exclusive jurisdiction over registration or validity of a patent applied irrespective of whether the issue was raised by way of an action or a plea in objection [5] . The Court held that it did: in the light of the position and objective of the provision within the scheme of the Brussels Convention, the view had to be taken that the courts of the State of registration of the patent had exclusive jurisdiction ‘whatever the form of proceedings in which the issue of a patent’s validity is raised, be it by way of an action or a plea in objection, at the time the case is brought or at a later stage in the proceedings’ [6] . The Court of Justice thus held that where an action was brought for infringement, the court seised could not find indirectly that the patent at issue was invalid, even if the effects of the judgment were limited to the parties to the proceedings, as happened under the national laws of some of the States bound by the Convention [7] .
In view of that precedent, a court called upon to hear an action for infringement of a patent in which the question arises whether the patent is valid must, unless it has exclusive jurisdiction to decide the validity of the patent under Article 22(4), of its own motion declare that it lacks jurisdiction to determine the point under Article 25 of the Convention; and depending on the procedures allowed by the national law applicable, it may have to suspend the infringement proceedings, pending judgment by the court with exclusive jurisdiction, before reaching a decision on the substance. Consequently, the wording of Article 22(4) of the new Convention was modified compared both to the corresponding provision in the 1988 Lugano Convention and Article 22(4) of the Brussels I Regulation, in order to incorporate the GAT ruling of the Court of Justice [1]. The position adopted by the Court of Justice largely satisfies the intended purposes of the proposal for a protocol on the exclusive jurisdiction of the Court of Justice, by requiring a single exclusive jurisdiction for actions challenging validity or alleging infringement, which prevents rulings on the validity of a patent from being delivered by more than one court, even if they are considering quite different aspects of the matter, and thus avoids the danger of conflicting decisions. If the European Community were to adopt a Regulation on the issue of a Community patent, and to confer exclusive jurisdiction over the registration and validity of patents on the Court of Justice, a court of a State bound by the Convention which was called upon to hear an action for infringement of a Community patent could not rule even indirectly on the validity of the patent, and for that question would have to recognise the exclusive jurisdiction of the Court of Justice, and treat that court as it would another national court [2]. 103. The system governing the parties’ freedom to determine which court has jurisdiction over their relationship is a particularly delicate issue, as can be seen from the abundant case-law of the Court of Justice from the Brussels Convention onward, which has required major modifications over the years in order to cater adequately for the needs of international business [3] . The 1988 Convention itself was the outcome of such development in case-law and legislation. It therefore comes as no surprise that the ad hoc working party found itself confronted with various problems here, some of which concerned questions that had already been discussed previously, while others arose out of the need to find solutions to more recent questions raised by international business practices. With reference to Article 23, on choice of forum clauses in contracts, the difficulties arose first of all from the connection with a State bound by the Convention that must exist if the rules in the Convention are to apply. The working party then considered whether the jurisdiction agreed by the parties should be exclusive or not. In the third place it examined the formal requirements for a choice of forum clause, and in particular how such a clause could meet the requirements of electronic commerce. Lastly, it discussed a number of problems relating to the different positions of the parties with respect to the clause, jurisdiction to rule on the validity of the clause, and the relationship between Article 23 and the rest of the Convention. 104. Article 23 applies exclusively to relationships with an international element, which cannot consist merely of a choice of the courts of a particular State [4] , and applies only if at least one of the parties is domiciled in a State bound by the Convention. If neither of the parties is domiciled in such a State, a court of a State bound by the Convention which has been designated in a choice of forum clause may appraise the validity of the clause on the basis of its national laws, and the courts of the other States bound by the Convention are obliged to refrain from dealing with the case until such time as the court or courts designated in the choice of forum clause have declined jurisdiction. The working party discussed the advisability of continuing to require that at least one of the parties must be domiciled in a State bound by the Convention, the purpose being to simplify the rules and to give equal effect to all clauses conferring jurisdiction on a court or courts of a State bound by the Convention. Even when account was taken of these arguments, however, it was not felt advisable to expand the scope of the Convention by amending Article 23 in the way suggested. Above all, it was felt that it would not be justified to change the view that there was no need to lay down in the Convention the conditions under which a court was to accept jurisdiction if it was designated by parties who were all domiciled outside the territory to which the Convention applied [5] , although once the court stipulated in a choice of forum clause had accepted that the departure from the ordinary rules was valid, it was agreed that the clause should have effect in all States bound by the Convention. Consequently, the wording of Article 23(1) is the same in this respect as the corresponding provision in the 1988 Convention, except that the second part of the paragraph, concerning the treatment of the clause in cases in which neither party is domiciled in a State bound by the Convention, has now been put into a separate paragraph, paragraph 3.
105. The ad hoc working party examined the question of the date on which one of the parties must be domiciled in a State bound by the Convention in order for Article 23(1) to apply, in the light of Articles 13(3) and 17(3), which specify that in the cases they refer to the relevant domicile is the parties’ domicile at the time of conclusion of the contract. It was agreed that that was the decisive date for purposes of Article 23 too, but it was not deemed necessary to add an explanation to that effect in the text. This was because the relevant time had to be the time of conclusion of the contract, for the sake of legal certainty and the confidence of the parties who agreed the clause. If the date of reference were to be the date on which the proceedings were brought, one party would be able to transfer his own domicile to a State bound by the Convention after signing the contract and before bringing the proceedings, thereby rendering Article 23(1) applicable, and changing the context in which the court designated in the clause was to verify its own jurisdiction. 106. The 1988 Convention lays down that a prorogation clause that meets the requirements of the Convention always confers exclusive jurisdiction on the designated court or courts. But under the laws of some of the States bound by the Convention - under English law in particular - the parties will often agree a choice of forum clause on a non-exclusive basis, leaving other courts with concurrent jurisdiction, and permitting the plaintiff to choose between several forums; and English case-law has accepted that a non-exclusive clause constitutes a valid choice of forum under the Convention [1]. On a proposal from the United Kingdom delegation, the ad hoc working party re-examined the question of the exclusive effect of a choice of forum clause, and reached the conclusion that, since a clause conferring jurisdiction was the outcome of an agreement between the parties, there was no reason to restrict the parties’ freedom by prohibiting them from agreeing in the contract between them that a non-exclusive forum should be available in addition to the forum or forums objectively available under the Convention. A similar possibility was in fact already provided for, though within certain limits, by the 1988 Convention, Article 17(4) of which allowed a choice of forum clause to be concluded for the benefit of only one of the parties, who then retained the right to bring proceedings in any other court which had jurisdiction by virtue of the Convention, so that in that case the clause was exclusive only as far as the other party was concerned. That provision was obviously to the advantage of the stronger party in the negotiation of a contract, without producing any significant gain for international commerce. The 1988 Convention has now been amended to give general recognition to the validity of a non-exclusive choice of forum clause, and at the same time the provision in the 1988 Convention that allowed a clause to be concluded for the benefit of one party only has been deleted. 107. Article 23 does still give preference to exclusivity, saying that the agreed jurisdiction ‘shall be exclusive unless the parties have agreed otherwise.’ A choice of forum clause is therefore presumed to have exclusive effect unless a contrary intention is expressed by the parties to the contract, and not, as was initially proposed, treated as a non-exclusive clause unless the parties agree to make it exclusive. 108. The rules governing the formal requirements for a prorogation of jurisdiction clause which were laid down in the 1988 Convention reflected significant developments in the case-law regarding the corresponding provision in the Brussels Convention, in its original form, whose formal rigour the judgments sought to attenuate in various ways. The 1988 Convention took account of the case-law, and incorporated the major change made to the Brussels Convention by the Accession Convention of 1978 regarding the formal validity of clauses that accorded with usage in international trade or commerce [2], adding a reference to forms that accorded with practices which the parties had established between themselves [3] . The interpretation by the courts of the rule in the 1988 Convention has not necessitated any radical changes in the drafting of the new Lugano Convention. The new Convention confirms that a choice of forum clause is not considered to be in a valid form unless it is in writing or, if concluded verbally, evidenced in writing, or else in a form which accords with practices which the parties have established between themselves, or in a form which accords with a usage in international trade or commerce of the kind defined in Article 23(1)(c). With regard to the written evidence of a verbal clause, doubts were raised as to whether it was sufficient for the evidence to come from one of the parties, or whether it should come from both. The decision must be for the first possibility. A clause concluded verbally is frequently proposed by one of the parties, with the other party reserving the right to set down the verbal agreement in writing, and confirmation given by that other party is enough to demonstrate the existence and the terms of the agreement. This interpretation corresponds more closely to the wording of Article 23(1)(a) in some of the language versions, particularly the English version, which is more explicit in requiring the written form as evidence of the verbal agreement, rather than for its conclusion [4] . To interpret the rule otherwise would also make the reference in other
language versions to ‘written confirmation’ in the second part of point (a) practically superfluous, since written confirmation that had to be given by both parties would ultimately be a clause ‘in writing’ within the meaning of the first part of the provision. 109. The main problem that the ad hoc working party focused on in relation to the formal requirements for a prorogation clause was the question whether or not Article 23 could accommodate the development of electronic communications, bearing in mind that e-commerce should not be obstructed by inappropriate formal requirements. There can be no doubt that points (b) and (c) of paragraph 1 are indeed capable of applying to electronic communications, because they refer to practices established by the parties and usage in international trade or commerce. It is more problematic to determine whether point (a) can apply, that is to say whether the written form it requires is present in the case of electronic communications. To resolve any doubt that might arise, it was felt advisable to adopt an express rule. Article 23(2) therefore now states that any communication by electronic means is equivalent to ‘writing’ if it ‘provides a durable record of the agreement’. The test of whether the formal requirement in Article 23(1) is met is therefore whether it is possible to create a durable record of an electronic communication by printing it out or saving it to a backup tape or disk or storing it in some other way. The working party here based itself on the formal requirements for arbitration agreements in the UNCITRAL Model Law on International Commercial Arbitration, which states that an agreement that has been concluded orally, by conduct or by other means is ‘in writing’ if it is recorded in any form, and an electronic communication is considered to satisfy the requirement that it be ‘in writing’ if the information contained therein is accessible so as to be usable for subsequent reference; it then provides express definitions of what is meant by ‘electronic communication’ and a ‘data message’ [1]. The rule excludes only such electronic communications as do not provide a durable record. Those communications consequently cannot be used to conclude a choice of forum clause that is formally valid for purposes of point (a), though they may be relevant for purposes of points (b) and (c) if the requirements of those provisions are met. Article 23(2) merely indicates that electronic communication is considered to be in writing ‘if it provides a durable record’, even if no such durable record has actually been made, meaning that the record is not required as a condition of the formal validity or existence of the clause, but only if the need arises for evidence of it, which of course it would be difficult to furnish in any other way. 110. There is implied prorogation of jurisdiction in favour of a court that would not otherwise have jurisdiction under the Convention if the plaintiff brings the matter before it and the defendant enters an appearance without contesting its jurisdiction; this provision is distinguished from the prorogation of jurisdiction contemplated by Article 23, in that it does not presuppose an agreement between the parties, and does not oblige the court to examine whether the clause conferring jurisdiction upon it was in fact the subject of a meeting of minds, which must be clearly and precisely demonstrated, the purpose of the formal requirements in Article 23 being to provide proof [2]. Article 24 confers jurisdiction by virtue of the mere fact of the appearance in court of a defendant who does not contest the jurisdiction of the court before which the case has been brought, and defends himself on the merits, so that there is no need to establish whether there was any agreement between the parties. The ad hoc working party considered the question whether the jurisdiction was conferred only if the defendant was domiciled in a State bound by the Convention [3] , or also when the defendant was domiciled in a State outside the Convention, but it did not consider it necessary to add any clarification of the wording. Despite the apparent ambiguity of the first sentence of Article 24, which refers generically to cases in which jurisdiction does not derive from the Convention, a comparison of the systems of Article 23 and Article 24 leads to the conclusion that if the domicile of the defendant did not have to be in a State bound by the Convention, implied prorogation of jurisdiction might have a broader scope than express prorogation, which does require that at least one of the parties be domiciled in such a State (a requirement that the Group decided not to remove). 111. The wording of Article 24 has raised difficulties of interpretation with reference to the corresponding provision in the Brussels Convention, particularly regarding the possibility of contesting jurisdiction and entering a defence on the merits at the same time, and regarding the point at which jurisdiction must be challenged.
The first issue, whether the prorogation of jurisdiction in favour of the court seised can be prevented by a challenge to jurisdiction if the defendant also defends himself on the merits, arises out of divergences between the language versions of the Brussels Convention (and subsequently of the Lugano Convention): some language versions, such as the English and Italian versions, stated that the rule on implied prorogation did not apply where appearance was entered ‘solely to contest the jurisdiction’, rather than simply ‘to contest the jurisdiction’. Under the laws of some countries all pleas in defence, including pleas on the merits, must be put forward in the first act of defence; this made it difficult to apply the rule literally, as it would have prevented the defendant from defending himself on the merits if his plea of lack of jurisdiction was rejected, and would have been incompatible with the protection of the rights of the defence in the original proceedings, which is one of the guarantees provided by the Convention. The doubt has been removed by the Court of Justice, which has interpreted the provision to mean that the defendant’s appearance in court does not have the effect of conferring jurisdiction if the defendant as well as contesting the jurisdiction also makes submissions on the substance [1], and that a defendant who at the same time submits in the alternative a defence on the substance of the claim does not thereby lose his right to raise an objection of lack of jurisdiction [2]. In order to dispel any further doubt, and to confirm the Court’s interpretation, the wording of Article 24 has been harmonised in the various language versions by deleting the word ‘solely’, thereby making it clear that it is enough that the defendant should contest the jurisdiction, even if at the same time he makes submissions in his defence on the substance. 112. The time at which jurisdiction must be challenged in order to prevent implied prorogation of jurisdiction depends on the national law of the court seised, whose rules of procedure will also determine what is meant by the defendant ‘entering an appearance’ [3] . The reference to national law here has been upheld by the Court of Justice, which has nevertheless given an independent interpretation of the provision by holding that ‘if the challenge to jurisdiction is not preliminary to any defence as to the substance it may not in any event occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised’ [4] . If the challenge is presented before any defence on the substance, on the other hand, the question of the time by which it must be presented is determined only by national law.
113. There was no change needed to the provision that requires a court of a State bound by the Convention to declare of its own motion that it lacks jurisdiction whenever exclusive jurisdiction is conferred by Article 22 on a court of another State bound by the Convention [5] . That obligation remains in effect even if the defendant appears in court and does not contest the jurisdiction, since exclusive jurisdiction cannot be waived by the parties under either Article 23 or Article 24. The ad hoc working party debated whether the obligation in the provision requiring a court to decline jurisdiction of its own motion should be extended beyond exclusive jurisdiction under Article 22, to include a jurisdiction chosen by the parties under Article 23, though only where the choice of forum clause conferred jurisdiction on an exclusive basis, and also to include a jurisdiction conferred by an arbitration clause. The working party concluded that it should not be so extended, in the light of the fact that Article 25 dealt with a situation where the parties had appeared in court. A failure to contest jurisdiction should therefore be deemed to be an amendment of the choice of forum clause in Article 24, while a challenge entered would, if the court agreed, lead to a decision on the part of the court that had not been taken of its own motion. The case of a defendant who did not appear in court was contemplated in Article 26. As regards jurisdiction deriving from an arbitration clause, it was pointed out that arbitration fell outside the scope of the Convention, and it was not felt advisable that the working party should consider it.
114. As with Article 25, there was no need for any major change to Article 26, which deals with the examination as to jurisdiction where the defendant fails to appear in court [6] . The provision distinguishes between a situation where the court seised lacks jurisdiction under the Convention and a situation where it does indeed have jurisdiction under the Convention, but in either case the provision requires the court to verify its own jurisdiction [7] on the basis of the plaintiff’s presentation of his claim. Under paragraph 1, if the court finds that it lacks jurisdiction over a defendant domiciled in a State bound by the Convention, it will declare of its own motion that it has no jurisdiction, either because there is nothing to confer jurisdiction on it under the Convention or because the parties have excepted themselves from its jurisdiction by agreeing a choice of forum clause in favour of another jurisdiction. In other words, the defendant’s failure to appear cannot be deemed to constitute submission to the jurisdiction, and to make up for the absence of other criteria conferring jurisdiction. The fact that Article 24 is an independent criterion of jurisdiction means that the court must verify that everything has been done to notify the defendant of the claim in accordance with Article 26(2), so as to permit him to enter an appearance and submit to the jurisdiction if he thinks it advisable.
The second situation described is broader in scope. When the court does have jurisdiction under the Convention, it will have to proceed in default of appearance, if and to the extent that its national law so permits in cases in which the defendant fails to appear. Before continuing the trial, however, Article 26(2) requires the court to stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end. 115. This provision must be applicable to all cases in which the court seised has jurisdiction within the meaning of the Convention, regardless of whether or not the defendant is domiciled in a State bound by the Convention [1]. Otherwise, cases of exclusive jurisdiction would not be covered if the defendant was domiciled in a State outside the Convention. The requirement that everything possible be done to ensure that the defendant has received the document instituting the proceedings is linked to the recognition of the decision in the other States bound by the Convention, which is independent of the domicile of the defendant in the original proceedings, but which may depend on the question whether everything possible was done to inform the defendant in advance that the proceedings were being brought [2]. 116. As in the 1988 Convention, if the document instituting the proceedings was transmitted pursuant to the Hague Convention of 15 November 1965 on the service abroad of judicial and extrajudicial documents in civil and commercial matters, the provisions of Article 26(2) of the Lugano Convention are replaced by Article 15 of the Hague Convention [3] . An additional paragraph has been inserted as a result of the adoption of Regulation (EC) No 1348/2000 of 29 May 2000 [4] , and the subsequent Agreement between the European Community and the Kingdom of Denmark on the service of judicial and extrajudicial documents in civil or commercial matters, signed in Brussels on 19 October 2005 [5] ; in the mutual relations between States bound by the Regulation or by the Convention, when the document instituting the proceedings was transmitted pursuant to the Regulation or the Agreement, this new paragraph replaces the reference to Article 15 of the Hague Convention by a reference to Article 19 of the Regulation. It has to be pointed out that Regulation No 1348/2000 has been replaced by the new Regulation (EC) No 1393/2007 [6] , which is applied since 13 November 2008. In accordance with Article 25(2) of the Regulation, the reference in the Lugano Convention to Regulation 1348/2000 should be constructed as a reference to Regulation 1393/2007. 117. To satisfy the requirements of certainty and rapidity of service, it was decided to preserve the provision on the transmission of documents contained in Article IV of Protocol 1 to the 1988 Convention, which has now become Article I of Protocol 1 to the new Convention. That provision states that documents are to be transmitted in accordance with the procedures laid down in the conventions and agreements applicable between the States bound by the Convention. Unless the State applied to has objected, a document may also be sent by public officers of the State in which it was drawn up directly to public officers of the State in which the addressee is to be found, to be forwarded to the addressee in the manner specified by the law of the State applied to. The forwarding is to be recorded by a certificate sent directly to the officer of the State of origin. This form of transmission corresponds to what is provided for in Article 10(b) of the Hague Convention of 15 November 1965. Article I of Protocol 1 adds a new provision stating that in their mutual relations Member States of the European Community bound by Regulation No 1348/2000 [7] , or by the Agreement between the European Community and the Kingdom of Denmark of 19 October 2005, are to transmit documents by the methods laid down in the Regulation or the Agreement, which give preference to direct transmission [8] but do not rule out other forms of transmission [9] .
118. The fact that alternative forums are available for disputes governed by the Convention makes it possible that the same case may be brought before the courts in different States bound by the Convention, with the danger that the decisions that are taken may be incompatible with one another. To ensure proper operation of the system of justice within a common judicial area, that risk should be minimised by avoiding, whenever possible, parallel proceedings going ahead at the same time in different States. The authors of the 1988 Convention, and indeed of the Brussels Convention before it, wanted a clear and effective mechanism to resolve cases of lis pendens and related actions, and had to take into account the profound differences between the internal laws of different countries: to start with, certain States look at the order in which the proceedings are brought, while others apply the rule of forum non conveniens. The 1988 Convention did not refer to the forum non conveniens rule, and was based on the criterion of the prior jurisdiction of the court first seised: any court before whom the matter was brought thereafter was to stay the proceedings until such time as the jurisdiction of the first court had been established, and if it was so established was to decline jurisdiction in favour of that court.
End of page Official Journal of the European Union C 319/31 (23.12.2009) That arrangement was better than the original solution in the Brussels Convention, under which any court subsequently seised was required to stay the proceedings before it only if the jurisdiction of the other court was contested, and otherwise to decline jurisdiction immediately, thereby creating a substantial danger of a negative conflict of jurisdiction [1]; but the new solution nevertheless posed quite a few problems of its own. In particular, its formulation, according to the interpretation given it by the Court of Justice, failed to establish an independent concept of lis pendens covering every aspect of the matter. On the one hand, it laid down a number of substantive conditions as components of a definition of lis pendens – e.g., that the cases pending simultaneously must have the same parties, cause of action, and subject-matter – thereby permitting the Court to affirm that the terms used in order to determine whether a situation of lis pendens arose must be regarded as independent [2]. On the other hand, however, the rule failed to give an independent, uniform indication of how it was to be determined which court was addressed previously, i.e. at which moment an action should be considered to be pending before the court [3] . Noting that an independent definition was lacking, the Court of Justice held that the conditions under which a dispute could be said to be pending before a court were to be appraised in accordance with the national law of each court [4] . One consequence of referring to national law in order to determine the moment at which a court should be considered to have been seised of a case is that the question will be decided in significantly different ways depending on the court seised. The laws of the States bound by the Convention show significant differences in that regard, sometimes even with respect to different types of proceedings within their own legal systems. Yet even if we confine ourselves to the case of an ordinary action, in certain countries, such as Italy and the Netherlands, a court is considered to be seised for the purposes of lis pendens at the time that the writ initiating the proceedings is served on the defendant by a bailiff. In those countries, the service of the writ on the defendant takes place before the writ is delivered to the court. In other countries, however, a situation of lis pendens arises when the application is lodged with the appropriate court: this is the case in Denmark, Spain, Ireland, Finland, Norway, most cantons of Switzerland [5] , and Sweden. The same is true of France and Luxembourg, except that there the writ of summons is served on the defendant before the case is entered on the court’s register, and the decisive moment is not the time of delivery to the court but rather the time of service of the writ of summons on the defendant. In certain other countries, finally, the case must have been entered on the court’s register and the writ must have been served on the defendant, and only then does a situation of lis pendens arise. This is the case in Austria, Belgium, Germany, Greece [6] , Portugal, and the United Kingdom. The situation is further complicated when the decisive moment for lis pendens depends on the time at which the defendant was notified of the action, since that moment varies from one State to another and may also depend on the procedure followed. In that respect, it is important to bear in mind the Community Regulation on the service of judicial and extrajudicial documents [7] , Article 9 of which – as a follow-up to the provisions of the European Convention on the same subject [8] – provides common rules on the date of service, under which the date of service of a document is the date on which it is served in accordance with the law of the Member State addressed; however, where a document must be served within a particular period in the context of proceedings to be brought or pending in the Member State of origin, the date to be taken into account with respect to the applicant is the date fixed by the law of that Member State, unless the State concerned has declared that it will not apply that provision. 119. These differences in national laws may give rise to serious problems, not only because they can encourage forum shopping, which is an inevitable possibility given the existence of courts with concurrent jurisdiction, or a race to litigation, owing in some measure to the fact that Article 27 gives priority to the court first seised [9] , but also because they encourage parallel actions before the courts of different States bound by the Convention, in some cases permitting a defendant to lodge an application based on the same cause of action as an application brought against him and to have his own application given priority under the laws of the court considering it.
To avoid such situations, the new Convention adopts an independent concept of the time at which a court is considered to be seised for the purposes of lis pendens, which takes into account the differences among the laws of the various countries, and in order to determine certain aspects refers to some extent, but in a more restricted manner than the previous arrangement, to the national rules of procedure. Article 30 expressly lists the two main criteria followed by the States bound by the Convention in order to establish when a court is deemed to be seised, namely the time when the document instituting the proceedings is served on the defendant and the time when the complaint is lodged with the court, and sets out to use those criteria in such a way as to establish a time which takes account of the different systems but is as convergent as possible. The rule distinguishes between cases in which, according to the national law, the document instituting proceedings or the equivalent document is lodged with the court, and cases in which the document must be served before being lodged with the court. If the time at which the court is deemed to be seised is determined by the lodging of the document instituting proceedings with the court, the court is considered to be seised at that moment, provided that the plaintiff has not subsequently failed to take the steps that he was required to take to have service effected on the defendant; if, on the other hand, the time at which the court is deemed to be seised is determined by service on the defendant, the court is considered to be seised when the authority responsible for service receives the document instituting proceedings, provided that the plaintiff has not subsequently failed to take the steps that he was required to take to have the document lodged with the court. The solution appears complicated, but only because it requires an additional verification beyond what is normally required by national laws. It makes it possible to identify a time at which the court is deemed to be seised that is largely convergent, but nevertheless consistent with and in compliance with the national systems of procedure, which specify moments that are quite different and far apart in time. When the point at which the court is seised depends on serving notice on the defendant, the solution adopted also satisfies the need for certainty, by avoiding the difficulty of ascertaining the date of service, which is often not easy to determine when service is not made to the recipient personally [1]. In any event the rule will reduce the advantage or disadvantage to either party that might result from simply referring to national law. 120. In Article 29, the Convention reproduces without modification the provision that provides for the rare case [2]in which actions between which there is a situation of lis pendens come within the exclusive jurisdiction of different courts: in that event any court seised subsequently is to decline jurisdiction in favour of the court seised first. Here too the determination of which court was seised first is to be based on the criteria laid down in Article 30. Article 29, unlike Article 25, does not specify the legal basis of the exclusive jurisdiction that may lead the court to decline jurisdiction in favour of the court first seised. The rule therefore also applies where exclusive jurisdiction is conferred by a choice of forum clause within the meaning of Article 23, but only in the event that it is concurrent with the exclusive jurisdiction conferred on another court by virtue of the same Article [3] . In contrast, if the exclusive jurisdiction based on Article 23 is concurrent with another based on Article 22, the latter will prevail, regardless of the moment at which the court is deemed to be seised, by virtue of Article 25. The cases regulated by the provision on lis pendens do not include the case in which only the court subsequently seised has exclusive jurisdiction, because in that case the other court continues to be obliged to declare of its own motion that it lacks jurisdiction under Article 25 of the Convention, regardless of the moment at which the matter was brought before it. 121. The provision on related actions represents an important aspect of the coordination of jurisdiction in the States bound by the Convention. When several non-identical actions are so closely connected that it is expedient to hear and determine them together, in order to avoid the risk of irreconcilable judgments that would not be mutually recognised by the States concerned, the Convention provides for coordination of the proceedings of the courts of the different States before which such actions are pending. Article 28 does not make the relation between the actions a general criterion of jurisdiction, as is done in certain national legal systems, and in particular does not confer jurisdiction on a court hearing an action that has come before it according to the rules of the Convention to rule on another action that is related to the first [4] ; instead, it establishes procedures intended to facilitate the handling of related cases in a single set of proceedings or in coordinated proceedings.
122. Provided that the tests of Article 28(3) are satisfied, therefore, a court seised subsequently is entitled – but not obliged – to stay the proceedings and await the decision of the court first seised before deciding the case before it. The new wording of Article 28(1) no longer requires, as the previous version did, that the related actions be pending at first instance. The reason given for that requirement, namely that ‘otherwise, the object of the proceedings would be different and one of the parties might be deprived of a step in the hierarchy of the courts’ [1], does not appear convincing. The stay of the proceedings by the court subsequently seised has no effect whatever on the proceedings in that court, which it is free to resume once the proceedings on the related action pending before the foreign court have been concluded. That is the appropriate time at which to appraise whether the foreign judgment respected the rights of the defendant guaranteed by the Convention and can be taken into account for the purposes of the proceedings before the court seised subsequently. But the requirement that both sets of proceedings be pending at first instance is nevertheless essential, and has been maintained and specifically formulated in Article 28(2), where the court subsequently seised decides – and here again it is a right, not an obligation – to refuse the case by declining jurisdiction in favour of the court previously seised of the related action. Otherwise, if the case before the court first seised were at the appeal stage, one of the parties would indeed be deprived of a step in the hierarchy of the courts. If, on the other hand, the case before the court seised subsequently were at the appeal stage, it would not be expedient for that court to decline its own jurisdiction in favour of a fresh trial at first instance, for reasons of economy of procedure. In any case, it is not possible for the court seised subsequently to decline jurisdiction unless one of the parties so requests, unless the court first seised has jurisdiction to hear the case, and unless that court’s laws allow for consolidation of the actions. The expression used in the provision – ‘consolidation thereof’, i.e. ‘of the related actions’, rather than ‘of related actions’ as in the 1988 Convention – means that the laws of the court first seised must allow the consolidation of the related actions pending in that particular case, and not the consolidation of actions in general. Before declining jurisdiction, therefore, the court must be satisfied that the other court will accept it. 123. The ad hoc working party discussed whether Article 28 ought to be made more flexible by granting the court first seised the right to decline jurisdiction in favour of the court seised subsequently, where the circumstances of the case would make that advisable, but it decided against this course. Providing such a right would have introduced into the Convention a further application of the doctrine of forum non conveniens that is alien to the legal tradition of most of the States bound by the Convention. 124. The rule on provisional and protective measures in the new Convention makes only formal changes to the wording of 1988 (see the reports by Jenard, p. 42; Schlosser, paragraph 183; and Jenard and Möller, paragraph 65). In its concise formulation, Article 31 merely indicates that if such measures are available under the law of a State bound by the Convention, they may be sought in the courts of that State even if, under the Convention, the courts of another State bound by the Convention have jurisdiction as to the substance of the matter. According to the Jenard report, the corresponding rule of the Brussels Convention (Article 24) implies that the competent authorities adjudicate ‘without regard to the rules of jurisdiction laid down in the Convention’. The provision, then, is merely a reference to the national laws of the court seised, which will apply the lex fori both with respect to the determination of the measures to be ordered and with respect to its own power to order them. 125. The ad hoc working party discussed very thoroughly the question whether the rule in the Convention was satisfactory, on the basis of various proposals put forward by the Commission and by the delegations of national experts. In the course of the debate, particular emphasis was placed on the desirability of a uniform definition of ‘provisional, including protective, measures’, which might include the French measure known as the référé provision. In the absence of an express definition in the Convention, the Court of Justice has defined ‘provisional, including protective, measures’ as measures which ‘are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter’ [2]. But such connections with the proceedings on the substance of the matter, it was observed, did not lead to satisfactory results in every case: when a protective measure amounted to pre-empted enforcement, regardless of the outcome of the trial on the merits, the rules laid down in the Convention regarding jurisdiction in actions on the merits could in practice be circumvented. It was argued, therefore, that the granting of enforceable measures might have to be made subject to restrictions, such as a requirement of urgency or a need for protection. It was also argued that the wording should be amended to make it clear that provisional orders for payment were outside the scope of the specific rule in the Convention, and could be issued only by the court with jurisdiction to decide on the merits; otherwise, the rules of jurisdiction in the Convention would be subverted and the case resolved before there was any full hearing.
It was therefore suggested that Article 31 should be interpreted not as a referral to the lex fori but as a substantive rule, whose scope was limited to measures that could actually be enforced in the State in which they were sought, without going through another enforcement procedure [1]. The court of the State in which a measure was to be enforced should have exclusive jurisdiction to order that measure. In favour of the jurisdiction of the court of the State in which the measure can and must be enforced, it was observed that leaving it to national law to determine the nature of such measures and the circumstances under which they might be granted opened up the possibility of a jurisdiction based on an exorbitant forum, which should be barred by the Convention. 126. Before the conclusion of the work of the ad hoc working party, these topics were dealt with in a judgment of the Court of Justice, which touched upon various aspects of the matter [2]. The Court found that the court having jurisdiction as to the substance of a case under one of the heads of jurisdiction laid down in the Convention also had jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions [3] . The relevant provision of the Convention adds a further rule of jurisdiction whereby a court may order provisional or protective measures that are available under its national law even if it does not have jurisdiction as to the substance of the case, provided that the subject-matter of the dispute falls within the scope ratione materiae of the Convention [4] . The mere fact that proceedings have been, or may be, commenced on the substance of the case before a court of a State bound by the Convention does not deprive a court of another State bound by the Convention of its jurisdiction [5] . Such jurisdiction does not depend on the rule of jurisdiction under the Convention and may also be based on one of the rules of exorbitant jurisdiction referred to in Article 3 of the Convention. Regarding the conditions set out by the Convention for the granting of a provisional or protective measure within the meaning of the relevant provision of the Convention, the granting of such measures is conditional on, inter alia, the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the State of the court before which the measures are sought [6] . The definition of provisional and preventive measures depends on the national law of the court, but the national law is to be interpreted in keeping with the concept stated by the Court, which, as we have seen, defines such measures as those intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought from the court having jurisdiction as to the substance of the matter. In the light of that concept, a measure ordering interim payment of a contractual consideration is, by its very nature, such that it may pre-empt the decision by the court having jurisdiction to rule on the substance of the case, and does not constitute a provisional measure within the meaning of the provision of the Convention, unless, first, repayment to the defendant of the sum awarded is guaranteed if the plaintiff is unsuccessful as regards the substance of his claim and, second, the measure sought relates only to specific assets of the defendant located or to be located within the confines of the territorial jurisdiction to which application is made [7] . 127. In consideration of that judgment by the Court of Justice, the ad hoc working party discussed whether it was necessary for Article 31 to codify the principles set out there, and concluded that it was not, among other things because of the further clarification that they might require if incorporated into a legislative text, particularly with respect to the nature of the factor connecting the subject-matter of the measure and the territorial jurisdiction of the court, which in the judgment was defined exclusively with reference to the specific case at issue. A further problem concerns recognition by the other States bound by the Convention of measures ordered under Article 31. Measures ordered by the court having jurisdiction as to the substance of the case by virtue of the Convention are undoubtedly decisions that must be recognised under Title III of the Convention, but it seems natural that the decisions taken on the basis of the jurisdiction provided for by Article 31 should not, in principle, give rise to recognition and enforcement abroad. Here again, the ad hoc working party preferred not to insert express provisions into the Convention.
23. The general rule of jurisdiction in the new Convention is the same as it was in the 1988 Convention. It is based on the principle of actor sequitur forum rei, and remains anchored to the domicile of the defendant in a State bound by the Convention. It confirms that the defendant’s nationality plays no role in jurisdiction (for reasons explored in detail in the Jenard report, pp. 14 ff.). Persons domiciled in a State bound by the Convention must therefore be sued in the courts of that State, whether they are citizens of that State or not (paragraph 1). As paragraph 2 reaffirms, persons who do not have the citizenship of the State in which they are domiciled are subject to the same jurisdiction as citizens of that State. It should be noted that, as in the 1988 Convention, the general rule assigns jurisdiction to the State in whose territory the defendant is domiciled without prejudice to the determination of a specific court with jurisdiction in that State on the basis of the national law of that State. 24. In the light of the Commission proposal [1], the ad hoc working party re-examined the question whether rather than domicile it would be preferable to look to the habitual residence of the defendant, as is done in many conventions, in particular those drawn up within the framework of the Hague Conference on Private International Law, and in Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and the enforcement of judgments in matrimonial matters and the matters of parental responsibility (‘the Brussels II bis Regulation’) [2]. The working party concluded that the criterion of domicile should be retained, for several reasons: because of the difficulties that would have been faced by some States, such as the United Kingdom, which had adopted a specific definition of domicile in their domestic law for the purposes of applying the Brussels and Lugano Conventions; because habitual residence was considered by some experts to be more appropriate to personal and family relationships rather than to those of a commercial nature; because habitual residence did not appear to be an appropriate connecting factor in the case of companies and legal persons; and because habitual residence would in any event have needed an independent definition, on which it might have been difficult to reach agreement. 25. The possibility that the place of habitual residence might have been added to the notion of domicile, as an alternative criterion for establishing jurisdiction, was also discarded, because it would have multiplied the possible jurisdictions in cases where domicile and habitual residence were located in two different States [3] . It was also pointed out that the use of domicile as the principal criterion for establishing jurisdiction had not met with any particular difficulties in the practical application of the Brussels and Lugano Conventions, notwithstanding the different interpretations of domicile offered by national laws, at least in proceedings in which the defendant was a natural rather than a legal person. 26. The ad hoc working party considered the possibility of providing an independent definition of ‘domicile’ in the Convention, instead of referring the matter to national law, as had the Brussels Convention and the Lugano Convention of 1988. Some experts had suggested that a common definition of the domicile of natural persons might be based in particular on the length of time the defendant had been present in the State of the court before which the case was brought; but in view of the fact that the existing Conventions had been working well, the working party did not think it advisable to provide such a definition. While it recognised the potential benefits of a common definition, the working party preferred to leave to national laws the task of defining the meaning of domicile in terms of the length of time the defendant had been in the territory, if such a definition was found to be necessary. The provision of Article 59 is therefore unchanged from the corresponding provision of Article 52 of the 1988 Convention, and the domicile of natural persons continues to be determined by the domestic law of the State in which they are domiciled. 27. The case of companies and legal persons is different, since the determination of their ‘seat’, treated as its domicile for this purpose, was entrusted by Article 53 of the 1988 Convention to the rules of private international law of the State of the court hearing the case. Reference to the domestic rules on conflict of laws, which are based on widely varying criteria, has not given rise to many problems in practice, but it may nevertheless create difficulties in the future. The Commission therefore proposed the adoption of a common definition of domicile for companies, which would be the place of their central management or, failing that, their registered office [4] , so that a company could be linked to one legal system on the basis of factual elements. The arrangement set out in the new Article 60 of the Convention takes account of the Commission’s proposal, but ensures that the courts of the States bound by the Convention have jurisdiction even if the company’s seat is not located in any State bound by the Convention, provided that the central administration is within one of those States, and vice versa. This solution thus goes further than the Commission’s proposal.
28. The new definition lists as alternatives the statutory seat, the central administration, or the principal place of business of the company or other legal person. The fact that these are listed as alternatives means that if just one of them is in a State bound by the Convention the company can be sued before the courts of that State, even if the others are in a State outside the Convention altogether or in another State bound by the Convention. In the latter case, under the system of the Convention, there will be competing jurisdictions, and the choice of the forum will be left to the plaintiff. This definition is open to a degree of forum shopping, which is also possible to some extent in relation to the domicile of natural persons. In justification it may be pointed out that if a company decides to keep its central administration in a place separate from its principal place of business, it chooses to expose itself to the risk of being sued in both places. 29. Above all, however, the definition answers the need for a connecting factor that will ensure that if a company is incorporated in a State bound by the Convention, or does business there, any dispute regarding its activities will fall within the jurisdiction of the States bound by the Convention, so that the plaintiff will not be deprived of a ‘Convention’ court. It also offers the plaintiff the possibility of suing in the courts of the place where the judgment will probably have to be enforced. None of the criteria considered would have answered these needs on its own. The statutory seat does offer a significant degree of certainty, since it is easy to identify, but it is often situated somewhere other than the location of the company’s assets, and does not lend itself to the enforcement of a judgment; it would, moreover, allow a company to have its central administration in a State bound by the Convention, or to carry on its principal business there, while having its statutory seat elsewhere, and thereby escape the jurisdiction of the States bound by the Convention. In turn, the central administration provides a link with a place that is useful for the purpose of enforcing judgment, but it is a factor internal to the company, often not immediately identifiable, which makes it harder to determine the court with jurisdiction; and if the central administration is located in a State outside the Convention, this criterion would not allow the company to be sued in a State bound by the Convention even if it had its statutory seat or its principal place of business there. Finally, the principal place of business is certainly easier to identify and verify, but if taken as the only connecting factor it would not allow jurisdiction to be exercised against a company which had its principal place of business outside the States bound by the Convention, even if that company had its statutory seat and central administration inside one of these States and conducted a significant amount of business there. 30. These considerations taken together underpin the choice of a broad definition that allows a company or other legal person to be summoned before a court in the State bound by the Convention with which it has a significant connection, in the shape of its central administration, its principal place of business, or its statutory seat. The concept of the ‘statutory seat’, however, is not an appropriate connecting factor for a company or legal person in the United Kingdom or Ireland, where the legal systems refer instead to the place where a company is entered in the register that exists for the purpose, or to the place in which it was incorporated. The registration criterion allows for the fact that the rule concerns not just companies or firms as such but also any body that is not a natural person, so that a registered office is of greater relevance than a ‘seat’ indicated in the founding documents. Article 60(2) therefore specifies that for purposes of those two countries the term ‘statutory seat’ means the registered office or, if there is no registration, the place of incorporation, or, if there is no place of incorporation, the place under the laws of which the formation took place. This last reference to the law applied to determine the place of formation that is treated as the statutory seat takes account in particular of the case of a partnership in Scottish law, where the only criterion looked at is the law under which the partnership was formed, regardless of the place of formation. 31. The working out of the concept of the domicile of companies and legal persons in Article 60 was also guided by the desirability of harmonising the general criterion of jurisdiction regarding companies with the connecting factors used in Article 48 of the EC Treaty for the purpose of recognising the right of establishment of companies or firms in the territory of the Community: Article 48 lists the ‘registered office’, the ‘central administration’ and the ‘principal place of business’ within the Community. Even if the need addressed by Article 48 is different – its purpose is to identify the companies or firms entitled to operate in all Member States - it appeared justified to use the same connecting factors to allow companies or firms to be sued in the courts of one of the States bound by the Convention. In other words, if one of the connecting factors referred to in Article 48 is enough to make a company a Community company, enjoying the advantages conferred by that status, it should be treated as a Community company for all purposes, and should therefore be subject to the civil jurisdiction of the Member States in which it operates and is entitled to operate. 32. The concept of domicile under consideration here relates to the forum generale of companies and legal persons, without prejudice to the definition of the domicile of a company for purposes of the forum speciale for particular categories of dispute, such as those which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons having their seat in a State bound by the Convention, or the validity of the decisions of their organs, which are the subject of Article 22(2) of the Convention (and which will be discussed below). For disputes relating to insurance contracts, consumer contracts and individual contracts of employment, Articles 9, 15 and 18 of the Convention make specific provision, unchanged from the 1988 Convention. Nor does the concept explained above affect jurisdiction in disputes arising out of the operations of a branch, agency or other establishment of a company, which are covered by Article 5(5) of the Convention (where the rules likewise remain unchanged).
33. The new text of the Convention also leaves unchanged the determination of the domicile of a trust, which it refers to the private international law of the court seised. While the application of this provision does not present particular problems in States whose legal systems recognise the trust as an institution, difficulties can arise in States in which this institution is unknown; in the absence of appropriate conflict rules for determining the domicile of trusts in the legal system of the court seised, the question may be made to depend on the law to which the trust is subject (Schlosser report, paragraphs 109- 120). 34. As in the 1988 Convention, the general rule of jurisdiction founded on the domicile of the defendant may be departed from only in accordance with the rules of jurisdiction set out in the Convention, specifically in Sections 2 to 7 of Title II. This means that it is only by virtue of those rules that a person domiciled in a State bound by the Convention, whether a natural or legal person, can be sued in the courts of another State bound by the Convention. It should be observed that, though Article 3(1) refers in general terms to the ‘courts’ of another State bound by the Convention, this reference does not necessarily leave the internal jurisdiction of the courts of that State untouched: in many cases, the rules of jurisdiction set out in Title II have implications not only for the jurisdiction of a particular State, but also for the distribution of territorial jurisdiction among its courts, and may confer jurisdiction on a specific court. 35. As this is an exception to the general rule, the reference to the rules of jurisdiction set out in the Convention must be taken as definitive, and exclusive of any other national rules of jurisdiction, whether they are exorbitant or not (for example, a national rule of jurisdiction that refers to the defendant’s place of residence, if different from the domicile). The system of the Convention is based on the unification of the rules of jurisdiction, rather than the mere exclusion of exorbitant jurisdictions, even though the national rules whose application is excluded are in fact often of this nature. 36. In this context, Article 3(2), together with Annex I, to which it refers and in which national rules that cannot be invoked are listed (for the reasons for moving the list of national rules from Article 3 to an annex, see below, in the discussion of Article 77), is intended merely as a description and guide for operators indicating the main national rules whose application is not permitted. Paragraph 1 provides that proceedings cannot be brought in courts other than those referred to in Sections 2 to 7 of Title II, and it follows that any other criterion of jurisdiction is excluded, whether or not the rule that provides for it is listed in Annex I. Thus, it appears to be irrelevant that not all the linguistic versions of paragraph 2 reproduce the words ‘in particular’ that preceded the list of national rules in the 1988 Convention [1]. The list in Annex I is exemplary only, and does not restrict the effect of paragraph 1, according to which all national rules that do not comply with the rules of the Convention must be considered inapplicable. 37. If the defendant is not domiciled in a State bound by the Convention, jurisdiction, according to the system of the Convention, is governed by national law, and this is confirmed in Article 4 of the new Convention. Here the Convention does not furnish its own rules of jurisdiction, but regulates the matter only indirectly, by referring it to the legal system of the State of the court seised. Thus the defendant’s domicile is also a criterion delimiting the scope of the rules in the Convention that govern jurisdiction directly and independently, but it is not a general criterion delimiting the regulation of jurisdiction by the Convention. The correctness of this understanding of the matter, which had already been asserted in the literature on the 1988 Convention, was confirmed by the Court of Justice in Opinion 1/03, where the Court, speaking of Regulation No 44/2001, said that ‘That regulation contains a set of rules forming a unified system which apply not only to relations between different Member States … but also to relations between a Member State and a non-member country’, and in particular that ‘Article 4(1) … must be interpreted as meaning that it forms part of the system implemented by that regulation, since it resolves the situation envisaged by reference to the legislation of the Member State before whose court the matter is brought’ [2]. 38. This reference to the national law of the court seised also encounters a limit in the rules laid down directly by the Convention which apply irrespective of the defendant’s domicile. These are the rules on exclusive jurisdiction in Article 22 and the rules on the prorogation of jurisdiction in Article 23, which are now also mentioned in Article 4, though they already restricted the reference to national law in the past. Leaving these two provisions aside, the reference to national law means that where the defendant is domiciled in a State not bound by the Convention, the rules of jurisdiction listed in Annex I may be applied even if they constitute exorbitant jurisdiction. It is worth pointing out, lastly, that Article 4(2) confirms that foreign plaintiffs have the same entitlement as nationals of the State of the court seised to avail themselves of the rules of jurisdiction there in force, the only condition being that they be domiciled in that country (see the Jenard report, pp. 21-22).
39. Alongside and as an alternative to the general rule of the domicile of the defendant in a State bound by the Convention, the Convention keeps unchanged the existing structure that provides for special jurisdictions which, at the plaintiff’s choice, allow the plaintiff to bring the action in another State bound by the Convention. These jurisdictions are governed by Articles 5 to 7 of the Convention (corresponding to Articles 5, 6 and 6A of the 1988 Convention). While the general rule hinges on a factor connecting the defendant to the court, the special rules recognise a link between the dispute itself and the court which may be called upon to hear it. These jurisdictions reflect a principle of the efficacious conduct of proceedings, and will be justified only when there is a sufficient connection in terms of the proceedings between the dispute and the court before which the matter is to be brought, from the point of view of the gathering of evidence or the conduct of the proceedings [1], or in order to secure better protection of the interests of the parties against which the proceedings are directed. Given the comprehensive system of jurisdiction in the Convention, these rules apply whether or not they correspond to jurisdictions provided for by the national laws of the States bound by the Convention [2]. 40. In part, the special jurisdictions provided for by the 1988 Convention remain as they were, although the wording sometimes undergoes minor changes of a purely editorial nature. The changes considered in what follows, therefore, are those that go beyond purely editorial modification, those where an editorial modification in fact reflects a substantive issue, and those where the development of the case-law of the Court of Justice requires further comment. There is no significant change, and no need for further comment here over and above what was said in the reports on previous Conventions, regarding the rules on the jurisdiction of the courts of a State in which a trust is domiciled when a settlor, trustee or beneficiary of the trust is sued (Article 5(6), see the Schlosser report, paragraphs 109-120), or on the jurisdiction of a court arresting cargo or freight to hear disputes regarding the payment of remuneration for assistance or salvage, if it is claimed that the defendant has an interest in the cargo or freight and had such an interest at the time of the salvage (Article 5(7), see the Schlosser report, paragraphs 121- 123). 41. The same can be said of the special rules conferring jurisdiction on the court in which the original claim is pending in the case of a counter-claim arising from the same contract or facts on which the original claim was based (Article 6(3), see the Jenard report, p. 28), or conferring jurisdiction in matters relating to a contract on the courts of the State bound by the Convention in which the property is situated, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property (Article 6(4), see the Jenard-Möller report, pp. 46-47, and the Almeida Cruz-Desantes Real-Jenard report, paragraph 24). 42. Of the special jurisdictions provided for in Articles 5 to 7 which allow the plaintiff to bring an action in a State bound by the Convention other than the State of the domicile of the defendant that would be called for by the general rule, the one that has given rise to most discussion is certainly the jurisdiction in matters of contract. Article 5(1) of the Lugano Convention of 1988, like the corresponding provision in the Brussels Convention, permits a person domiciled in a State bound by the Convention to be sued in another State bound by the Convention ‘in matters relating to a contract, in the courts for the place of performance of the obligation in question’; it has been the source of a number of problems of interpretation, regarding the definition of ‘matters relating to a contract’, the determination of the obligation to be performed, and the determination of the place of performance. These problems have generated a large body of case-law of the Court of Justice, which has arrived at independent solutions or referred the matter back to national law as appropriate, without overcoming all the difficulties generated by the Convention. 43. On the definition of ‘matters relating to a contract’, the national laws of the Contracting States differ, and the Court has taken the approach that the concept is an independent one; it has not provided any general or abstract definition, but in individual cases has given pointers indicating when there is a contractual obligation and when there is not [3] . The existence or validity of a contract is a matter relating to a contract [4] . If an action relates both to breach of a contractual obligation and to non-contractual liability, there is no accessory jurisdiction: for the first claim jurisdiction is to be determined in accordance with Article 5(1), and for the second it is to be determined in accordance with Article 5(3), on liability arising out of a tort or delict, even if that might face the plaintiff with the prospect of separate actions before different courts [5] , a prospect that can always be avoided by falling back on the general rule of the domicile of the defendant.
44. Concerning the determination of ‘the obligation in question’, Article 5(1) expressly allows a number of jurisdictions in respect of one and the same contract, preferring a genuine connection between the court and the specific dispute over a single method of treatment of the contract. The search for a fair balance between the two requirements – a genuine link with the dispute and the unity of the contract – has led the Court of Justice to hold that the expression ‘the obligation in question’ refers to the contractual obligation on which the action is based, the obligation on whose non-performance the plaintiff’s action relies, rather than to the obligation whose performance is expressly sought by the plaintiff [1]. In the same way the Court has held that where several obligations arising out of one contract are relied upon in the application, the court before which the matter is brought can determine whether it has jurisdiction by referring to the principal obligation [2]; the question whether obligations are accessory or equivalent is a question to be determined by the court hearing the case, ordinarily on the basis of the law applicable to the contract [3] . Despite these judgments, it is still regularly the case that one contract will be subject to more than one jurisdiction, particularly when claims are based on obligations arising out of the same contract that are equal in rank [4] . It has been pointed out that this situation is not always satisfactory, especially since an obligation to pay can be severed from the rest of the contract and the matter brought before the court of the place where that obligation is to be performed, which is often the forum of the plaintiff. 45. Regarding the determination of the place of performance of the obligation in question, though other solutions might have been possible – an independent solution, or a reference to the lex fori – the Court of Justice has opted for reference to the lex causae of the disputed obligation, determined according to the rules of conflict of laws of the court before which the matter is brought [5] , even in cases where the parties themselves decide the place in a clause which is valid according to the law applicable to the contract [6] . This interpretation, which did not initially offer any uniform solution to the lack of harmonisation of the rules of conflict of laws of the Contracting States, and which left open the possibility of forum shopping, was subsequently underpinned by the Rome Convention of 19 June 1980 on the law applicable to contractual obligations: although the Rome Convention uses a flexible, objective connecting factor, nevertheless the law applicable to the contract, and hence the place of performance of the obligations arising under it, can as a rule be foreseen by the parties. But reference to the applicable law, as a means of determining the place of performance of the obligation, leaves intact the considerable disparity between national laws on financial obligations, and does not solve the problem that when the obligation relied on before the court is the obligation of payment, the place of performance frequently coincides with the forum of the plaintiff, thus providing scope for forum shopping. 46. Notwithstanding the interpretation provided by the caselaw, which has smoothed out some of the difficulties, the rules described above have been judged unsatisfactory by many, and numerous proposals have been put forward for their amendment by the Commission and by the Contracting States. The proposals are varied, but all move in the direction of reducing the role of the reference to the place of performance of the obligation, safeguarding the unity of jurisdiction over the contract at least to some extent, and making it easier to ascertain and foresee the place of performance which is to serve as the basis of jurisdiction in the case. The proposals and the debate to which they gave rise in the ad hoc working party are described below to the extent that may be useful for an understanding of the origins of the present text. 47. The most radical proposal, which also has authoritative support in the literature [7] , was that the forum of performance of the obligation should be removed, so that contractual matters would be left to the ordinary forum of the defendant, or alternatively the jurisdiction chosen by the parties. This solution was rejected by the ad hoc working party on the grounds that the forum of the defendant may not be the most appropriate if inspections have to be carried out in the place where goods were to be delivered or services provided, and that the parties may fail to select a forum for their disputes. The working party therefore turned to other proposals that would retain a forum of the contract, while avoiding, or at least limiting, the difficulties of the existing text. 48. Among these was a proposal to refer to the place of enforcement of the obligation characteristic of the contract, the intention being to avoid the fragmentation of jurisdiction over the contract, and to prevent jurisdiction based on the
obligation to make payment, unless, of course, the financial debt was the characteristic obligation of the contract. The proposal was not accepted, on several grounds: international contracts are often complex, and it is not always easy to identify the characteristic obligation; establishing the characteristic obligation requires an overall evaluation of the contract which is premature at the stage when jurisdiction is being determined; the determination of the place of performance of the characteristic obligation depends on the applicable law, so that it does not avoid the need to refer to the rules on conflict of laws; and, lastly, the characteristic obligation does not necessarily represent a sufficient connecting factor between the dispute and a particular court if the dispute turns on a different contractual obligation. It may be pointed out that it is one thing to determine the applicable law by seeking to define an overall contractual relationship in a homogeneous manner, even though some parts may be clearly less closely linked and jurisdiction may be fragmented, and quite another to define the connecting factor between a dispute and the court in the best position to decide it. 49. Having discarded the possibility of reference to the characteristic obligation of the contract, the ad hoc working party considered the possibility of restricting the scope of Article 5(1) to certain contracts only, more specifically to contracts of sale, as the Commission had proposed, with the place of performance being the place where the delivery was or should have been carried out, except in cases where the goods were delivered, or deliverable, to more than one place; this would deny any relevance to the obligation of payment [1]. Against a restricted solution of this kind it was pointed out that a forum of the contract was desirable not only in the case of contracts of sale but also, and just as strongly, in the case of contracts for the provision of services. On the other hand it was in contracts of these kinds that the obligation to make payment was in most cases not the significant aspect on which jurisdiction could be based, except of course in the case of contracts for money services. After mature reflection, the ad hoc working party decided not to make any radical change to the existing text, but to adjust it so as to indicate, in the case of a contract of sale or a contract for the provision of services, which obligation was the one whose place of performance could provide a basis for a jurisdiction alternative to the forum of the defendant, and to exclude any reference to the place of payment under such contracts, while leaving the existing provision unchanged for all other contracts and for cases in which the specific rules described proved inapplicable [2]. 50. Article 5(1)(a) of the new Convention takes over the corresponding provision of the 1988 Convention, conferring jurisdiction on the court of the place of performance of the obligation in question. The scope of the rule is not left entirely to the interpretation of whoever is called upon to apply it, as it was before: for the application of point (a), point (b) specifies that in the case of contracts for the sale of goods or the provision of services the place of performance of the obligation in question is to be the place - in a State bound by the Convention – where, under the contract, the goods were delivered or should have been delivered, or the services were provided or should have been provided. Thus point (b) identifies the obligation whose place of performance serves as a basis for establishing jurisdiction in respect of such contracts independently, irrespective of the obligation whose performance is the subject of the dispute. Without using the word, it adopts the principle of the characteristic obligation, and consequently excludes a reference to the obligation to make payment, even when that obligation is relied upon in the application. The ad hoc working party did not incorporate into the text the Commission’s initial proposal that point (b) should expressly exclude cases where under a contract of sale the goods were delivered, or deliverable, to more than one place. In such a case, if all the obligations to deliver are relied upon in the application at the same time, various solutions may be suggested in appropriate cases, without prejudice to any future interpretation this provision will be given by the Court of Justice, such as a reference to the principal place of delivery, a plaintiff’s choice as to the place of delivery where to bring his action entirely or limited to the partial delivery in that place, or even a reference to the place of performance of the monetary obligation, if that obligation is relied upon in the application. The Court of Justice has already pronounced on the parallel provision enshrined in Article 5(1)(b) of the Brussels I Regulation, and has ruled that, ‘where there are several places of delivery within a single Member State’, ‘the court having jurisdiction to hear all the actions based on the contract for the sale of goods is that in the area of the principal place of delivery, which must be determined on the basis of economic criteria. In the absence of determining factors for establishing the principal place of delivery, the plaintiff may sue the defendant in the court for the place of delivery of his choice’ [3] . The questions that arise, and the solutions that may be the more appropriate ones, where there are several places of delivery in different Member States have been deliberately left open by the Court of Justice [4] . It goes without saying that similar problems will also arise where there are several places of provision of services in different States. 51. For the determination of the place of performance, point (b) adopts a factual test intended to avoid recourse to private
international law, stating that unless the parties have agreed otherwise the place of delivery of the goods or of provision of the services must be identified ‘under the contract’. It has to be pointed out that this provision applies ‘unless otherwise agreed’ by the parties; under these terms, party autonomy is explicitly preserved also as concerns the determination of the place of performance. The question remains open whether this provision may entirely prevent the rules of conflict of laws of the court hearing the dispute from coming into play where the parties have not indicated with sufficient precision the place of delivery or of provision of the service, and this may be established with the help of the law applicable to the contract, or where the subject of the dispute is in fact the place where the goods were delivered or should have been delivered, or the place where the services were provided or should have been provided. Point (b), then, acts as a special rule, limited to contracts of sale and contracts for the provision of services, for the application of the general principle of the place of performance of the obligation in question laid down in point (a). It does not apply to contracts that do not fall into either of those categories, and it does not apply even to those categories when the place of performance of the contract is in a State not bound by the Convention. Whenever point (b) is found to be inapplicable, point (a) applies; this is in fact stated in point (c), which clarifies and confirms a conclusion that could be drawn from points (a) and (b) even without it. In the case, for example, of a sales contract where the obligation to deliver the goods is to be performed in a State bound by the Convention, the place of performance of an obligation to make payment cannot be made the basis for establishing jurisdiction; but if the obligation of delivery is to be performed in a State not bound by the Convention, the plaintiff could invoke the place where payment was to be made, always supposing that that place was located in a State bound by the Convention, as point (a) would then be applicable, and it allows the specific obligation relied upon to be taken into account. 52. Regarding jurisdiction over individual contracts of employment, which figure in Article 5(1) of the 1988 Convention, several proposals for amendment were put forward; the ad hoc working party chose to deal with this matter separately in Title II (see below, in connection with Section 5). 53. The first limb of the provision, in (a) and (b), remains unchanged with respect to the provision in the 1988 Convention, which in its turn was identical to the provision in the Brussels Convention following the Accession Convention of 1978. For commentary, therefore, please refer to the previous reports (Jenard report, pp. 24-25; Schlosser report, paragraphs 90-108). 54. The Court of Justice has considered this provision on a number of occasions, and has clarified several aspects. The Court has held that the concept of a maintenance obligation is to be interpreted broadly, to include any obligation designed to enable a person to provide for himself or herself, whether or not payments are periodic and whether or not the obligation is determined on the basis of resources and need. It may, therefore, consist of the payment of a lump sum, if the amount of the capital has been arrived at in order to guarantee a predetermined level of income, or the transfer of ownership of property intended to enable a person to provide for himself or herself. Where such a provision is designed to enable one spouse to provide for himself or herself, or if the needs and resources of each of the spouses are taken into consideration in the determination of its amount, the payment relates to a maintenance obligation, and not to rights in property arising out of a matrimonial relationship, which would be outside the scope of the Convention [1]. If these characteristics of a maintenance obligation are present, the obligation is governed by Article 5(2), and falls within the scope of the Convention, even if it is ancillary to a proceeding, such as a divorce proceeding, which is itself excluded [2]. 55. The concept of ‘maintenance creditor’ is an independent concept that has to be determined in the light of the purpose of the rules of the Convention, without reference to the national law of the court seised. Article 5(2) does not make it possible to distinguish between a person whose right to maintenance payments has been recognised and a person whose right has not yet been established, and the concept consequently covers not only a person whose right to maintenance has already been established by a previous judgment, but also a person who is applying for maintenance for the first time, irrespective of whether national law restricts the notion of maintenance creditor to persons in the first category [3] . In the light of the Court’s case-law, the ad hoc working party felt that there was no need to change Article 5(2) by replacing the expression ‘maintenance creditor’ with the expression ‘applicant for maintenance’, as the Commission had suggested [4] . The concept of ‘maintenance creditor’ does not include a public body that brings an action to recover sums it has paid to the maintenance creditor, to whose rights it is subrogated against the maintenance debtor, since in that case there is no need to deny the maintenance debtor the protection offered by the general rule in Article 2 of the Convention [5] .
56. There is a new provision in point (c), which concerns matters relating to maintenance that are ancillary to proceedings concerning parental responsibility: it confers jurisdiction on the court which, according to its own law, has jurisdiction to entertain the proceedings concerning parental responsibility, unless that jurisdiction is based solely on the nationality of one of the parties. But it should be noted that this does not in any way modify the provision of Article 5(2) as it currently stands in the 1988 Convention and in the Brussels I Regulation [1]. The aim of point (c) is only to ensure parallelism between European Community law and the Lugano Convention. Recital No 11 to the Brussels II bis Regulation (Council Regulation (EC) No 2201/2003 of 27 November 2003) [2], in particular, clarifies the meaning of the rule of jurisdiction for maintenance claims where the maintenance claims are ancillary to parental responsibility proceedings, stating that jurisdiction with regard to such claims should be determined on the basis of Article 5(2) of the Brussels I Regulation. In order to avoid any doubt in the Lugano Convention, it was thought opportune to insert a provision clarifying the issue. 57. In matters of ‘tort, delict or quasi-delict’, the jurisdiction of ‘the courts for the place where the harmful event occurred’, provided for in Article 5(3) of the 1988 Convention (and earlier in the Brussels Convention), has given rise to a large body of Court of Justice case-law, prompted in part by the Jenard report, which limited itself to saying that the committee of experts for which Mr Jenard served as rapporteur ‘did not think it should specify where the event which resulted in damage or injury occurred, or whether it is the place where the damage or injury was sustained. The Committee preferred to keep to a formula which has already been adopted by number of legal systems’ [3] , leaving open the meaning to be to be ascribed to the formula itself. The question came before the Court of Justice, which held that the wording of Article 5(3) must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it, and that the defendant could be sued, at the option of the plaintiff, in the courts of either of the two places [4] . This interpretation does not choose between the different solutions accepted under national laws, which in order to determine where unlawful acts committed ‘remotely’ are deemed to have occurred base themselves sometimes on the theory of the place of the act and sometimes on the theory of the place of the result; it thus increases the scope for forum shopping. It should be noted, however, that reference exclusively to the place of the act would in many cases have removed any significance from this special jurisdiction for the place of the tort, given that the place of the act frequently coincides with the domicile of the defendant liable for the tort, while reference exclusively to the place where the damage occurred would in any event not have prevented a fragmentation of the legal action in many cases. 58. The Commission proposed that the case-law of the Court of Justice should be confirmed in the wording of Article 5(3), which should refer both to ‘the place where the event giving rise to the damage occurred’ and to ‘the place where the damage or part thereof was sustained’ [5] . The ad hoc working party did not accept this proposal: it felt that to confirm clear and uncontested case-law in a legislative act was unnecessary, and perhaps dangerous, since the words used, if they were inserted into a legislative text, might lend themselves to new interpretations. Furthermore, from the standpoint of reference to the place where the damage occurred, the proposal to confer jurisdiction on the courts of ‘the place where the damage or part thereof was sustained’ had several drawbacks. It did not incorporate into the legislation the clarification supplied by the Court of Justice in judgments subsequent to the initial ruling. In these, the Court made clear that the place of the damage was the place where the event giving rise to the damage, and entailing tortious, delictual or quasi-delictual liability, directly produced its harmful effects upon the person who was the immediate victim of that event [6] , and did not cover the place where the victim claimed to have suffered financial damage following upon initial damage arising and suffered by him in another Contracting State; so that it could not be construed so extensively as to encompass any place where the adverse consequences could be felt of an event which had already caused damage actually arising elsewhere [7] . To codify part of the Court’s case-law, but not all of its later developments, might have raised doubts regarding the legislature’s intention as to the scope of the rule. 59. Furthermore, to confer jurisdiction on the court of ‘the place where the damage or part thereof was sustained’ would have meant that if there was damage in more than one State, the plaintiff could sue for the total damage in each of these States, which was contrary to the case-law of the Court: in a case of libel by a newspaper, the Court resolved the problem of plurality of damage caused by the same act by giving the courts of each of the States in which injury was suffered jurisdiction to rule on the harm caused in that State: the only courts with jurisdiction to rule on all the harm caused were those of the domicile of the defendant [8] .
It is true that the solutions offered by Court of Justice oblige plaintiffs who suffer damage in several States to bring multiple proceedings, and given the different laws that are applicable this may lead to contradictory rulings regarding the same causal act [1]. Conferring jurisdiction over the entire damage on the court in each place where part of the damage occurred, on the other hand, would increase the scope for forum shopping and favour the plaintiff excessively. The ad hoc working party examined the alternative proposal that jurisdiction should be attributed to the court of the State in which the major part or a decisive part of the damage occurred. However, this solution was also eventually rejected, in view of the risk that a test of this nature might lead to frequent disputes regarding the determination of the major or decisive part of the damage, obliging the parties and the court to resolve questions of substance at the stage at which jurisdiction was being determined. 60. Having decided not to amend Article 5(3) in the manner proposed by the Commission, the ad hoc working party gave lengthy consideration to the possibility of clarifying the provision’s scope with regard to its applicablity not only to claims for injury that had already occurred, as a literal reading of the 1988 Convention might suggest, but also to claims based on the threat of injury in the future. The ad hoc working party had in mind in particular those cases in which an action brought by a public or private consumers’ organisation led to an injunction protecting the collective interests of consumers, since such an action concerned behaviour likely to cause harm, and would otherwise be outside the objective scope of Article 5(3). Actions of this nature are common practice in Scandinavian countries, and especially in Swedish law, and require uniform treatment in terms of jurisdiction and the enforcement of judgments in order to ensure that commercial operators who engage in fraudulent practices to the detriment of consumers in Member States of the Community – such as misleading marketing practices or unfair terms in standard contracts – are not beyond the reach of any action or remedy once their firm is based in a State other than the State where they are actually operating. The ad hoc working party noted that this situation was covered by Article 31, which allowed application to be made to a court for provisional or protective measures available under national law, because that rule applied even where the measures in practice had final effect [2]. It also considered the protection extended to consumers by Community directives, such as Directive 93/13/EEC on unfair terms in consumer contracts, Article 7(1) and (2) of which oblige Member States to ensure that adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers, and specify that the means referred to must include provisions whereby persons or organisations, having a legitimate interest in protecting consumers, may take action according to the national law concerned, before the courts or before competent administrative bodies, for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms [3] , or Directive 98/27/EC on injunctions for the protection of consumers’ interests, Article 2 of which obliges Member States to designate courts or administrative authorities competent to require the cessation or prohibition of any infringement of a series of Directives on consumer protection listed in the Annex, and, where appropriate, to order measures such as the publication of the decision or the publication of a corrective statement, with a view to eliminating the continuing effects of the infringement, and the payment of fines to ensure compliance with the decisions [4] . 61. Notwithstanding the possibility of resorting to these various legal provisions, the ad hoc working party also took account of the fact that these directives contained no rules of jurisdiction and that their application in the various Member States might not be uniform, the possibility that doubts might arise as to whether certain actions for cessation under national law were covered, and, lastly, the fact that such actions might be brought in cases that did not concern consumer protection, for example where a plaintiff sought to prevent a defendant from infringing the plaintiff’s intellectual property rights; these considerations led the working party to include a specific provision in Article 5(3) conferring jurisdiction on the courts of the place of the harmful event in respect of threatened future harm as well. The amendment is intended to clarify the scope of the law, and not to change it substance, as the inclusion of actions for cessation can clearly be derived by interpretation from the previous wording [5] . It should be remembered in this regard that the rationale for the special jurisdiction of the court of the place of a harmful event lies in the fact that that court is usually best placed to decide the case, owing to its proximity to the dispute and the ease with which evidence can be produced, and that this rationale applies not only to claims for compensation for damage already sustained but also to actions aimed at preventing damage from occurring. The Court of Justice subsequently took this view with regard to the Brussels Convention, though its reasoning was guided partly by the amendment made to Article 5(3) of the Brussels I Regulation, which was in the same terms as those now inserted into the Lugano Convention [6] .
62. The provision conferring jurisdiction in respect of harmful events that may occur in the future means that they are governed by the findings of the Court of Justice allowing the plaintiff to bring proceedings either in the place where the action generating the harm is to be avoided or in the place where the harmful event itself is to be prevented. Determining the place where the harm ‘may occur’ is essentially a matter of fact, and thus a matter for the court hearing the case. In line with the approach taken by the Court of Justice, however, it must be the place where there is a danger of immediate damage, and not a place where there may be indirect financial damage. The existence of a danger that may justify the grant of an injunction depends on the law of the State in which the injunction is sought: the rule here merely regulates jurisdiction, and does not specify the injunctions that may be issued, so that their character and content, the conditions on which they may be granted, and the persons entitled to seek them are to be determined by the law of the court seised or by Community provisions aimed at harmonising the relevant national laws. 63. As mentioned earlier, the special jurisdiction to issue injunctions that is under consideration here is concerned only with claims relating to conduct likely to cause damage which is not a breach of a contractual obligation; in the case of a breach of a contractual obligation, a remedy may be sought, as an alternative to the forum of the defendant, in the forum of the contract, as provided in Article 5(1). It should be borne in mind that the concept of ‘tort, delict or quasi-delict’, like that of ‘matters relating to a contract’, is to be interpreted independently, primarily by looking at the system and scope of the Convention, and is not a question that is referred to national law. In particular, the Court of Justice has held that the concept of ‘matters relating to tort, delict or quasi-delict’ covers all actions which seek to establish the liability of a defendant and which are not related to a contract with an obligation freely assumed by one party towards another [1]. 64. The provision conferring jurisdiction on the criminal court to hear actions for compensation or recovery arising out of a crime has been retained in the new Convention. The ad hoc working party discussed whether this provision should remain in the same terms, or should be amended or even deleted. It would indeed have been deleted by a proposal that criminal courts should be able to hear civil actions only if civil courts of the same place could hear actions originating from the same crime under the Convention. The working party decided to retain the rule, in view of the usefulness of the special jurisdiction conferred on criminal courts where national law allowed civil actions to be brought in the context of a criminal trial, which did not necessarily coincide with the jurisdiction for the place of a tort under Article 5(3). 65. The proposal for the amendment of Article 5(4) was in part connected to a redrafting of the other provision regarding the bringing of civil actions within a criminal context, in Article II of Protocol 1 to the 1988 Convention, which allows persons domiciled in a Contracting State who are being prosecuted in the criminal courts of another Contracting State of which they are not nationals, for an offence which was not intentionally committed, to be defended by a lawyer without having to appear in person. If the court orders their appearance, and they fail to appear, a judgment in the civil action given in the criminal trial need not be recognised in the other States bound by the Convention [2]. It was proposed, on the one hand, that this rule should be extended to include intentional offences, and on the other hand that it should be restricted, so that it would say only that if the criminal court was also hearing the civil action, the defendant was entitled to be represented with respect to the civil action without appearing in person, without the provison specifying the implications of this provision for the recognition of the judgment. These proposals were rejected, partly in order to avoid forceful interference in the criminal law of the States in a Convention dealing with civil and commercial matters. 66. Article II of the Protocol thus remained unchanged [3] , and in view of the parallelism with the Brussels I Regulation was transferred to the text of the Convention, now becoming Article 61. However, it should be noted that the decision not to extend the rule to intentional offences has been tempered by the Court of Justice, which has held that Article II of the Protocol is not to be interpreted as preventing the court of the State in which enforcement is sought from taking account, in relation to the public policy clause in Article 34(1), of the fact that in an action for compensation founded on an intentional criminal offence the court of the State of origin refused to allow that person to have his defence presented unless he appeared in person [4] . Which is the equivalent of saying that the provision in the present Article 61, which expressly refers to unintentional offences, applies to intentional ones as well, failing which recognition of judgments may be refused on the ground that they are contrary to public policy [5] . 67. The provision regulating the forum of a branch, agency or other establishment for disputes arising out of their operations has not undergone any modification. Article 5(5) confers special and terrritorial jurisdiction on the courts of the place where they are situated, with the aim of avoiding reference to national law. The concept of a branch, agency or
other establishment is thus an independent one, which is common to the States bound by the Convention and ensures legal certainty. The Court of Justice has indicated that the concept of a branch, agency or other establishment implies a place of business which presents itself as the extension of a parent body, and has a management and is materially equipped to negotiate business with third parties, so that the latter know that they can establish a legal relationship with the parent body abroad without having to deal directly with it [1]. These characteristics are present even where the place of business is run by a company independent of the parent from the point of view of national company law, which has the same name and identical management, and which negotiates and conducts business as an extension of the parent, because third parties must be able to rely on the appearance thus created [2]. Protection of third parties in such a case requires that the appearance be deemed equivalent to the existence of a branch without legal independence. On the basis of the concept described, it falls to the court to verify the evidence for the existence of a genuine secondary establishment in the case before it. 68. The disputes that have arisen regarding branches, agencies and other establishments, for which this Article provides a special jurisdiction that may replace the ordinary forum of the defendant, have been concerned with contractual and extra-contractual rights and obligations related to the management of the establishment (rent, relationships with staff, etc.), contractual obligations which have been entered into by the establishment in the name of the parent company and which are to be performed in the State in which the place of business is situated, and non-contractual obligations arising out of the activities engaged in by the establishment in the place in which it is situated on behalf of the parent [3] . Here too it is for the court before which the matter is brought to verify and classify the relationship relied upon, in the light of the concept of a dispute arising out of the operations of a branch, agency or other establishment as described here. 69. Of the various situations where jurisdiction may be founded on a connection between the action brought and another action where jurisdiction is regulated by the Convention, the need has been felt for clarification of the case where there is more than one defendant, allowing the plaintiff to bring proceedings in the court of the domicile of any of them, as the effective scope of the provision has been considered uncertain. In the absence of any indication in the original text of the Brussels Convention, the Jenard report pointed out that jurisdiction that derived from the domicile of one of the defendants had been adopted because it made it possible to obviate the handing down in the Contracting States of judgments which were irreconcilable with one another, and was not justified where the application was brought solely with the object of ousting the jurisdiction of the courts of the State in which the defendant was domiciled [4] . The Court of Justice has held that Article 6(1) requires that the actions brought by the plaintiff be related in such a way that dealing with them separately might result in irreconcilable judgments [5] . The ad hoc working party considered it advisable to codify the case-law on this point, and to define what the relationship between the actions should be if it was to confer jurisdiction with respect to all the defendants on the courts of the domicile of one of them. It may be noted that the concept of relatedness accepted coincides with that in Article 28(3), although the premisses and purposes of that provision are different: it is aimed at coordinating the jurisdiction of the States bound by the Convention, rather than identifying the court or courts of one of those States that has jurisdiction. 70. Contrary to the view put forward by the Commission [6] , the ad hoc working party did not believe it necessary to codify the other principle stated in the Jenard report, according to which jurisdiction is justified only if the claim does not have the exclusive purpose of removing one of the defendants from their proper court. It felt that the close relation that must exist between the claims, together with the requirement that the court before which the matter was brought be the court of the domicile of one of the defendants [7] , was sufficient to avoid the misuse of the rule [8] ; this was not the case with an action on a warranty or guarantee or other third party
proceedings regulated by Article 6(2), where the principle was expressly referred to in order to prevent a third party from being sued in an unsuitable court. It may be pointed out that where there is more than one defendant, jurisdiction is based objectively on the close link between the actions, which has to be shown by the plaintiff, whereas in the case of an action on a warranty or guarantee or other third party proceedings no such close link is required. In its place, ‘the related nature of the main action and the action on a warranty or guarantee’ [1]is enough, irrespective of the basis on which the court has jurisdiction in the original proceedings, and this makes it advisable that there should be a provision safeguarding the defendant’s right to be sued in the court which would be competent in his case, even though it places on the defendant himself the burden of proving that he has been removed from it. 71. Nor did the ad hoc working party consider it necessary to include a provision in Article 6(1) aimed at preventing the provision from being applied to defendants who have agreed a choice of forum clause with the plaintiff in accordance with Article 23 of the Convention. The Commission had made a proposal to this effect, but the exclusive jurisdiction provided for in Article 23 has precedence over any other jurisdiction regulated by the Convention, subject only to the provisions indicated in Article 23(5), so that there is no room for doubts of interpretation, and there is no reason to repeat the principle in a specific rule conferring jurisdiction. The fact that the report refers to such precedence only in the comment on Article 6(2) is no evidence to the contrary, as this rule of jurisdiction takes precedence over all the rules of jurisdiction in the Convention, with the exception of those listed in Article 23 itself. Of course this does not apply to a choice of forum clause to which the parties did not intend to give an exclusive character (for which see below, in connection with Article 23). 72. It should be noted, finally, that the pecularities in matters of actions on a warranty or guarantee of some States bound by the Convention, which had been made subject to a special rule under which Article 6(2) of the Brussels Convention was declared inapplicable, a rule repeated in Article V of Protocol 1 to the 1988 Convention, are treated in the same way once again in the new Convention, and specifically in Article II of Protocol 1. That Article provides that the jurisdiction specified in Articles 6(2) and 11 may not be fully resorted to in the States bound by the Convention referred to in Annex IX to the Convention (Germany, Austria, Hungary and Switzerland [2], while persons domiciled in another State bound by the Convention may be sued in the courts of those States pursuant to the rules on third party proceedings there provided for. But decisions taken in other States under Articles 6(2) and 11 will be recognised and enforced in the States concerned under the special provision in Title III of the Convention (for comment on the reasons for this special provision for some States, see the Jenard report, pp. 27-28; the Schlosser report, paragraph 135; and the Jenard-Möller report, paragraph 105) [3] . Article II of Protocol 1 adds a new paragraph (paragraph 2) which provides that at the time of ratification the European Community may declare that proceedings referred to in Articles 6(2) and 11 may not be resorted to in some other Member States, and in that event is to provide information on the rules that are to apply instead [4] . The inapplicability of Articles 6(2) and 11 in Germany, Austria and Hungary is also recognised in the Brussels I Regulation (Article 65).
73. In matters of insurance, the Convention maintains an independent and complete scheme, with the exception of a reference to Articles 4 and 5(5); Article 9(2) gives more extensive scope to the forum of a branch, agency or other establishment, which makes it possible to base jurisdiction on the existence of a branch, agency or other establishment even when the insurer is not domiciled in a State bound by the Convention. In order to protect the weaker party in an insurance relationship, the Convention keeps the previous structure, distinguishing between the position of the insurer on one side, and that of the policyholder, the insured or a beneficiary, on the other, and providing various criteria for jurisdiction depending on whether one or other assumes the position of plaintiff or defendant (see the Jenard report, pp. 30-33, and the Schlosser report, paragraphs 136-152). 74. Under the 1988 Convention, the insurer could be sued not only in the courts of the State of domicile – and other courts in particular cases – but also in the courts of the policyholder’s domicile, on an action brought by the policyholder; but the insurer could sue the policyholder, the insured or a beneficiary only in the courts of their State of domicile. This rule of jurisdiction gave a distinctive position to the policyholder, who enjoyed greater protection than the insured or the beneficiary: They could likewise be sued only in the courts of the State in which they were domiciled, but as plaintiffs they could not sue the insurer before the courts of their own domicile, which was a right reserved to the policyholder. The Jenard report explained
that the distinction was motivated by the consideration that only the policyholder was in a business relationship with the insurer and that ‘it would be unreasonable to expect the insurer to appear in the court of the insured or of a beneficiary, since he will not necessarily know their exact domicile at the time when the cause of action arises’ [1]. The ad hoc working party took the view that this argument no longer reflected the needs of the insurance business as it had developed in recent decades, with greater competition, new forms of insurance, and above all a higher level of legislative harmonisation as a result of the adoption of Community single market directives, which made it less difficult for an insurer to appear before a court of another country in the single market. Despite the development of European judicial cooperation, on the other hand, it is still quite difficult for a private person to sue a company in a different country, in the courts of the company’s State of domicile. These considerations have led to the removal of the distinction described, and the insertion of the insured and the beneficiary alongside the policyholder in Article 9(1)(b), thus putting them on an equal footing [2]. 75. In addition to the entitlement given them to sue the insurer in the courts of their own domicile, policyholder, insured and beneficiary are protected by restricting the general principle that allows the parties to depart from the rules of jurisdiction of the Convention except in the case of exclusive jurisdiction. Article 13 states that an agreement on jurisdiction can be entered into only in specified and limited circumstances, which include that of an insurance contract covering one or more of the risks listed in Article 14, essentially connected with sea, air and combined transport of goods and passengers. This restriction on choice of forum clauses in contracts ensures a high level of protection, and applies to insurance contracts entered into not just by private consumers, but also by businesses and professionals. There was some doubt, however, whether such wide protection was justified with respect to commercial insurance contracts. The ad hoc working party, therefore, looked at the option of increasing the role of the freedom of the parties by distinguishing between insurance contracts concluded by consumers and contracts entered into in the course of industrial, commercial or professional activities, and allowing the latter a choice of forum. The preferred option, however, was that the contracts in respect of which the parties could be allowed greater freedom should be identified by reference not to the policyholder, but to the risks covered by the contract, with additional risks being added to those that already appeared in Article 12A of the 1988 Convention. This solution has the advantage that it does not modify the structure of the Convention, so that the section on insurance remains separate from the section on consumer contracts. Furthermore, it avoids any reference to a policyholder who is a consumer, so that it continues to offer protection not just to consumers but to individual entrepreneurs, to small and medium-sized enterprises, and to professionals who, even though they carry on an industrial, commercial or professional activity, deserve the same protection in matters of insurance as that given to consumers. 76. By a cumulative approach, therefore, the risks already listed in Article 14 (to which reference is made in Article 13(5)) remain as they are, and to these the new Convention adds ‘all large risks’. The expression used to define the risks which, when they are covered by an insurance contract, allow the parties to depart from the otherwise compulsory provisions of the section, differs from the corresponding Article 14(5) of the Brussels I Regulation. The latter speaks of all large risks ‘as defined in Council Directive 73/239/EEC, as amended by Council Directives 88/357/EEC and 90/618/EEC, as they may be amended’, and thus refers to Community legislation both present and future. The wording is different here because it would not have been appropriate to make a precise reference to Community rules in a Convention to which States that are not members of the European Community are party. Effectively, however, the general reference to ‘large risks’ in Article 14(5) of the Convention is to be understood to designate the same risks as those referred to in the Directives listed. These large risks are defined in Article 5 of Directive 1988/357/CEE [3] , which refers to point A in the Annex to Directive 73/239/EEC [4] , and specifically to risks classified under classes 4 to 7 (damage to or loss of railway rolling stock, aircraft, sea, lake and river and canal vessels, and goods in transit or baggage, irrespective of the form of transport), and under classes 11 and 12 (aircraft liability and liability for sea, lake and river and canal vessels including carrier’s liability); risks classified under classes 14 and 15 (credit and suretyship), where the policyholder is engaged professionally in an industrial or commercial activity or in one of the liberal professions, and the risks relate to such activity; and risks classified under classes 8 and 9 (fire and natural forces and other damage to property), 13 (general liability) and 16 (miscellaneous financial loss), in so far as the policyholder exceeds the limits of at least two of three criteria relating to balance-sheet total, net turnover and average number of employees during the financial year.
Of the risks classified under point A of the Annex, therefore, those considered ‘large risks’ are essentially those where the policyholder is a business of a certain size, or at any rate one that is engaged in an industrial, commercial or professional activity, and exclude the risks classified under the classes accident, sickness, motor vehicles and legal expenses, where the policyholder is usually acting as a private individual. Thus although it does not do so expressly, as the Brussels I Regulation does, the Convention establishes a connection between jurisdiction and the freedom to provide services, for firms and for the classes of insurance other than life assurance covered by the First Directive, even in the States bound by the Convention that are not members of the European Community. 77. As has been pointed out, the Brussels I Regulation defines large risks by making an express reference to Community directives which includes potential future amendments. There is no such reference in the Convention, but the bare words ‘all large risks’ in Article 14(5) have to be interpreted in the light of the Community rules, present and future, at least in so far as the Community rules do not make radical changes to the approach to the handling of large risks. This view is supported by the recital in the preamble that states that the Convention is based on the extension of the principles laid down in the Brussels I Regulation to the contracting parties, and by Protocol 2, which seeks to arrive at as uniform an interpretation as possible of the Convention and of the Brussels I Regulation. Any problems that may emerge as a result of changes in the Community rules are to be considered within the context of the Standing Committee set up under Protocol 2 (paragraph 203 below). 78. In matters of consumer contracts, the Convention confirms the preceding rules protecting the weaker party to a contract in the same terms as the 1988 Convention, and lays down an independent scheme, without prejudice to Articles 4 and 5(5). While the consumer may sue the other party to the contract not just before the court of the State in which the other party is domiciled, but also before the court of the consumer’s own domicile, the other party may bring an action only in the courts of the State bound by the Convention in whose territory the consumer is domiciled (Article 16). The Convention permits an agreed choice of forum, but only after the dispute between the parties has arisen, or if it allows the consumer to bring proceedings in other courts, or if the choice of forum agreement confers jurisdiction on the courts of a State in which the consumer and the other party both have their domicile or habitual residence at the time of the conclusion of the contract, provided that such an agreement is not contrary to the law of that State (Article 17). For these provisions, therefore, please refer to the earlier reports (Jenard report, pp. 33-34; Schlosser report, paragraphs 159-161). 79. While the system of protection does not change, the Convention further widens the range of the contracts falling under it. The 1988 Convention, which took over the wording of the Brussels Convention then in force, provided that the protection offered by the Convention covered the sale of goods on instalment credit terms, loans repayable by instalments, or any other form of credit made to finance the sale of goods, and any other contract for the supply of goods or contract for the supply of services, if in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and the consumer took in that State the steps necessary for the conclusion of the contract (Article 13(1)). This last part of the provision considerably broadened the scope of the protection provided by comparison with that in the original Brussels Convention, which was confined to sales on instalment credit terms and loans repayable by instalments, but nevertheless it was not considered sufficient to guarantee adequate protection of consumers by the courts, parallel to the substantial protection offered by the Community directives. The 1988 Convention lacks a definition of the parties to a consumer contract, and in particular a definition of the other contracting party, it does not cover all consumer contracts, and its wording does not make it certain that it covers contracts concluded in non-traditional and especially digital formats. 80. Regarding the definition of the consumer, Article 15 of the Convention essentially reproduces the definition in the 1988 Convention, under which the consumer is a natural person who concludes a contract ‘for a purpose which can be regarded as being outside his trade or profession’. This corresponds to the definition used in other Community legislation [1], in particular in the Regulation on the law applicable to contractual obligations (Rome I) [2]. But the 1988 Convention lacks a definition of the other party to a consumer contract, which has given rise to doubt whether a contract which is concluded for a purpose outside the trade or profession of both contracting parties falls under the special rules on consumer contracts or the general rules of the Convention. It should be observed that the application of the special rules in Articles 15 to 17 is justified only where there is an imbalance between the positions of the parties such as to require that steps be taken to reduce or to eliminate it so as to protect the weaker party. This is the case only when the other party is engaged in a commercial or professional activity. Nevertheless, in order to avoid doubts of interpretation, Article 15(1)(c), which applies to most consumer contracts, expressly states that it is applicable to contracts concluded by the consumer with ‘a person who pursues commercial or professional activities’. This clarification was not considered necessary in the specific cases of contracts for the sale of goods on instalment credit terms or for loans repayable by
instalments, where it is difficult to imagine that the seller or lender is acting outside the scope of a trade or profession. 81. Article 15 of the Convention also considerably widens the range of consumer contracts to which it refers. While Article 13(1)(3) of the 1988 Convention speaks of ‘any other contract for the supply of goods or a contract for the supply of services’, Article 15(1)(c) of the new Convention uses the words ‘in all other cases’, referring to any contract, other than a contract for the sale of goods on instalment credit terms or for a loan repayable by instalments, which is concluded with a person who pursues commercial or professional activities, provided the contract falls within the scope of such activities. This broad concept of consumer contracts extends the scope of the protection offered, and simplifies the determination of the contracts covered, in line with the protection provided by the Community directives on consumer protection. It encompasses all the contracts regulated as consumer contracts by the Community directives, including contracts whereby a creditor grants or promises to grant to a consumer credit in the form of a deferred payment, loan or other similar financial accommodation, in so far as they are regulated by Directive 87/102/EEC on consumer credit [1]. There is no longer any doubt that the concept includes contracts relating to the purchase of the right to use immovable properties on a timeshare basis, which are the subject of Directive 94/47/EC [2]; it would not otherwise have been certain that these were to be classified with consumer contracts, rather than with contracts for the purchase of rights in rem in immovable property, which are the subject of Article 22(1), given the disparity among the various national laws of the States bound by the Convention. This conclusion has been confirmed by the Court of Justice, which has held that timeshare contracts that are subject to Directive 94/47/EC are also covered by Directive 85/577/EC if the conditions for the application of that directive are otherwise fulfilled [3] , and that that interpretation must be taken into account for the purposes of the interpretation of the Convention, given the link between the Convention and the Community legal order [4] . 82. The Convention also extends the scope of the rules on consumer contracts as regards the connection with the State in which a consumer is domiciled. It does not innovate with regard to the sale of goods on instalment credit terms or loans repayable by instalments, where there is no need for proximity between the contract and the State in which the consumer is domiciled. For other contracts, however, the extension of protection to all consumer contracts, and the extension of the forum actoris that that brings with it, would not be justified without a factor connecting the other contracting party and the State of domicile of the consumer. The 1988 Convention required certain links in the case of contracts for the supply of goods or services – the requirement that in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to the consumer or by advertising, and the requirement that the consumer took in that State the steps necessary for the conclusion of the contract – but the ad hoc working party considered that these were insufficient, and unsuited to the present requirements of consumer protection. The new Convention therefore requires that the commercial or professional activities of the person with whom the consumer concludes a contract be pursued in the State of the consumer’s domicile, or that they be directed to that State or to several States including that State. 83. The new connection with the State of domicile of the consumer can be applied to a contract of any kind, and is intended in particular to meet the need for protection arising out of electronic commerce [5] . It does not depend on the place where the consumer acts, or on the place where the contract is concluded, which may be in a country other than that of the consumer’s domicile: it attaches importance only to the activities of the other party, which must be pursued in the State of the consumer’s domicile, or directed to that State, perhaps by electronic means. In the case of an Internet transaction, for example, the fact that the consumer has ordered the goods from a State other than the State of his own domicile does not deprive him of the protection offered by the Convention if the seller’s activities are directed to the State of his domicile, or to that State among others; in that case too the consumer may bring proceedings in the courts of his own domicile, under Article 16 of the Convention, regardless of the place where the contract was concluded and regardless of the place where a service supplied electronically was enjoyed. The connection exists only if the commercial or professional activities are indisputably directed towards to the State where the consumer is domiciled. Whether a website is considered active or passive is irrelevant here. As the EU Council and the EU Commission have stated on Article 15 of the Brussels I
Regulation, ‘for Article 15(1)(c) to be applicable it is not sufficient for an undertaking to target its activities at the Member State of the consumer’s residence, or at a number of Member States including that Member State; a contract must also be concluded within the framework of its activities. This provision relates to a number of marketing methods, including contracts concluded at a distance through the Internet. In this context, the Council and the Commission stress that the mere fact that an Internet site is accessible is not sufficient for Article 15 to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means. In this respect, the language or currency which a website uses does not constitute a relevant factor’ [1]. 84. The sphere of application of the rules of jurisdiction protecting consumers has been further expanded to include contracts of transport, which were excluded from it by the 1988 Convention, where they were made subject to the general rules on contracts. The exclusion of all contracts of transport appeared unjustified given the practice of concluding contracts for a combination of travel and accommodation for an inclusive price. To continue to exclude contracts of transport here would also have meant that different rules of jurisdiction would have to be applied to the different services combined in a single contract which in economic terms represents a single commercial transaction. Article 15(3) therefore limits the exclusion from the rules in Section 4 of Title II to contracts of transport that do not provide for a combination of travel and accommodation for an inclusive price; this provision is thereby aligned on the provision for consumer contracts in the Convention on the law applicable to contractual obligations [2]. 85. Individual contracts of employment were completely ignored in the original Brussels Convention, and were consequently subject to the general rules and to the special rule on contractual obligations in Article 5(1), without any special restriction on the choice of forum; they were made the subject of special rules in the 1988 Convention (the second part of Article 5(1) and Article 17(5)); and they are now dealt with by special rules in Section 5 of Title II, which comes after the sections on insurance and consumer contracts, completing the rules protecting the weaker party to a contract. The new section follows the same scheme and the same solutions as the others, departing in some respects from the arrangements in the 1988 Convention. 86. Like the provisions in the other sections, Article 18(1) affirms the independent and comprehensive nature of the rules of jurisdiction for individual contracts of employment contained in the section, without prejudice to Article 4 if the defendant is domiciled in a State not bound by the Convention, and without prejudice to Article 5(5) for disputes concerning a branch, agency or other establishment. Like Article 9(2) and Article 15(2), Article 18(2) treats the existence of a branch, agency or establishment in a State bound by the Convention as equivalent for questions arising out of their operation to a domicile of the employer in that State, even if the employer is domiciled in a State not bound by the Convention. 87. Jurisdiction in proceedings against an employer domiciled in a State bound by the Convention is governed by Article 19, which, for the most part, reproduces the provision in the second part of Article 5(1) of the 1988 Convention. This means that an employer can be sued not only in the courts of the State where he is domiciled, but also in the courts of the place where the employee habitually carries out his work or the last place where he did so (paragraph 2(a)). The last phrase was missing from the 1988 Convention, and has been inserted because it has frequently been observed that proceedings are brought by an employee against an employer only after the employment relationship comes to an end or the employee is no longer working. It would not be appropriate to deprive the employee of the alternative forum of his place of work in such cases. There is also the fact that in the place of his employment, whether during the employment relationship or after it has ended, the employee can usually turn to a trade union that can help him to assert his rights before the courts. If an employee works or has worked habitually in different countries, an action may be brought in the courts of the place where the business which engaged the employee is or was situated (paragraph 2(b)). The solution adopted corresponds to that of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations [3] . It should be noted that this solution is necessary only when it is not possible to determine a country of reference meeting the two requirements that a significant link be established between the dispute and a place whose courts are in the best position to decide the case in order to afford proper protection to the employee as the weaker party to the contract, and that multiplication of the courts having jurisdiction be avoided. Even when the employee works in more than one State, if he actually performs the essential part of his duties vis-à-vis his employer in one place, it is in that place that he must be judged habitually to carry out his work, and Article 19(2)(a) of the Convention will consequently apply [4] .
88. The ad hoc working party examined a proposal to add a jurisdiction to those provided for in Article 19 so as to allow an employee who has been posted for a limited period in another State bound by the Convention, for the purpose of work, to bring legal proceedings concerning the work and the conditions under which it is carried out in the courts of that State. The proposal was considered in the light of Directive 1996/71/EC on the posting of workers [1], Article 6 of which provides that ‘In order to enforce the right to the terms and conditions of employment guaranteed in Article 3, judicial proceedings may be instituted in the Member State in whose territory the worker is or was posted, without prejudice, where applicable, to the right, under existing international conventions on jurisdiction, to institute proceedings in another State’. Obviously this provision, interpreted in the context of the Directive, has a scope different from that of a provision in the Convention conferring general jurisdiction, in favour of the employee, on the courts of the State in which he is posted. The Directive gives a series of definitions of the terms used – such as ‘posted employee’, ‘terms and conditions of employment’, etc. – which would need to be referred to in interpreting the provisions of the Convention. Furthermore, the jurisdiction of the court of the employee’s place of posting is limited by the Directive to ‘the terms and conditions of employment guaranteed in Article 3’ of the Directive, and is not of a general nature. To confer general jurisdiction on this court would not include all of the matters covered by Article 3 of the Directive, since the terms and conditions of employment it refers to cover such subjects as health, safety and hygiene at work, which are matters of public law, and could not be included in the Lugano Convention, confined as it is to civil and commercial matters. Lastly, an additional forum inserted into the Convention would be available exclusively to employees, while Article 6 of the Directive does not distinguish between the positions of the parties, and also provides a basis for jurisdiction over proceedings brought by an employer. So to confer jurisdiction on the courts of a State in which a worker is posted would not regulate jurisdiction in the same way as the Directive, and would create two systems subject to different rules of interpretation and application, which might undermine legal certainty in areas where protection ought to be ensured. These considerations persuaded the ad hoc working party not to accept the proposal to confer general jurisdiction on the court of the place where a worker is posted, and not to amend the rules of jurisdiction regarding employment, though the Directive continues to operate within its own sphere of application, and in any event allows proceedings to be brought under existing international conventions on jurisdiction, among them the Lugano Convention, whose sphere of application remains unchanged. 89. As with the other protective jurisdictions, actions may be brought by an employer against an employee only in the courts of the State bound by the Convention in which the employee is domiciled, except in the case of a counter-claim before the court dealing with the principal claim under the rules in the section on contracts of employment. In providing accordingly, Article 20 follows the same criterion as that adopted for insurance and consumer contracts, and thus modifies Article 5(1) of the 1988 Convention, which also allows the employer to bring proceedings before the court of the place where the employee habitually carries out his work, and, if he works in more than one country, the place of the business which engaged the employee. The decision to remove the employer’s option here was taken after careful evaluation of the role played by this criterion of jurisdiction. The reference to the place where the work is carried out is intended to offer the employee an alternative forum if the employee takes the view that it will be easier to prove his claim there, even after the relationship of employment has ended, and not to offer the employer an expedient forum actoris for disputes with an employee. 90. The rules on choice of forum are also aligned on the system for insurance and consumer contracts. In line with what is provided in Article 5(1) of the 1988 Convention, Article 21(1) states that a different jurisdiction can be agreed only after the dispute has arisen, so that the employee is in a position to assess whether it is desirable. Article 21(2) adds that a choice of forum clause may also depart from the general rules if it allows the employee to bring proceedings in courts other than those indicated in Article 19. By contrast with the other sections, however, there is no reference to the validity of a clause conferring jurisdiction on the courts of a State where both the employer and the employee have their domicile or habitual residence, as this would conflict with Article 3 of the abovementioned Community Directive on the posting of workers in the framework of the provision of services. 91. For some classes of subject-matter the jurisdiction provided for is exclusive, for reasons that require no particular comment, all related to the special closeness between the court and the type of situation. In certain matters the sound administration of justice suggests that exclusive jurisdiction should be conferred on the courts that are best placed to consider the dispute and to apply the local rules and customs. The new Convention confirms the characteristics of exclusive jurisdiction: exclusive jurisdiction applies regardless of where the parties are domiciled in the States bound by the Convention (Article 22); it cannot be departed from by agreement between the parties (Article 23) or implied submission to jurisdiction (Article 24); a court before which the main proceedings in a dispute are brought must decline jurisdiction of its own motion if exclusive jurisdiction vests in the courts of another State bound by the Convention (Article 25); and judgments will not be recognised if they conflict with the provisions on exclusive jurisdiction (Article 35), and may not be enforceable (Article 45).
Only the exclusive jurisdictions referred to in Article 22(1), (2) and (4) have been modified and require specific comment. Those in Article 22(3) and (5) are unchanged from the 1988 Convention, and the reader is asked to refer to previous reports (Jenard report, pp. 35-36). 92. There is no change to the rule that rights in rem in immovable property or tenancies of immovable property are within the exclusive jurisdiction of the courts of the State bound by the Convention in which the property is situated, for reasons which have already been explained with regard to the 1988 Convention (Jenard-Möller report, paragraphs 49-54) and the Brussels Convention (Jenard report, pp. 34-35; Schlosser report, paragraphs 162-165), and need not be gone into here. Nor is it necessary to specify the scope of the provision in relation to the other rules of jurisdiction in the Convention, which has been the subject of repeated examination in the Court of Justice’s case-law with regard to the Brussels Convention. Let us merely note that the Court has accepted that the exclusive jurisdiction in respect of tenancies is confined to disputes which are clearly concerned with the rental of property, and fall within the raison d’être of the exclusive jurisdiction conferred on the courts of the country of the property. A contract that concerns a range of services provided in return for a lump sum paid by the customer is not a tenancy within the meaning of the provision [1]. The provision does apply, however, to an action for damages for taking poor care of premises and causing damage to accommodation which a private individual has rented for a few weeks’ holiday, even where the action is not brought directly by the owner of the property but by a professional tour operator from whom the person in question had rented the accommodation and who has brought legal proceedings after being subrogated to the rights of the owner of the property [2]. Finally, the question whether and to what extent a time-sharing interest in property should be subject to the exclusive jurisdiction over matters of immovable property has been resolved by the ad hoc working party in accordance with the Community rules and their interpretation by the Court of Justice, without the need for any special provision (see paragraph 81 above). 93. At the Commission’s suggestion, the ad hoc working party examined the question whether Article 22(1) should be considered to have a reflex effect by which the courts of the States bound by the Convention would also be deprived of jurisdiction if the property was located in a State outside the Convention. As indicated in the Jenard-Möller report [3] , Article 16(1) of the 1988 Convention ‘applies only if the property is situated in the territory of a Contracting State’; if the property is situated in a non-Convention State, Article 2 of the Convention, and possibly the special jurisdictions which the Convention provides for, apply if the defendant is domiciled in a Contracting State, and Article 4 applies if the defendant is domiciled in a State outside the Convention. After close examination, the ad hoc working party decided that it would not be advisable to modify this reading of the scope of exclusive jurisdiction in matters of property, or to clarify the point in the text of the Convention, even taking into account the fact that in cases where the property was located in a non- Convention country Article 4 would probably be invoked frequently, and that there were significant differences in the relevant national laws [4] . Following the observations of the Court of Justice in its Opinion 1/03 [5] , the question whether Article 22(1) has a reflex effect, and the implications of any such effect, can best be reconsidered if the national provisions on jurisdiction in property cases where the defendant is domiciled in a non-Community country were to be unified within the European Community. 94. Particularly close attention was paid to the question of conferring jurisdiction on the courts of the State of domicile of the defendant, as an alternative to the courts of the State in which the property was located, for tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months. In this regard the Brussels Convention differs from the 1988 Convention. The Brussels Convention makes the possibility dependent on two conditions, namely that both parties must be natural persons and both must be domiciled in the same State, but the 1988 Convention makes the concurrent jurisdiction of the courts of the State of the defendant’s domicile wider, the conditions here being only that one of the parties, the tenant, must be a natural person and that neither of them be domiciled in the country in which the property is situated, regardless of whether or not they are domiciled in the same State. As the ad hoc working party’s terms of reference called upon it to align the texts of the two
Conventions as far as possible, the working party considered whether the Lugano Convention should be aligned on the Brussels Convention in this respect or vice versa. The solution adopted – which was also followed in the Brussels I Regulation – takes something from both: it requires that only the tenant need be a natural person, but that the contracting parties must be domiciled in the same State. In support of that solution, it should be pointed out in particular that it would have been excessive to require both contracting parties to be natural persons, since the purpose of the provision is to also to provide protection in the very frequent cases where holidaymakers rent accommodation from a company which owns property abroad. Moreover, the requirement that the contracting parties must be domiciled in the same State covers most cases in which it is appropriate to abandon the exclusive jurisdiction of the State in which the property is situated, without extending the scope of the exception too far. 95. Article Ib of Protocol 1 to the 1988 Convention allowed a State to declare that it would not recognise a judgment on a tenancy of immovable property if the property was situated in its territory, even if the tenancy was of a kind contemplated by the rule, and the jurisdiction of the court of the State of origin was based on the domicile of the defendant; this provision was no longer felt to be necessary, and it has not been included in the new Convention. 96. There is no change to the provision in the 1988 Convention regarding exclusive jurisdiction in proceedings which have as their object ‘the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the decisions of their organs’ – or more precisely ‘the validity of the decisions of their organs’, as the new wording puts it, confirming the interpretation that the reference to ‘the decisions of their organs’ was intended to be linked to the first part of the preceding phrase. The provision, in Article 16(2) of the old Convention, conferred jurisdiction on the courts of the seat of the company, legal person or association, in line with the provision that made the seat the equivalent of the domicile. The new provision has maintained the connection with the ‘seat’, but the link is no longer necessarily the same as the one in the general rule. In the new Convention the domicile of a company is in fact defined by reference to the statutory seat, or the central administration or the principal place of business. That definition is an independent one that makes it easier to bring proceedings before a court of a State bound by the Convention against a company that has some significant link with the States to which the Convention applies, but it was not felt to be a proper basis for exclusive jurisdiction over disputes in the areas considered here. The jurisdictions referred to in Article 22 are exclusive, and this is difficult to reconcile with a definition of domicile that applies alternative tests, which might create uncertainty surrounding the law applicable to the validity of the constitution of companies. In other words, the ordinary forum for companies can properly be based on a broad concept of domicile, but for the validity of the constitution of companies the concept applied has to be a narrow one, based on just one connecting factor. The working party opted to maintain the reference simply to the ‘seat’, as in the 1988 Convention, to be determined, as it was under that Convention, by reference to the rules of private international law of the court before which the matter is brought. It should be emphasised, therefore that the ‘seat’ of the company here is not an independent concept, as the ‘statutory seat’ is in Article 60. A reference simply to the ‘statutory seat’ might have avoided the possibility that where the ‘statutory seat’ and the real seat were situated in different countries there might be more than one court with supposedly exclusive jurisdiction; but it was decided that for the resolution of that problem the provisions in the Convention on the coordination of jurisdictions would be enough. 97. The agreed solution will as a rule ensure that forum and jus will coincide, and is motivated by the desirability of ensuring that when the validity of the constitution of a company is at issue there is a single jurisdiction that is predictable and certain. It was pointed out in the working party that the desirability of such a jurisdiction was less evident when the dispute was concerned with decisions of a company’s governing bodies. But the working party decided to keep the exclusive jurisdiction of the court of the seat of the company here too, on the ground that that court is usually best placed to decide on the validity of such decisions. To prevent the possibility that this jurisdiction might be widened by interpretation, the new Convention, as we have seen, refers explicitly to the ‘validity’ of decisions, rather than, as in the previous wording, to the ‘decisions’ themselves, thus making it quite clear that the exclusive jurisdiction does not extend to the decisions’ substance or effects. 98. On the subject of the validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the rule governing jurisdiction is generally the one laid down in the 1988 Convention. Exclusive jurisdiction is conferred on the courts of the State bound by the Convention in whose territory the deposit or registration has been applied for, has taken place or is deemed to have taken place under the terms of an international convention or, as the new wording makes clear, a Community instrument. This last point has been added to remove any doubt about the equivalence of Community law concerning intellectual and industrial property rights with the law of the international conventions in force.
99. Exclusive jurisdiction also applies with respect to patents granted on the basis of the Convention on the grant of European patents, signed in Munich on 5 October 1973. The rule according to which the courts of each State bound by the Convention are to have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that State, without prejudice to the jurisdiction of the European Patent Office, which was contained in Article Vd of Protocol 1 to the 1988 Convention, has now been incorporated into Article 22(4). The last part of the provision as it stood in the Protocol has been omitted: it made an exception to the exclusive jurisdiction of the courts of the States bound by the Convention where the patent was a Community patent under Article 86 of the Convention for the European patent for the common market, signed in Luxembourg on 15 December 1975 [1]. The Luxembourg Convention, amended by a subsequent Agreement relating to Community patents signed in Luxembourg on 15 December 1989, provided for the grant of a Community patent similar to national patents, but independent of them and with equivalent effects in all Contracting States. It declared the Brussels Convention to be applicable to all actions concerning Community patents, while establishing a special jurisdiction for disputes concerning validity and infringement. The Luxembourg Convention never came into force, and no reference has been made to it in the new Lugano Convention. 100. The question of an exception to the exclusive jurisdiction conferred by Article 22(4) on the courts of the Member States has remained a live issue, however, as a result of efforts to pursue the creation of a Community patent by means of Community legislation; the Commission presented a proposal for a Council Regulation on the Community patent in 2000 [2], followed by the Commission’s 2003 proposals for a Council Decision conferring jurisdiction on the Court of Justice in disputes relating to the Community patent and a Council Decision establishing the Community Patent Court and concerning appeals before the Court of First Instance [3] . The general approach is to give broad jurisdiction to the Court of Justice, more especially in disputes concerning infringement, including declarations of non-infringement, disputes concerning the validity of a Community patent, whether challenged in the main action or by way of counter-claim, and disputes concerning the use of the invention after publication of the Community patent application or regarding rights based on prior use of the invention, with exclusive jurisdiction to order provisional measures in cases within these areas, leaving the courts of the States with exclusive jurisdiction under Article 22(4) only in cases not expressly reserved to the Community court. 101. The diplomatic conference held from 10 to 12 October 2006 discussed whether it would be advisable to append to the Lugano Convention a protocol conferring exclusive jurisdiction on the Court of Justice in matters of Community industrial property rights [4] . Such a protocol would have the advantage of assigning to a single court disputes on the validity of patents and disputes on infringement, which under the Lugano Convention would otherwise have to be brought before different courts. But against the proposed protocol it was argued that it did not circumscribe the disputes concerned with sufficient precision, leaving their definition to Community legislation to be enacted later, and that to include actions for infringement was a major departure from the rules of jurisdiction in the Lugano Convention and would compromise its overall harmony. It proved impossible to arrive at a satisfactory formulation, and the diplomatic conference consequently preferred to defer consideration of such a protocol to a later date, when a Regulation on the Community patent had been adopted. 102. The protocol conferring exclusive jurisdiction on the Court of Justice in industrial property matters drew attention to certain needs which have in fact been at least partially satisfied by the subsequent case-law of the Court of Justice: before the signature of the new Convention, the Court found itself called upon to decide the question whether the rule of exclusive jurisdiction over registration or validity of a patent applied irrespective of whether the issue was raised by way of an action or a plea in objection [5] . The Court held that it did: in the light of the position and objective of the provision within the scheme of the Brussels Convention, the view had to be taken that the courts of the State of registration of the patent had exclusive jurisdiction ‘whatever the form of proceedings in which the issue of a patent’s validity is raised, be it by way of an action or a plea in objection, at the time the case is brought or at a later stage in the proceedings’ [6] . The Court of Justice thus held that where an action was brought for infringement, the court seised could not find indirectly that the patent at issue was invalid, even if the effects of the judgment were limited to the parties to the proceedings, as happened under the national laws of some of the States bound by the Convention [7] .
In view of that precedent, a court called upon to hear an action for infringement of a patent in which the question arises whether the patent is valid must, unless it has exclusive jurisdiction to decide the validity of the patent under Article 22(4), of its own motion declare that it lacks jurisdiction to determine the point under Article 25 of the Convention; and depending on the procedures allowed by the national law applicable, it may have to suspend the infringement proceedings, pending judgment by the court with exclusive jurisdiction, before reaching a decision on the substance. Consequently, the wording of Article 22(4) of the new Convention was modified compared both to the corresponding provision in the 1988 Lugano Convention and Article 22(4) of the Brussels I Regulation, in order to incorporate the GAT ruling of the Court of Justice [1]. The position adopted by the Court of Justice largely satisfies the intended purposes of the proposal for a protocol on the exclusive jurisdiction of the Court of Justice, by requiring a single exclusive jurisdiction for actions challenging validity or alleging infringement, which prevents rulings on the validity of a patent from being delivered by more than one court, even if they are considering quite different aspects of the matter, and thus avoids the danger of conflicting decisions. If the European Community were to adopt a Regulation on the issue of a Community patent, and to confer exclusive jurisdiction over the registration and validity of patents on the Court of Justice, a court of a State bound by the Convention which was called upon to hear an action for infringement of a Community patent could not rule even indirectly on the validity of the patent, and for that question would have to recognise the exclusive jurisdiction of the Court of Justice, and treat that court as it would another national court [2]. 103. The system governing the parties’ freedom to determine which court has jurisdiction over their relationship is a particularly delicate issue, as can be seen from the abundant case-law of the Court of Justice from the Brussels Convention onward, which has required major modifications over the years in order to cater adequately for the needs of international business [3] . The 1988 Convention itself was the outcome of such development in case-law and legislation. It therefore comes as no surprise that the ad hoc working party found itself confronted with various problems here, some of which concerned questions that had already been discussed previously, while others arose out of the need to find solutions to more recent questions raised by international business practices. With reference to Article 23, on choice of forum clauses in contracts, the difficulties arose first of all from the connection with a State bound by the Convention that must exist if the rules in the Convention are to apply. The working party then considered whether the jurisdiction agreed by the parties should be exclusive or not. In the third place it examined the formal requirements for a choice of forum clause, and in particular how such a clause could meet the requirements of electronic commerce. Lastly, it discussed a number of problems relating to the different positions of the parties with respect to the clause, jurisdiction to rule on the validity of the clause, and the relationship between Article 23 and the rest of the Convention. 104. Article 23 applies exclusively to relationships with an international element, which cannot consist merely of a choice of the courts of a particular State [4] , and applies only if at least one of the parties is domiciled in a State bound by the Convention. If neither of the parties is domiciled in such a State, a court of a State bound by the Convention which has been designated in a choice of forum clause may appraise the validity of the clause on the basis of its national laws, and the courts of the other States bound by the Convention are obliged to refrain from dealing with the case until such time as the court or courts designated in the choice of forum clause have declined jurisdiction. The working party discussed the advisability of continuing to require that at least one of the parties must be domiciled in a State bound by the Convention, the purpose being to simplify the rules and to give equal effect to all clauses conferring jurisdiction on a court or courts of a State bound by the Convention. Even when account was taken of these arguments, however, it was not felt advisable to expand the scope of the Convention by amending Article 23 in the way suggested. Above all, it was felt that it would not be justified to change the view that there was no need to lay down in the Convention the conditions under which a court was to accept jurisdiction if it was designated by parties who were all domiciled outside the territory to which the Convention applied [5] , although once the court stipulated in a choice of forum clause had accepted that the departure from the ordinary rules was valid, it was agreed that the clause should have effect in all States bound by the Convention. Consequently, the wording of Article 23(1) is the same in this respect as the corresponding provision in the 1988 Convention, except that the second part of the paragraph, concerning the treatment of the clause in cases in which neither party is domiciled in a State bound by the Convention, has now been put into a separate paragraph, paragraph 3.
105. The ad hoc working party examined the question of the date on which one of the parties must be domiciled in a State bound by the Convention in order for Article 23(1) to apply, in the light of Articles 13(3) and 17(3), which specify that in the cases they refer to the relevant domicile is the parties’ domicile at the time of conclusion of the contract. It was agreed that that was the decisive date for purposes of Article 23 too, but it was not deemed necessary to add an explanation to that effect in the text. This was because the relevant time had to be the time of conclusion of the contract, for the sake of legal certainty and the confidence of the parties who agreed the clause. If the date of reference were to be the date on which the proceedings were brought, one party would be able to transfer his own domicile to a State bound by the Convention after signing the contract and before bringing the proceedings, thereby rendering Article 23(1) applicable, and changing the context in which the court designated in the clause was to verify its own jurisdiction. 106. The 1988 Convention lays down that a prorogation clause that meets the requirements of the Convention always confers exclusive jurisdiction on the designated court or courts. But under the laws of some of the States bound by the Convention - under English law in particular - the parties will often agree a choice of forum clause on a non-exclusive basis, leaving other courts with concurrent jurisdiction, and permitting the plaintiff to choose between several forums; and English case-law has accepted that a non-exclusive clause constitutes a valid choice of forum under the Convention [1]. On a proposal from the United Kingdom delegation, the ad hoc working party re-examined the question of the exclusive effect of a choice of forum clause, and reached the conclusion that, since a clause conferring jurisdiction was the outcome of an agreement between the parties, there was no reason to restrict the parties’ freedom by prohibiting them from agreeing in the contract between them that a non-exclusive forum should be available in addition to the forum or forums objectively available under the Convention. A similar possibility was in fact already provided for, though within certain limits, by the 1988 Convention, Article 17(4) of which allowed a choice of forum clause to be concluded for the benefit of only one of the parties, who then retained the right to bring proceedings in any other court which had jurisdiction by virtue of the Convention, so that in that case the clause was exclusive only as far as the other party was concerned. That provision was obviously to the advantage of the stronger party in the negotiation of a contract, without producing any significant gain for international commerce. The 1988 Convention has now been amended to give general recognition to the validity of a non-exclusive choice of forum clause, and at the same time the provision in the 1988 Convention that allowed a clause to be concluded for the benefit of one party only has been deleted. 107. Article 23 does still give preference to exclusivity, saying that the agreed jurisdiction ‘shall be exclusive unless the parties have agreed otherwise.’ A choice of forum clause is therefore presumed to have exclusive effect unless a contrary intention is expressed by the parties to the contract, and not, as was initially proposed, treated as a non-exclusive clause unless the parties agree to make it exclusive. 108. The rules governing the formal requirements for a prorogation of jurisdiction clause which were laid down in the 1988 Convention reflected significant developments in the case-law regarding the corresponding provision in the Brussels Convention, in its original form, whose formal rigour the judgments sought to attenuate in various ways. The 1988 Convention took account of the case-law, and incorporated the major change made to the Brussels Convention by the Accession Convention of 1978 regarding the formal validity of clauses that accorded with usage in international trade or commerce [2], adding a reference to forms that accorded with practices which the parties had established between themselves [3] . The interpretation by the courts of the rule in the 1988 Convention has not necessitated any radical changes in the drafting of the new Lugano Convention. The new Convention confirms that a choice of forum clause is not considered to be in a valid form unless it is in writing or, if concluded verbally, evidenced in writing, or else in a form which accords with practices which the parties have established between themselves, or in a form which accords with a usage in international trade or commerce of the kind defined in Article 23(1)(c). With regard to the written evidence of a verbal clause, doubts were raised as to whether it was sufficient for the evidence to come from one of the parties, or whether it should come from both. The decision must be for the first possibility. A clause concluded verbally is frequently proposed by one of the parties, with the other party reserving the right to set down the verbal agreement in writing, and confirmation given by that other party is enough to demonstrate the existence and the terms of the agreement. This interpretation corresponds more closely to the wording of Article 23(1)(a) in some of the language versions, particularly the English version, which is more explicit in requiring the written form as evidence of the verbal agreement, rather than for its conclusion [4] . To interpret the rule otherwise would also make the reference in other
language versions to ‘written confirmation’ in the second part of point (a) practically superfluous, since written confirmation that had to be given by both parties would ultimately be a clause ‘in writing’ within the meaning of the first part of the provision. 109. The main problem that the ad hoc working party focused on in relation to the formal requirements for a prorogation clause was the question whether or not Article 23 could accommodate the development of electronic communications, bearing in mind that e-commerce should not be obstructed by inappropriate formal requirements. There can be no doubt that points (b) and (c) of paragraph 1 are indeed capable of applying to electronic communications, because they refer to practices established by the parties and usage in international trade or commerce. It is more problematic to determine whether point (a) can apply, that is to say whether the written form it requires is present in the case of electronic communications. To resolve any doubt that might arise, it was felt advisable to adopt an express rule. Article 23(2) therefore now states that any communication by electronic means is equivalent to ‘writing’ if it ‘provides a durable record of the agreement’. The test of whether the formal requirement in Article 23(1) is met is therefore whether it is possible to create a durable record of an electronic communication by printing it out or saving it to a backup tape or disk or storing it in some other way. The working party here based itself on the formal requirements for arbitration agreements in the UNCITRAL Model Law on International Commercial Arbitration, which states that an agreement that has been concluded orally, by conduct or by other means is ‘in writing’ if it is recorded in any form, and an electronic communication is considered to satisfy the requirement that it be ‘in writing’ if the information contained therein is accessible so as to be usable for subsequent reference; it then provides express definitions of what is meant by ‘electronic communication’ and a ‘data message’ [1]. The rule excludes only such electronic communications as do not provide a durable record. Those communications consequently cannot be used to conclude a choice of forum clause that is formally valid for purposes of point (a), though they may be relevant for purposes of points (b) and (c) if the requirements of those provisions are met. Article 23(2) merely indicates that electronic communication is considered to be in writing ‘if it provides a durable record’, even if no such durable record has actually been made, meaning that the record is not required as a condition of the formal validity or existence of the clause, but only if the need arises for evidence of it, which of course it would be difficult to furnish in any other way. 110. There is implied prorogation of jurisdiction in favour of a court that would not otherwise have jurisdiction under the Convention if the plaintiff brings the matter before it and the defendant enters an appearance without contesting its jurisdiction; this provision is distinguished from the prorogation of jurisdiction contemplated by Article 23, in that it does not presuppose an agreement between the parties, and does not oblige the court to examine whether the clause conferring jurisdiction upon it was in fact the subject of a meeting of minds, which must be clearly and precisely demonstrated, the purpose of the formal requirements in Article 23 being to provide proof [2]. Article 24 confers jurisdiction by virtue of the mere fact of the appearance in court of a defendant who does not contest the jurisdiction of the court before which the case has been brought, and defends himself on the merits, so that there is no need to establish whether there was any agreement between the parties. The ad hoc working party considered the question whether the jurisdiction was conferred only if the defendant was domiciled in a State bound by the Convention [3] , or also when the defendant was domiciled in a State outside the Convention, but it did not consider it necessary to add any clarification of the wording. Despite the apparent ambiguity of the first sentence of Article 24, which refers generically to cases in which jurisdiction does not derive from the Convention, a comparison of the systems of Article 23 and Article 24 leads to the conclusion that if the domicile of the defendant did not have to be in a State bound by the Convention, implied prorogation of jurisdiction might have a broader scope than express prorogation, which does require that at least one of the parties be domiciled in such a State (a requirement that the Group decided not to remove). 111. The wording of Article 24 has raised difficulties of interpretation with reference to the corresponding provision in the Brussels Convention, particularly regarding the possibility of contesting jurisdiction and entering a defence on the merits at the same time, and regarding the point at which jurisdiction must be challenged.
The first issue, whether the prorogation of jurisdiction in favour of the court seised can be prevented by a challenge to jurisdiction if the defendant also defends himself on the merits, arises out of divergences between the language versions of the Brussels Convention (and subsequently of the Lugano Convention): some language versions, such as the English and Italian versions, stated that the rule on implied prorogation did not apply where appearance was entered ‘solely to contest the jurisdiction’, rather than simply ‘to contest the jurisdiction’. Under the laws of some countries all pleas in defence, including pleas on the merits, must be put forward in the first act of defence; this made it difficult to apply the rule literally, as it would have prevented the defendant from defending himself on the merits if his plea of lack of jurisdiction was rejected, and would have been incompatible with the protection of the rights of the defence in the original proceedings, which is one of the guarantees provided by the Convention. The doubt has been removed by the Court of Justice, which has interpreted the provision to mean that the defendant’s appearance in court does not have the effect of conferring jurisdiction if the defendant as well as contesting the jurisdiction also makes submissions on the substance [1], and that a defendant who at the same time submits in the alternative a defence on the substance of the claim does not thereby lose his right to raise an objection of lack of jurisdiction [2]. In order to dispel any further doubt, and to confirm the Court’s interpretation, the wording of Article 24 has been harmonised in the various language versions by deleting the word ‘solely’, thereby making it clear that it is enough that the defendant should contest the jurisdiction, even if at the same time he makes submissions in his defence on the substance. 112. The time at which jurisdiction must be challenged in order to prevent implied prorogation of jurisdiction depends on the national law of the court seised, whose rules of procedure will also determine what is meant by the defendant ‘entering an appearance’ [3] . The reference to national law here has been upheld by the Court of Justice, which has nevertheless given an independent interpretation of the provision by holding that ‘if the challenge to jurisdiction is not preliminary to any defence as to the substance it may not in any event occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised’ [4] . If the challenge is presented before any defence on the substance, on the other hand, the question of the time by which it must be presented is determined only by national law.
113. There was no change needed to the provision that requires a court of a State bound by the Convention to declare of its own motion that it lacks jurisdiction whenever exclusive jurisdiction is conferred by Article 22 on a court of another State bound by the Convention [5] . That obligation remains in effect even if the defendant appears in court and does not contest the jurisdiction, since exclusive jurisdiction cannot be waived by the parties under either Article 23 or Article 24. The ad hoc working party debated whether the obligation in the provision requiring a court to decline jurisdiction of its own motion should be extended beyond exclusive jurisdiction under Article 22, to include a jurisdiction chosen by the parties under Article 23, though only where the choice of forum clause conferred jurisdiction on an exclusive basis, and also to include a jurisdiction conferred by an arbitration clause. The working party concluded that it should not be so extended, in the light of the fact that Article 25 dealt with a situation where the parties had appeared in court. A failure to contest jurisdiction should therefore be deemed to be an amendment of the choice of forum clause in Article 24, while a challenge entered would, if the court agreed, lead to a decision on the part of the court that had not been taken of its own motion. The case of a defendant who did not appear in court was contemplated in Article 26. As regards jurisdiction deriving from an arbitration clause, it was pointed out that arbitration fell outside the scope of the Convention, and it was not felt advisable that the working party should consider it.
114. As with Article 25, there was no need for any major change to Article 26, which deals with the examination as to jurisdiction where the defendant fails to appear in court [6] . The provision distinguishes between a situation where the court seised lacks jurisdiction under the Convention and a situation where it does indeed have jurisdiction under the Convention, but in either case the provision requires the court to verify its own jurisdiction [7] on the basis of the plaintiff’s presentation of his claim. Under paragraph 1, if the court finds that it lacks jurisdiction over a defendant domiciled in a State bound by the Convention, it will declare of its own motion that it has no jurisdiction, either because there is nothing to confer jurisdiction on it under the Convention or because the parties have excepted themselves from its jurisdiction by agreeing a choice of forum clause in favour of another jurisdiction. In other words, the defendant’s failure to appear cannot be deemed to constitute submission to the jurisdiction, and to make up for the absence of other criteria conferring jurisdiction. The fact that Article 24 is an independent criterion of jurisdiction means that the court must verify that everything has been done to notify the defendant of the claim in accordance with Article 26(2), so as to permit him to enter an appearance and submit to the jurisdiction if he thinks it advisable.
The second situation described is broader in scope. When the court does have jurisdiction under the Convention, it will have to proceed in default of appearance, if and to the extent that its national law so permits in cases in which the defendant fails to appear. Before continuing the trial, however, Article 26(2) requires the court to stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end. 115. This provision must be applicable to all cases in which the court seised has jurisdiction within the meaning of the Convention, regardless of whether or not the defendant is domiciled in a State bound by the Convention [1]. Otherwise, cases of exclusive jurisdiction would not be covered if the defendant was domiciled in a State outside the Convention. The requirement that everything possible be done to ensure that the defendant has received the document instituting the proceedings is linked to the recognition of the decision in the other States bound by the Convention, which is independent of the domicile of the defendant in the original proceedings, but which may depend on the question whether everything possible was done to inform the defendant in advance that the proceedings were being brought [2]. 116. As in the 1988 Convention, if the document instituting the proceedings was transmitted pursuant to the Hague Convention of 15 November 1965 on the service abroad of judicial and extrajudicial documents in civil and commercial matters, the provisions of Article 26(2) of the Lugano Convention are replaced by Article 15 of the Hague Convention [3] . An additional paragraph has been inserted as a result of the adoption of Regulation (EC) No 1348/2000 of 29 May 2000 [4] , and the subsequent Agreement between the European Community and the Kingdom of Denmark on the service of judicial and extrajudicial documents in civil or commercial matters, signed in Brussels on 19 October 2005 [5] ; in the mutual relations between States bound by the Regulation or by the Convention, when the document instituting the proceedings was transmitted pursuant to the Regulation or the Agreement, this new paragraph replaces the reference to Article 15 of the Hague Convention by a reference to Article 19 of the Regulation. It has to be pointed out that Regulation No 1348/2000 has been replaced by the new Regulation (EC) No 1393/2007 [6] , which is applied since 13 November 2008. In accordance with Article 25(2) of the Regulation, the reference in the Lugano Convention to Regulation 1348/2000 should be constructed as a reference to Regulation 1393/2007. 117. To satisfy the requirements of certainty and rapidity of service, it was decided to preserve the provision on the transmission of documents contained in Article IV of Protocol 1 to the 1988 Convention, which has now become Article I of Protocol 1 to the new Convention. That provision states that documents are to be transmitted in accordance with the procedures laid down in the conventions and agreements applicable between the States bound by the Convention. Unless the State applied to has objected, a document may also be sent by public officers of the State in which it was drawn up directly to public officers of the State in which the addressee is to be found, to be forwarded to the addressee in the manner specified by the law of the State applied to. The forwarding is to be recorded by a certificate sent directly to the officer of the State of origin. This form of transmission corresponds to what is provided for in Article 10(b) of the Hague Convention of 15 November 1965. Article I of Protocol 1 adds a new provision stating that in their mutual relations Member States of the European Community bound by Regulation No 1348/2000 [7] , or by the Agreement between the European Community and the Kingdom of Denmark of 19 October 2005, are to transmit documents by the methods laid down in the Regulation or the Agreement, which give preference to direct transmission [8] but do not rule out other forms of transmission [9] .
118. The fact that alternative forums are available for disputes governed by the Convention makes it possible that the same case may be brought before the courts in different States bound by the Convention, with the danger that the decisions that are taken may be incompatible with one another. To ensure proper operation of the system of justice within a common judicial area, that risk should be minimised by avoiding, whenever possible, parallel proceedings going ahead at the same time in different States. The authors of the 1988 Convention, and indeed of the Brussels Convention before it, wanted a clear and effective mechanism to resolve cases of lis pendens and related actions, and had to take into account the profound differences between the internal laws of different countries: to start with, certain States look at the order in which the proceedings are brought, while others apply the rule of forum non conveniens. The 1988 Convention did not refer to the forum non conveniens rule, and was based on the criterion of the prior jurisdiction of the court first seised: any court before whom the matter was brought thereafter was to stay the proceedings until such time as the jurisdiction of the first court had been established, and if it was so established was to decline jurisdiction in favour of that court.
End of page Official Journal of the European Union C 319/31 (23.12.2009) That arrangement was better than the original solution in the Brussels Convention, under which any court subsequently seised was required to stay the proceedings before it only if the jurisdiction of the other court was contested, and otherwise to decline jurisdiction immediately, thereby creating a substantial danger of a negative conflict of jurisdiction [1]; but the new solution nevertheless posed quite a few problems of its own. In particular, its formulation, according to the interpretation given it by the Court of Justice, failed to establish an independent concept of lis pendens covering every aspect of the matter. On the one hand, it laid down a number of substantive conditions as components of a definition of lis pendens – e.g., that the cases pending simultaneously must have the same parties, cause of action, and subject-matter – thereby permitting the Court to affirm that the terms used in order to determine whether a situation of lis pendens arose must be regarded as independent [2]. On the other hand, however, the rule failed to give an independent, uniform indication of how it was to be determined which court was addressed previously, i.e. at which moment an action should be considered to be pending before the court [3] . Noting that an independent definition was lacking, the Court of Justice held that the conditions under which a dispute could be said to be pending before a court were to be appraised in accordance with the national law of each court [4] . One consequence of referring to national law in order to determine the moment at which a court should be considered to have been seised of a case is that the question will be decided in significantly different ways depending on the court seised. The laws of the States bound by the Convention show significant differences in that regard, sometimes even with respect to different types of proceedings within their own legal systems. Yet even if we confine ourselves to the case of an ordinary action, in certain countries, such as Italy and the Netherlands, a court is considered to be seised for the purposes of lis pendens at the time that the writ initiating the proceedings is served on the defendant by a bailiff. In those countries, the service of the writ on the defendant takes place before the writ is delivered to the court. In other countries, however, a situation of lis pendens arises when the application is lodged with the appropriate court: this is the case in Denmark, Spain, Ireland, Finland, Norway, most cantons of Switzerland [5] , and Sweden. The same is true of France and Luxembourg, except that there the writ of summons is served on the defendant before the case is entered on the court’s register, and the decisive moment is not the time of delivery to the court but rather the time of service of the writ of summons on the defendant. In certain other countries, finally, the case must have been entered on the court’s register and the writ must have been served on the defendant, and only then does a situation of lis pendens arise. This is the case in Austria, Belgium, Germany, Greece [6] , Portugal, and the United Kingdom. The situation is further complicated when the decisive moment for lis pendens depends on the time at which the defendant was notified of the action, since that moment varies from one State to another and may also depend on the procedure followed. In that respect, it is important to bear in mind the Community Regulation on the service of judicial and extrajudicial documents [7] , Article 9 of which – as a follow-up to the provisions of the European Convention on the same subject [8] – provides common rules on the date of service, under which the date of service of a document is the date on which it is served in accordance with the law of the Member State addressed; however, where a document must be served within a particular period in the context of proceedings to be brought or pending in the Member State of origin, the date to be taken into account with respect to the applicant is the date fixed by the law of that Member State, unless the State concerned has declared that it will not apply that provision. 119. These differences in national laws may give rise to serious problems, not only because they can encourage forum shopping, which is an inevitable possibility given the existence of courts with concurrent jurisdiction, or a race to litigation, owing in some measure to the fact that Article 27 gives priority to the court first seised [9] , but also because they encourage parallel actions before the courts of different States bound by the Convention, in some cases permitting a defendant to lodge an application based on the same cause of action as an application brought against him and to have his own application given priority under the laws of the court considering it.
To avoid such situations, the new Convention adopts an independent concept of the time at which a court is considered to be seised for the purposes of lis pendens, which takes into account the differences among the laws of the various countries, and in order to determine certain aspects refers to some extent, but in a more restricted manner than the previous arrangement, to the national rules of procedure. Article 30 expressly lists the two main criteria followed by the States bound by the Convention in order to establish when a court is deemed to be seised, namely the time when the document instituting the proceedings is served on the defendant and the time when the complaint is lodged with the court, and sets out to use those criteria in such a way as to establish a time which takes account of the different systems but is as convergent as possible. The rule distinguishes between cases in which, according to the national law, the document instituting proceedings or the equivalent document is lodged with the court, and cases in which the document must be served before being lodged with the court. If the time at which the court is deemed to be seised is determined by the lodging of the document instituting proceedings with the court, the court is considered to be seised at that moment, provided that the plaintiff has not subsequently failed to take the steps that he was required to take to have service effected on the defendant; if, on the other hand, the time at which the court is deemed to be seised is determined by service on the defendant, the court is considered to be seised when the authority responsible for service receives the document instituting proceedings, provided that the plaintiff has not subsequently failed to take the steps that he was required to take to have the document lodged with the court. The solution appears complicated, but only because it requires an additional verification beyond what is normally required by national laws. It makes it possible to identify a time at which the court is deemed to be seised that is largely convergent, but nevertheless consistent with and in compliance with the national systems of procedure, which specify moments that are quite different and far apart in time. When the point at which the court is seised depends on serving notice on the defendant, the solution adopted also satisfies the need for certainty, by avoiding the difficulty of ascertaining the date of service, which is often not easy to determine when service is not made to the recipient personally [1]. In any event the rule will reduce the advantage or disadvantage to either party that might result from simply referring to national law. 120. In Article 29, the Convention reproduces without modification the provision that provides for the rare case [2]in which actions between which there is a situation of lis pendens come within the exclusive jurisdiction of different courts: in that event any court seised subsequently is to decline jurisdiction in favour of the court seised first. Here too the determination of which court was seised first is to be based on the criteria laid down in Article 30. Article 29, unlike Article 25, does not specify the legal basis of the exclusive jurisdiction that may lead the court to decline jurisdiction in favour of the court first seised. The rule therefore also applies where exclusive jurisdiction is conferred by a choice of forum clause within the meaning of Article 23, but only in the event that it is concurrent with the exclusive jurisdiction conferred on another court by virtue of the same Article [3] . In contrast, if the exclusive jurisdiction based on Article 23 is concurrent with another based on Article 22, the latter will prevail, regardless of the moment at which the court is deemed to be seised, by virtue of Article 25. The cases regulated by the provision on lis pendens do not include the case in which only the court subsequently seised has exclusive jurisdiction, because in that case the other court continues to be obliged to declare of its own motion that it lacks jurisdiction under Article 25 of the Convention, regardless of the moment at which the matter was brought before it. 121. The provision on related actions represents an important aspect of the coordination of jurisdiction in the States bound by the Convention. When several non-identical actions are so closely connected that it is expedient to hear and determine them together, in order to avoid the risk of irreconcilable judgments that would not be mutually recognised by the States concerned, the Convention provides for coordination of the proceedings of the courts of the different States before which such actions are pending. Article 28 does not make the relation between the actions a general criterion of jurisdiction, as is done in certain national legal systems, and in particular does not confer jurisdiction on a court hearing an action that has come before it according to the rules of the Convention to rule on another action that is related to the first [4] ; instead, it establishes procedures intended to facilitate the handling of related cases in a single set of proceedings or in coordinated proceedings.
122. Provided that the tests of Article 28(3) are satisfied, therefore, a court seised subsequently is entitled – but not obliged – to stay the proceedings and await the decision of the court first seised before deciding the case before it. The new wording of Article 28(1) no longer requires, as the previous version did, that the related actions be pending at first instance. The reason given for that requirement, namely that ‘otherwise, the object of the proceedings would be different and one of the parties might be deprived of a step in the hierarchy of the courts’ [1], does not appear convincing. The stay of the proceedings by the court subsequently seised has no effect whatever on the proceedings in that court, which it is free to resume once the proceedings on the related action pending before the foreign court have been concluded. That is the appropriate time at which to appraise whether the foreign judgment respected the rights of the defendant guaranteed by the Convention and can be taken into account for the purposes of the proceedings before the court seised subsequently. But the requirement that both sets of proceedings be pending at first instance is nevertheless essential, and has been maintained and specifically formulated in Article 28(2), where the court subsequently seised decides – and here again it is a right, not an obligation – to refuse the case by declining jurisdiction in favour of the court previously seised of the related action. Otherwise, if the case before the court first seised were at the appeal stage, one of the parties would indeed be deprived of a step in the hierarchy of the courts. If, on the other hand, the case before the court seised subsequently were at the appeal stage, it would not be expedient for that court to decline its own jurisdiction in favour of a fresh trial at first instance, for reasons of economy of procedure. In any case, it is not possible for the court seised subsequently to decline jurisdiction unless one of the parties so requests, unless the court first seised has jurisdiction to hear the case, and unless that court’s laws allow for consolidation of the actions. The expression used in the provision – ‘consolidation thereof’, i.e. ‘of the related actions’, rather than ‘of related actions’ as in the 1988 Convention – means that the laws of the court first seised must allow the consolidation of the related actions pending in that particular case, and not the consolidation of actions in general. Before declining jurisdiction, therefore, the court must be satisfied that the other court will accept it. 123. The ad hoc working party discussed whether Article 28 ought to be made more flexible by granting the court first seised the right to decline jurisdiction in favour of the court seised subsequently, where the circumstances of the case would make that advisable, but it decided against this course. Providing such a right would have introduced into the Convention a further application of the doctrine of forum non conveniens that is alien to the legal tradition of most of the States bound by the Convention. 124. The rule on provisional and protective measures in the new Convention makes only formal changes to the wording of 1988 (see the reports by Jenard, p. 42; Schlosser, paragraph 183; and Jenard and Möller, paragraph 65). In its concise formulation, Article 31 merely indicates that if such measures are available under the law of a State bound by the Convention, they may be sought in the courts of that State even if, under the Convention, the courts of another State bound by the Convention have jurisdiction as to the substance of the matter. According to the Jenard report, the corresponding rule of the Brussels Convention (Article 24) implies that the competent authorities adjudicate ‘without regard to the rules of jurisdiction laid down in the Convention’. The provision, then, is merely a reference to the national laws of the court seised, which will apply the lex fori both with respect to the determination of the measures to be ordered and with respect to its own power to order them. 125. The ad hoc working party discussed very thoroughly the question whether the rule in the Convention was satisfactory, on the basis of various proposals put forward by the Commission and by the delegations of national experts. In the course of the debate, particular emphasis was placed on the desirability of a uniform definition of ‘provisional, including protective, measures’, which might include the French measure known as the référé provision. In the absence of an express definition in the Convention, the Court of Justice has defined ‘provisional, including protective, measures’ as measures which ‘are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter’ [2]. But such connections with the proceedings on the substance of the matter, it was observed, did not lead to satisfactory results in every case: when a protective measure amounted to pre-empted enforcement, regardless of the outcome of the trial on the merits, the rules laid down in the Convention regarding jurisdiction in actions on the merits could in practice be circumvented. It was argued, therefore, that the granting of enforceable measures might have to be made subject to restrictions, such as a requirement of urgency or a need for protection. It was also argued that the wording should be amended to make it clear that provisional orders for payment were outside the scope of the specific rule in the Convention, and could be issued only by the court with jurisdiction to decide on the merits; otherwise, the rules of jurisdiction in the Convention would be subverted and the case resolved before there was any full hearing.
It was therefore suggested that Article 31 should be interpreted not as a referral to the lex fori but as a substantive rule, whose scope was limited to measures that could actually be enforced in the State in which they were sought, without going through another enforcement procedure [1]. The court of the State in which a measure was to be enforced should have exclusive jurisdiction to order that measure. In favour of the jurisdiction of the court of the State in which the measure can and must be enforced, it was observed that leaving it to national law to determine the nature of such measures and the circumstances under which they might be granted opened up the possibility of a jurisdiction based on an exorbitant forum, which should be barred by the Convention. 126. Before the conclusion of the work of the ad hoc working party, these topics were dealt with in a judgment of the Court of Justice, which touched upon various aspects of the matter [2]. The Court found that the court having jurisdiction as to the substance of a case under one of the heads of jurisdiction laid down in the Convention also had jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions [3] . The relevant provision of the Convention adds a further rule of jurisdiction whereby a court may order provisional or protective measures that are available under its national law even if it does not have jurisdiction as to the substance of the case, provided that the subject-matter of the dispute falls within the scope ratione materiae of the Convention [4] . The mere fact that proceedings have been, or may be, commenced on the substance of the case before a court of a State bound by the Convention does not deprive a court of another State bound by the Convention of its jurisdiction [5] . Such jurisdiction does not depend on the rule of jurisdiction under the Convention and may also be based on one of the rules of exorbitant jurisdiction referred to in Article 3 of the Convention. Regarding the conditions set out by the Convention for the granting of a provisional or protective measure within the meaning of the relevant provision of the Convention, the granting of such measures is conditional on, inter alia, the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the State of the court before which the measures are sought [6] . The definition of provisional and preventive measures depends on the national law of the court, but the national law is to be interpreted in keeping with the concept stated by the Court, which, as we have seen, defines such measures as those intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought from the court having jurisdiction as to the substance of the matter. In the light of that concept, a measure ordering interim payment of a contractual consideration is, by its very nature, such that it may pre-empt the decision by the court having jurisdiction to rule on the substance of the case, and does not constitute a provisional measure within the meaning of the provision of the Convention, unless, first, repayment to the defendant of the sum awarded is guaranteed if the plaintiff is unsuccessful as regards the substance of his claim and, second, the measure sought relates only to specific assets of the defendant located or to be located within the confines of the territorial jurisdiction to which application is made [7] . 127. In consideration of that judgment by the Court of Justice, the ad hoc working party discussed whether it was necessary for Article 31 to codify the principles set out there, and concluded that it was not, among other things because of the further clarification that they might require if incorporated into a legislative text, particularly with respect to the nature of the factor connecting the subject-matter of the measure and the territorial jurisdiction of the court, which in the judgment was defined exclusively with reference to the specific case at issue. A further problem concerns recognition by the other States bound by the Convention of measures ordered under Article 31. Measures ordered by the court having jurisdiction as to the substance of the case by virtue of the Convention are undoubtedly decisions that must be recognised under Title III of the Convention, but it seems natural that the decisions taken on the basis of the jurisdiction provided for by Article 31 should not, in principle, give rise to recognition and enforcement abroad. Here again, the ad hoc working party preferred not to insert express provisions into the Convention.
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