| SCHLOSSER REPORT 1979, No C 59 / 72
69. In section A of Chapter 4 of his report, Mr. Jenard sets out the main ideas underlying the rules of jurisdiction of the 1968 Convention. None of this is affected by the accession of the new Member States. The extent to which three features of the law in the United Kingdom and in Ireland are consistent with the application of the 1968 Convention must, however, be clarified. These features are: the far-reaching jurisdiction of the Superior Courts (1), the concept of domicile (2) and, lastly, the discretionary powers enjoyed by the courts to determine territorial jurisdiction (3).
70. The Continental Member States of the Community have geographically defined jurisdictions where courts of first instance are competent to give judgments even in the most important civil disputes. There are many courts of equal status: approximately 50 'Landgerichte' in Germany, and an equal number of 'tribunaux de grande instance' in France and 'Tribunali' in Italy. Where the 1968 Convention itself lays down both the international and local jurisdiction of the courts, as for example in Articles 5 and 6 jurisdiction is given to only one of the many courts with equal status in a State. There is little room for such a distinction in the judicial systems ...
... of Ireland and the United Kingdom in so far as a Superior Court has jurisdiction as a court of first instance. In Ireland, the High Court is the only court of first instance with unlimited jurisdiction. It can exceptionally, sit outside Dublin. Nothing in the 1968 Convention precludes this. In addition to the High Court, there is a Circuit Court and a District Court. In respect of these courts too, the Expression 'the Court' is used in the singular and there is only one Court for the whole country, but each of its judges is permanently assigned to a specific circuit or district. The local jurisdiction laid down in the 1968 Convention means, in the case of Ireland, the judge assigned to a certain 'circuit' or 'district'. In the United Kingdom three Superior Courts have jurisdiction at first instance: the High Court of Justice for England and Wales, the Outer House of the Court of Session for Scotland and the High Court for Northern Ireland. Each of these courts has, however, exclusive jurisdiction for the entire territory of the relevant part of the United Kingdom (see paragraph 11). Thus the same comments as those made in connection with the territorial jurisdiction of the Irish High Court apply also to each judicial area. The possibility of transferring a case from London to a district registry of the High Court does not mean transfer to another court. Bearing in mind that foreign judgments have to be registered separately in - respect of each of the judicial areas of the United Kingdom in order to become enforceable therein (see paragraph 208), the distinction between international and local jurisdiction becomes largely irrelevant in the United Kingdom. The rules in the 1968 Convention governing local jurisdiction are relevant to the Superior Courts of first instance in the United Kingdom only in so far as a distinction has to be made between the courts of England and Wales, Scotland and Northern Ireland. The competence of the other courts (County Courts, Magistrates Courts, and in Scotland, the Sheriff Courts) presents no particular problems.
71. (a) The concept of domicile is of fundamental importance for the 1968 Convention in determining jurisdiction (e.g. Articles 2 to 6, 8 12 (3), 17 and 32). In the legal systems of the original Member States of the EEC its meaning differs to some extent. In the Federal Republic of Germany, it expresses a person connection with a local community within the national territory. In France and Luxembourg, it denotes a person s exact address. In Belgium, for , purposes of jurisdiction the term denotes the place where a person is entered in the register of population as having his principal residence (Article 36 of the Code judiciaire). These differences explain why" in determining a person s domicile, e.g. German law places greater emphasis on the stability of the connection with a specific place than do some of the other legal systems. Notwithstanding these differences the basic concept of 'domicile' is the same in all the legal systems of the original Member States of the EEC, namely the connection of a person with a smaller local unit within the State. This made it possible in Article 52 of the 1968 Convention to leave a more precise definition of the term to the law of the State in which the 'domicile' of a person had to be ascertained. It did not lead to an uneven application of the provisions of the 1968 Convention. Clearly, for the purposes of applying them in the original Member States of the Community it is irrelevant whether the concept of domicile refers to a specific address or to a local community. 72. (b) The concept of domicile under the law in Ireland and the United Kingdom differs considerably in several respects from the Continental concept. First, this concept does not refer to a person connection with a particular place and even less with a particular residence within a place, but to his having his roots within a territory covered by a particular legal system (see paragraph 11). A person domicile only indicates whether he comes under the legal system of England and Wales, Scotland, Northern Ireland, or possibly under a foreign legal system. A person s legal connection with a particular place is denoted by the word 'residence', not 'domicile'. According to United Kingdom law, a person always has one 'domicile' and can never have more than one. At birth a legitimate child acquires the domicile of its father, an illegitimate child that of its mother. child retains its domicile of its parents throughout its minority.
73. (c) Article 52 of the 1968 Convention does not expressly provide for the linking of the concept of domicile with a particular place or a particular residence, nor does it expressly prohibit it from being connected with a particular national territory. The United Kingdom and Ireland would, consequently, be free to retain their traditional concept of domicile when the jurisdiction of their courts is invoked. The Working Party came to the conclusion that this would lead to a certain imbalance in the application of the 1968 Convention. In certain cases, the courts of the United Kingdom or Ireland could assume jurisdiction on the basis of their rules on the retention of domicile, although by the law of all the other Member States of the Community, such a person would be domiciled at his actual place of residence within their territory. The Working Party therefore requested the United Kingdom and Ireland to provide in their legislation implementing the 1968 Convention (see paragraph 256), at any rate for the purposes of that Convention, for a concept of domicile which would depart from their traditional rules and would tend to reflect more the concept of 'domicile' as understood in the original States of the EEC. In Article 69 (5) of the Convention for the European patent for the common market which was drawn up concurrently with the Working Party s discussions, the concept of 'Wohnsitz' is translated as 'residence' and for the meaning of the expression reference is made to Articles 52 and 53 of the 1968 Convention. To prevent confusion, the proposed new Article V c of the Protocol makes it clear that the concept of 'residence' within the meaning of the Community Patent Convention should be ascertained in the same way as the concept of 'domicile' in the 1968 Convention. 74. (d) It should be noted that the application of the third paragraph of Article 52 raises the problem of different concepts of domicile, when considering which system of law determines whether a person s domicile depends on that of another person. The relevant factor, in such a case, may be where the dependent person domiciled. Under United Kingdom private international law, the question whether a person has a dependent domicile is not determined by that person s nationality, but by his domicile in the traditional sense of that concept. The re-definition of 'domicile' in connection with the first paragraph of Article 52 in no way affects this. If a foreigner under age who has settled in England is sued in an English court, that court must take account of the different concepts of domicile. As a first step it must establish where the defendant had his 'domicile' before settling in England. This is decided in accordance with the traditional meaning of that concept. The law thus found to be applicable will then determine whether the minor was in a position to acquire a 'domicile' in England within the meaning of the 1968 Convention. The English court must then ascertain whether the requirements for 'domicile' in the area covered by the English court concerned are satisfied. 75. (e) There is no equivalent in the law of the United Kingdom to the concept of the 'seat' of a company in Continental law. In order to achieve the results which under private international law are linked on the continent with the 'seat' of a company, the United Kingdom looks to the legal system where the company was incorporated ('law of incorporation', Section 406 of the Companies Act, 1948). The 'domicile' of a company in the traditional sense of the term (see paragraph 72) is taken to be the judicial area in which it was incorporated. The new Member States of the Community are not obliged to introduce a legal concept which corresponds to that of a company's 'seat' within the meaning of the continental legal systems, just as in general they are not obliged to adapt their concept of domicile. However, should the United Kingdom and Ireland not change their law on this point, the result would again be an imbalance in the application of the 1968 Convention. It would therefore, be desirable for the United Kingdom to introduce for the purposes of the Convention an appropriate concept in its national legislation such as 'domicile of a company', which would correspond more closely to the Continental concept of the 'seat' of a company than the present United Kingdom concept of 'law of incorporation'. Such a provision would not preclude a company from having a 'domicile' in the United Kingdom ....
76. The idea that a national court has discretion in the exercise of its jurisdiction either territorially or as regards the subject matter of a dispute does not generally exist in Continental legal systems. Even where, in the rules relating to jurisdiction tests of an exceptionally flexible nature are laid down, no room is left for the exercise of any discretionary latitude. It is true that Continental legal systems recognize the power of a court to transfer proceedings from one court to another. Even then the court has no discretion in determining whether or not this power should be exercised. In contrast, the law in the United Kingdom and in Ireland has evolved judicial discretionary powers in certain fields. In some cases, these correspond in practice to legal provisions regarding jurisdiction which are more detailed in the Continental States, while in others they have no counterpart on the Continent. It is therefore difficult to evaluate such powers within the context of the 1968 Convention. A distinction has to be made between the international and national application of this legal concept. 77. (a) In relationships with the courts of other States and also, within the United Kingdom, as between the courts of different judicial areas (see paragraph 11) the doctrine of forum conveniens in Scotland forum non conveniens is of relevance. The courts are allowed, although only in very rare and exceptional cases, to disregard the fact that proceedings may already be pending before foreign courts, or courts of another judicial area. Exceptionally, the courts may refuse to hear or decide a case, if they believe it would be better for the case to be heard before a court having equivalent jurisdiction in another State (or another judicial area) because this would increase the likelihood of an efficient and impartial hearing of the particular case. There are several special reasons why in practice such discretionary powers are exercised: the strict requirements traditionally imposed by the laws of the United Kingdom and Ireland regarding changes of domicile (see paragraph 72); the rules allowing establishment of jurisdiction by merely serving a writ or originating summons in the territory of the State concerned (see paragraphs 85 and 86); the principles developed particularly strongly in the procedural law of these States requiring directness in the taking of evidence with the consequent restrictions on making use of evidence taken abroad or merely in another judicial area; and finally, the considerable difficulties arising in the application of foreign law by United Kingdom or Irish courts. 78. According to the views of the delegations from the Continental Member States of the Community such possibilities are not open to the courts of those States when, under the 1968 Convention, they have jurisdiction and are asked to adjudicate. Article 21 expressly prohibits a court from disregarding the fact that proceedings are already pending abroad. For the rest the view was expressed that under the 1968 Convention the Contracting States are not only entitled to exercise jurisdiction in accordance with the provisions laid down in Title 2; they are also obliged to do so. A plaintiff must be sure which court has jurisdiction. He should not have to waste his time and money risking that the court concerned may consider itself less competent than another. In particular, in accordance with the general spirit of the 1968 Convention, the fact that foreign law has to be applied either generally or in a particular case, should not constitute a sufficient reason for court to decline jurisdiction. Where the courts of several States have jurisdiction the plaintiff has deliberately been given a right of choice, which should not be weakened by application of the doctrine of forum conveniens. The plaintiff may have chosen another apparently inappropriate court from among the competent courts in order to obtain a judgment in the State in which he also wishes to enforce it. Furthermore, the risk of a negative conflict of jurisdiction should not be disregarded: despite the United Kingdom court decision, the judge on the Continent could likewise decline jurisdiction. The practical ...
79. (b) A concept similar to the doctrine of forum conveniens is also applied within the territory of the State, though the term itself is not used in that context. This may be due to the fact that the same result can be achieved by the device of transferring the case to another court having alternative jurisdiction within the same State or the same legal area (see paragraph 11). The Working Party had to examine to what extent the 1968 Convention restricted such powers of transfer. In this connection certain comments made earlier may be repeated: the powers of the Superior Courts in Ireland or in a judicial area of the United Kingdom (see paragraph 70) to decide as a court of first instance remain unchanged. For the rest, the following applies: 80. (aa) The previous legal position in Ireland and the United Kingdom remains essentially the same. Each court can transfer proceedings to another court, if that court has equivalent jurisdiction and can better deal with the matter. For example, if an action is brought before the High Court, the value of which is unlikely to exceed the amount which limits the jurisdiction of the lower court the High Court has power to transfer the proceedings to such a court, but it is not obliged to do so. A Circuit Court in Ireland, a County Court or Magistrates Court in England and a Sheriff Court in Scotland but not an Irish District Court (see paragraph 70) - may transfer proceedings to another court of the same category or exceptionally to a court of another category, if the location of the evidence or the circumstances for a fair hearing should make such a course desirable in the interest of the parties. Some Continental legal systems also provide for the possibility, albeit on a much smaller scale, of a judge having discretion to confer jurisdiction on a court which would not otherwise have it. This is the case under, for instance, Article 36 of the German Code of Civil Procedure, if proper proceedings are not possible before the court which originally had jurisdiction. Under Section 356 of the new French Code of Civil Procedure [19] proceedings may be transferred to another court of the same type, if a risk of lack of impartiality exists. 81. (bb) The 1968 Convention in no way affects the competence as regards subject matter of the courts of a State. The national legal systems are thus free to provide for the possibility of transfer of cases between courts of different categories. For the most part, the 1968 Convention does not affect the territorial jurisdiction of the courts within a State, but only their international jurisdiction. This is clearly reflected by the basic rule on jurisdiction contained in Article 2. Unless the jurisdiction of a court where proceedings are instituted against a person domiciled in the United Kingdom or Ireland is derived from a provision of the 1968 Convention which at the same time determines local jurisdiction, as for example Article 5, the 1968 Convention does not prevent a transfer of the proceedings to another court in the same State. Even in respect of exclusive jurisdiction, Article 16 only lays down the international jurisdiction of the courts of a State, and does not prevent a transfer within that State. Finally, the 1968 Convention does not of course prevent a transfer to the court which actually has local jurisdiction under the Convention. This would occur where both parties agree to the transfer and the requirements for jurisdiction by consent pursuant to Article 17 are satisfied. The only type of case which remains problematic is where an action is brought before a court in circumstances where the 1968 Convention gives the plaintiff a choice of jurisdiction. An action in tort or a liability insurance claim is brought at the place where the harmful event occurred or a ...
In so far as a court's discretionary powers to confer jurisdiction on other courts and in particular to transfer proceedings to another court are not defined in detail such discretionary powers should, of course, only be used in the spirit of the 1968 Convention, if the latter has determined, not only international but also local jurisdiction. A transfer merely on account of the cost of the proceedings or in order to facilitate the taking of evidence would be possible only with the consent of the plaintiff, who had the choice of jurisdiction.
82. The proposed adjustments to Articles 2 to 4 are confined to inserting certain exorbitant jurisdictions in the legal systems of the new Member States into the second paragraph of Article 3. The occasion has been taken to adjust the text of that Article to take account also of an amendment to the law which has been introduced in Belgium. Detailed comments on the proposed alterations (I) precede two more general remarks on the relevance of this provision to the whole structure of the 1968 Convention (II). 83. 1. Belgium In Belgium, Articles 52, 52 bis and 53 of the law of 25 March 1876 had already been superseded before the coming into force of the 1968 Convention by Articles 635, 637 and 638 of the Judicial Code. Nevertheless only Article 638 of the Judicial Code is mentioned in the second paragraph of Article 3 in its revised version. It corresponds to Article 53 of the law of 25 March 1876 and provides that where Belgian courts do not possess jurisdiction based on other provisions, a plaintiff resident in Belgium may sue any person before the court of his place of residence. The version of Article 3, valid hitherto erroneously classed the jurisdiction based on Articles 52 and 52 bis of the abovementioned law as exorbitant. 84. 2. Denmark The provisions of Danish law included in the second paragraph of Article 3 state that a foreigner may be sued before any Danish court in whose district he is resident or has property when the document instituting the proceedings is served. On this last point the provision corresponds to similar German provisions included in the list of exorbitant jurisdictions. On the first point reference may be made to what follows concerning Ireland (see paragraph 85). There is a separate Code of, Civil Procedure for Greenland (see paragraph 253); special reference had therefore to be made to the corresponding provisions affecting that country. 85. 3. Ireland According to the principles of common law which are unwritten and apply equally in the United Kingdom and Ireland, a court has jurisdiction in principle if the plaintiff has been properly served with the court process. The jurisdiction of Irish (and United Kingdom) courts is indirectly restricted to the extent of the limits imposed on the service of a writ of summons. Service is available without special leave only within the territory of Ireland (or the United Kingdom). However every service validly effected there is sufficient to establish jurisdiction; even a short stay by the defendant in ...
86. 4. United Kingdom As regards the United Kingdom it will suffice for point (a) of Article 3, second paragraph, of the 1968 Convention as amended, to refer to what has been said above in the case of Ireland. Points (b) and (c) deal with some characteristic features of Scottish law. To establish jurisdiction merely by service of a writ of summons during the temporary presence of the defendant is a rare though not totally unknown, practice in Scotland. Scottish courts usually base their jurisdiction in respect of a defendant not permanently resident there on other factors, namely that he has been in Scotland for at least 40 days, or that he owns immovable property in Scotland or that he owns movable property which has been impounded in Scotland. In such cases service on the defendant is also required, but this may be effected by post or exceptionally, by posting it on the court notice board. In the case of Germany, the 1968 Convention has already classed jurisdiction based solely on the existence of property in Germany as exorbitant. Any jurisdiction based solely on the seizure of property within a country must be treated in the same way.
87. The rejection as exorbitant of jurisdictional bases hitherto considered to be important in the new Member States should not, any more than the original version of the second paragraph of Article 3, mislead anyone into thinking that the scope of the first paragraph of Article 3 would thereby be more closely circumscribed. Only particularly extravagant claims to international jurisdiction by the courts of a Member State are expressly underlined. Other rules founding jurisdiction in the national laws of the new Member States are compatible with the 1968 Convention also only to the extent that they do not offend against Article 2 and Articles 4 to 18. Thus, for example, the jurisdiction of English courts in respect of persons domiciled in the Community can no longer be based on the ground that the claim concerns a contract which was concluded in England or is governed by English law. On the other hand, the rules on the jurisdiction of English courts in connection with breaches of contract in England or claims connected with the commission or omission of an act in England largely correspond to the provisions in Article 5 (1) to (3).
88. With regard to Germany, Denmark and the United Kingdom the list in the second paragraph of Article 3 contains provisions rejecting jurisdiction derived solely from the existence of property in the territory of the State in which the court is situated. Such jurisdiction cannot be asserted even if the proceedings concern a dispute over rights of ownership, or possession, or the capacity to dispose of the specific property in question. Persons domiciled on the Continent Europe may not be sued in Scotland, even if the aim of the action is to recover movable property situated or seized there or to determine its ownership. Interpleaded actions (England and Wales) and multiple poinding (Scotland) are no longer permissible in the United Kingdom in respect of persons domiciled in another Member State of the Community, in so far as the international jurisdiction of the English or Scottish courts does not result from other provisions of the 1968 Convention. This applies for example, to actions brought by an auctioneer to establish whether ownership of an article sent to him for disposal belongs to his customer or a third party claiming the article.
As regards persons who are domiciled outside the Community, the provisions which hitherto governed the jurisdiction of courts in the new Member States remains unaffected. Even the rules of jurisdiction mentioned in the second paragraph of Article 3 may continue to apply to such persons. Judgments delivered by courts which thus have jurisdiction must also be recognized and enforced in other States of the Community - unless one of the exceptions in the new paragraph 5 of Article 27 or in Article 59 as amended applies. This latter provision is the only one concerning which the list in Article 3, second paragraph is not only of illustrative significance but has direct and restrictive importance. (see paragraph 249).
89. In the sphere of special non-exclusive jurisdictions the problems of adjustment were confined to judicial competence as regards maintenance claims (I), questions raised by trusts in United Kingdom and Irish law (II) and problems in connection with jurisdiction in maritime cases (III). In addition, the Working Party dealt with a few less important individual questions (IV). Reference should be made here to the Judgments of the Court of Justice of the European Communities of 6 October 1976 (12/76; 14/76) and of 30 November 1976 (21/76) which were delivered shortly before or after the end of the negotiations [22]. 90. The need for an adjustment of Article 5 (2) arose because the laws of the new Member States was also by then the case with the laws of many of the original States of the EEC allow status proceedings to be combined with proceedings concerning maintenance claims (see paragraphs 32 to 42). As far as other problems were concerned no formal adjustment was required. However certain special features of United Kingdom and Irish law give rise to questions of interpretation; the views of the Working Party as to their solutions should be recorded. They concern a more precise definition of the term maintenance (1) and how maintenance entitlements are to be adjusted to changed circumstances in accordance with the system, jurisdiction and recognition established by the 1968 Convention (2). 91. (a) The 1968 Convention refers simply to 'maintenance' in Article 5 (2), the only Article which uses the expression. Several legal concepts used within one and the same national legal system can be covered by this term. For example, Italian law speaks of 'alimenti'(Article 433 seq. of the codice civile) to indicate payments amongst relations and spouses, but payments after divorce are 'assegni' [23]. The new French divorce law [24], too, does not speak of 'aliments but of devoir de secours . In addition French legal, terminology uses the expressions 'devoir entretien' and 'contribution aux charges du menage'. All those are 'maintenance' within the meaning of Article 5 (2) of the 1968 Convention. 92. (b) The Article says nothing, however, about the legal basis from which maintenance claims can emanate. The wording differs markedly from that of the Hague Convention of 2 October 1973 on the recognition and enforcement of decisions relating to maintenance obligations. Article 1 of that Convention excludes from its scope maintenance claims arising from tort, contract and the law of succession. However, there is no significant difference regarding the concept of maintenance as used in the two Conventions. The 1968 Convention is in any case not applicable to maintenance claims under the law of succession (second paragraph, point (1) of Article 1). Maintenance claims as the legal consequence of tortious act are, in legal theory, claims for damages, even if the amount of compensation depends on the needs of the injured party. Contracts creating a 'maintenance' obligation ....
Judicial proceedings concerning 'maintenance' claims are still civil and commercial matters even where Article 5 (2) is not applicable because the claim arises from a tortious act or a contract. 93. (c) The concept of maintenance does not stipulate that the claim must be for periodic payments. Under Article 1613 (2) of the German Civil Code for example, the maintenance creditor may in addition to regular payments, claim payment of a lump sum on the ground of exceptional need. Under Article 1615 (e) of the Code a father may agree with his illegitimate child on the payment of a lump sum settlement. Article 5 (4), third sentence of the Italian, divorce law 1 December 1970 allows divorced spouses to agree on the payment of maintenance in the form of a lump sum settlement. Finally, under Article 285 of the French Civil Code, as amended by the divorce law of 11 July 1975, the French courts can order maintenance in the form of a single capital payment even without the agreement of the spouses. The mere fact that the courts in the United Kingdom have power to order not only periodic payments by one spouse to the other after a divorce, but also the payment of a single lump sum of money, does not therefore prevent the proceedings or a judgment from being treated as a maintenance matter. Even the creation of charges on property and the transfer of property as provided on the Continent, for example in Article 8 of the Italian divorce law, can be in the nature of maintenance. 94. (d) It is difficult to distinguish between claims for maintenance on the one hand and claims for damages and the division of property on the other. 95. (aa) In Continental Europe a motivating factor in assessing the amount of maintenance due to a divorced spouse by his former partner is to compensate an innocent spouse for his loss of matrimonial status. A typical example contained in Article 301 of the Civil Code in its original form, which still applies in Luxembourg. In its two paragraphs a sharp distinction is drawn in respect of post-matrimonial relations between a claim for maintenance and compensation for material and non-material damages. Yet material damages generally consist in the loss of the provision of maintenance which the divorced party would have enjoyed as a spouse. Thus the claims deriving from the two paragraphs of Article 301 of the Civil Code overlap in practice especially since they can both take the form of a pension or a single capital payment. It remains to be seen whether the new French divorce law of 11 July 1975, which makes a clearer distinction Between 'prestations compensatoires' and 'devoir de secours', will change this situation. Under Section 23 (1) (c) and (f) and Section 27 (6) (c) of the English Matrimonial causes Act 1973, an English divorce court, too, may order a lump sum to be paid by one divorced spouse to the other or to a child. However, English law which is characterized by judicial discretionary powers and which does not favour inflexible systematic rules, does not make a distinction as to whether the payments ordered by the Court are intended as damages or as maintenance. 96. (bb) The 1968 Convention is not applicable at all where the payments claimed or ordered are governed by matrimonial property law (see paragraph 45 et seq). Where claims for damages are involved Article 5 (2) is not relevant. Whether or not that provision applies depends, in the case of a lump sum payment, solely on whether a payment under family law is in the nature of maintenance. The maintenance nature of the payment is likely to predominate in relation to children. As ...
97. (e) All legal systems have to deal with the problems of how the needs of a person requiring financial support are to be met when the maintenance debtor defaults. Others also liable to provide maintenance if necessary a public authority, may have to step in temporarily. They, in turn, should be able to obtain a refund of their outlay from the (principal) maintenance debtor. Legal systems have therefore evolved various methods to overcome this problem. Some of them provide for the maintenance claim to be transferred to the payer, thereby giving it a new creditor, but not otherwise changing its nature. Others confer on the payer an independent right to compensation. United Kingdom law makes particular use of the latter method in cases where the Supplementary Benefits Commission has paid maintenance. As already mentioned in the Jenard report [25] claims of this type are covered by the 1968 Convention even where claims for compensation are based on a payment made by public authority in accordance with administrative law or under provisions of social security legislation. It is not, however, the purpose of the special rules of jurisdiction in Article 5 (2) to confer jurisdiction in respect of compensation claims on the courts of the domicile of the maintenance creditor or even those of the seat of the public authority whichever of the two abovementioned methods a legal system may have opted for. 98. Economic circumstances in general and the particular economic position of those obliged to pay and those entitled to receive maintenance are constantly changing. The need for periodical adjustments of maintenance orders arises particularly in times of creeping inflation. Jurisdiction to order adjustments depends on the general provisions of the 1968 Convention. Since this is a problem of great practical importance it may be appropriate to preface its discussion in detail with a brief comparative legal survey. 99. (a) Continental legal systems differ according to whether the emphasis of the relevant legal provisions is placed on the concept of an infringement of the principle of finality of a maintenance judgment or more on the concept of an adjustment of the question of the claim (aa). In this respect, as in many others, the provisions of United Kingdom (bb) and Irish (cc) law do not fit into this scheme. 100. (aa) The provisions of German law relating to adjustments of maintenance orders are based on the concept of a special procedural remedy in the nature of a review of the proceedings (Wiederaufnahmeklage) . Since there are no special provisions governing jurisdiction, the general provisions governing jurisdiction in maintenance claims are considered applicable. This means that the original court making the maintenance order may have lost its competence to adjust it. Enforcement authorities, even when they are courts, have no power, either in general or in maintenance cases, to adjust a judgment to changed circumstances. Provisions giving protection against enforcement of a judgment for social reasons apply irrespective of whether or not the amount ordered to be paid in, the judgment is subject to variation. This is also true regarding the subsidiary provision of Article 765 (a) of the Zivilprozessordnung (Code of Civil Procedure) [26], which is of general application and states that enforcement measures may be rescinded or disallowed in very special circumstances if they constitute an undue hardship for the debtor. Accordingly legal theory and case law accept that a foreign maintenance order may be adjusted by a German court, if the latter has jurisdiction [27]
In the legal systems in the other original Member States of the EEC the problem has always been regarded as one of substantive law and not as a...
In general, the 1968 Convention is based on a similar legal position obtaining in all the original Member States: in the case of proceedings for adjustment of maintenance order the jurisdiction of the court concerned has to be examined afresh. 101. (bb) In the United Kingdom, the most important legal basis for amendment of maintenance orders is Section 53 of the Magistrates Courts Act of 1952 in conjunction with Sections 8 to 10 of the Matrimonial proceedings (Magistrates'Courts) Act 1960 which will be suspended in 1979 by the Domestic proceedings and Magistrates Courts Act 1978. According to these Acts, the Court may revoke or vary maintenance orders, or revive them after they have been revoked or varied. In addition, the court in whose district the applicant is now resident also has jurisdiction in such matters [29]. In principle, the court s discretion is unfettered in such cases, but an application for variation may not be based on facts or evidence which could have been relied on when the original order was made [30]. The same applies under Section 31 of the Matrimonial causes Act 1973. A divorce court can vary or discharge an order it has made with regard to maintenance irrespective of whether the original basis for its jurisdiction still exists or not. 102. To these possibilities must be added another characteristic aspect of the British judicial system. Enforcement of judgments is linked much more closely than on the Continent to the jurisdiction of the particular court which gave the judgment (see paragraph 208). Before a judgment can be enforced by the executive organs of another court, it must be registered with that other court. After registration, it is regarded as a judgment of that court. A further consequence is that, after, such registration, the court with which it registered is empowered to amend it. Hitherto the United Kingdom has also applied this system in cases where foreign maintenance judgments have been registered with a British court to be enforced in the United Kingdom [31] 103. (cc) In Ireland the District Court has jurisdiction to make maintenance orders in respect of spouses and children of a marriage and also in respect of illegitimate children. The Court also has power to vary or revoke its maintenance orders. The jurisdiction of the Court is exercised by the judge for the district where either of the parties to the proceedings is ordinarily resident or carries on any profession or occupation or, in the case of illegitimate children, the judge for the district in which the mother of the child resides. A judge who makes a maintenance order loses jurisdiction to vary it if these requirements as to residence, etc., are no longer fulfilled. Apart from the possibility of having a maintenance order varied there is a right of appeal to the Circuit Court from such orders made by the District Court. The Circuit Court also has jurisdiction to make maintenance orders in proceedings relating to the guardianship of infants. It may also vary or revoke its maintenance orders. Its jurisdiction is exercised by the judge for the circuit in which the defendant is ordinarily resident at the date of application for maintenance or at the date of application for a variation of a maintenance order, as the case may be. An appeal lies to the High Court. The High Court may order maintenance to be paid including alimony pending suit and permanent alimony following the granting of divorce a mensa et thoro. It has jurisdiction to vary its own maintenance orders and appeals against its orders lie to the Supreme Court. 104. (b) Although it nowhere states this expressly, the 1968 Convention is based on the principle that all judgments given in a Member State can be contested in that State by all the legal remedies available under the law of that State, even when the basis on which the competence of the courts of that State was founded no longer exists. In France, a French judgment may be contested by an appeal, appeal in cassation and an application to set aside a conviction, even if the defendant has long since ceased to be domiciled in France. It follows from the obligation of recognition that no Contracting State can claim jurisdiction with regard to appeals against judgments given in another Contracting State. This also covers proceedings similar to an appeal, such as an ...
105. On no account may the court of the State addressed examine whether the amount awarded is still appropriate, without having regard to the jurisdiction provisions of the 1968 Convention. If the proceedings are an appeal, the courts of the State of origin will remain competent. Alternatively the new action may be quite distinct from the original proceedings, in which case the jurisdiction provisions of the 1978 Convention must be observed. 106. (bb) Under the legal systems of all six original EEC States, the adjustment of maintenance orders, at any rate as far as jurisdiction is concerned, is not regarded as a remedy by way of appeal (see paragraph 100). Accordingly the courts of the State of origin lose their competence to adjust maintenance orders within the original scope of the 1968 Convention, if the conditions on which their jurisdiction was based no longer exist. The 1968 Convention could not, however, be applied consistently, if the courts in the United Kingdom were to claim jurisdiction to adjust decisions irrespective of the continued existence of the facts on which jurisdiction was originally based. 107. Applications for the adjustment of maintenance claims can only be made in courts with jurisdiction under Article 2 or Article (2), as amended, of the 1968 Convention. For example if the maintenance creditor claims adjustment due to increases in the cost of living, he may choose between the international jurisdiction of the domicile of the maintenance debtor and the local jurisdiction of the place where he himself is domiciled or habitually resident. However, if the maintenance debtor seeks adjustment because of a deterioration in his financial circumstances, he can only apply under the international jurisdiction referred to in Article 2, i.e. the jurisdiction of the domicile of the maintenance creditor, even where the original judgment (pursuant to Article 2 where it is applicable) was given in the State of his own domicile and the parties have retained their places of residence. 108. If a maintenance debtor wishes effect to be given in another State to an adjusted order, account must be taken of the reversed roles of the parties. Adjustment at the instance of the maintenance debtor can only be aimed at a remission or reduction of the amount of maintenance. Reliance on such a decision in another Contracting State does not therefore involve 'enforcement' within the meaning of Sections 2 and 3 of Title III, but rather recognition as referred to in Section 1 of that Title. It is true that the second paragraph of Article 26 makes provision for a special application to obtain recognition of a judgment, and the provisions of Sections 2 and 3 of Title III concerning enforcement are applicable to such application. If in these circumstances recognition is to be granted to a judgment which has been amended on the application of the maintenance debtor, the position is as follows: the applicant within the meaning of Articles 34 and 36 is not the creditor but the debtor, and therefore, according to Article 34, the creditor is the party who is not entitled to make any submissions. The right of appeal of the party against whom enforcement is sought, provided for in Article 36, lies with the creditor in this case. As applicant, the maintenance debtor has the right laid down in the second paragraph of Article 42, read together with the second paragraph of Article 26, to request recognition of part only of an adjusting order. For the application of Article 44 it has to be determined whether, as plaintiff, he was granted legal aid in the original proceedings.
109. A distinguishing feature of United Kingdom and, Irish law is the trust. In these two States it provides the solution to many problems which Continental legal systems overcome in an ...
110. (a) In his external relationships, i.e. in legal dealings with persons who are not beneficiaries of the trust, the trustee acts like any other owner of property. He can dispose of and acquire rights, enter into commitments binding on the trust and acquire rights for its benefit. As far as these acts are concerned no adjustments to the 1968 Convention are necessary. Its provisions on jurisdiction are applicable, as in legal dealings between persons who are not acting as trustees. If a Belgian lessee of property situated in Belgium but belonging to an English trust, sues to be allowed into occupation Article 16 (1) applicable irrespective of the fact that the property belongs to a trust. 111. (b) Problems arise in connection with the internal relationships of a trust, i.e. as between the trustees themselves, between persons claiming the status of trustees and, above all, between trustees on the one hand and the beneficiaries of a trust on the other. Disputes may occur among a number of persons as to who has been properly appointed as a trustee; among a number of trustees doubts may arise as to the extent of their respective rights to one another; there may be disputes between the trustees and the beneficiaries as to the rights of the latter to or in connection with the trust property, as to whether for example, the trustee is obliged to hand over assets to a child beneficiary of the trust after the child has attained a certain age. Disputes may also arise between the settlor and other parties involved in the trust. 112. The internal relationships of a trust are not necessarily covered by the 1968 Convention. They are excluded from its scope when the trust deals with one of the matters referred to in the second paragraph of Article 1. Thus as a legal institution the trust plays a significant role in connection with the law of succession. If a trust has been established by a will, disputes arising from the internal relationships are outside the scope of the 1968 Convention (see paragraph 52). The same applies when a trustee is appointed in bankruptcy proceedings; he would correspond to liquidator ('Konkursverwalter') in Continental legal systems. 113. Where the 1968 Convention is applicable to the internal relationships of a trust, its provisions on jurisdiction were in their original form not always well adapted to this legal institution. To base jurisdiction on the domicile of the defendant trustee would not be appropriate in trust matters. trust has no legal personality as such. If however, an action is brought against a defendant in his capacity as trustee, his domicile would not necessarily be a suitable basis for determining jurisdiction. If a person leaves the United Kingdom to go to Corsica, it is right and proper that, in the absence of any special jurisdiction claims directed against him personally should be brought only before Corsican courts. If, however he is a sole or joint trustee or co-trustee of trust property situated in the United Kingdom and hitherto administered there, the beneficiaries and the other trustees cannot be expected to seek redress in a Corsican court. Moreover the legal relationships between trustees inter se and between the trustees and the beneficiaries, are not of a contractual nature; in most cases, the trustees are not even authorized to conclude agreements conferring jurisdiction by consent. Jurisdiction for actions arising from the internal relationships of a trust can be based therefore, neither on Article 5 (1) nor as a rule on agreements conferring jurisdiction by consent pursuant to Article 17. To overcome this difficulty simply by amending the 1968 Convention so as to allow a settlor to stipulate which courts are to have jurisdiction would only partly solve the problem. Such an amendment would not include already existing trusts, and the most suitable jurisdiction for possible disputes cannot always be foreseen when creating a trust. 114. (a) The solution proposed in the new paragraph(6) of Article 5 is based on the argument that trusts ...
... even though they have no legal personality, may be said to have a geographical centre of operation. This would fulfil functions similar to those fulfilled by the 'seat' of business associations without legal personality. It is true that United Kingdom and Irish law have so far provided only a tentative definition of such a central point of a trust. However, the concept of the domicile of a trust is not, at present unknown in legal practice and theory [32]. In his manual on Private International Law the Scottish Professor Anton gives the following definition [33]: 'The domicile of a trust is thought to be basically a matter depending upon the wishes of a trustee and his expressed intentions will usually be conclusive. In their absence the trustee’s intentions will be inferred from such circumstances as the administrative centre of the trust, the place of residence of the trustees, the situs of the assets of the trust, the nature of the trust purposes and the place where these are to be fulfilled.' No doubt these notions about the domicile of a trust were developed mainly for the purpose of determining the legal system to be applied usually either English or Scottish law. The principal characteristics of 'domicile' so defined and some of the factors on which it is based would also justify making it the basis for founding jurisdiction. The proposed new provision does not, strictly speaking, create a special jurisdiction. It covers only a very limited number of cases and is, therefore, added to Article 5 rather than to Article 2. For the non-exclusive character of the new provision see paragraph 118. 115. (b) The following are some detailed comments on the Working Party s proposal (see paragraph 181). 116. The concepts' trust', 'trustee' and 'domicile' have not been translated into the other Community languages, since they relate to a distinctive feature of United Kingdom and Irish law. However, the Member States can give a more detailed definition of the concept of a trust in their national language in their legislation implementing the Accession Convention. 117. The phrase 'created by the operation of a statute or by a written instrument, or created orally and evidenced in writing' is intended to indicate clearly that the new rules on jurisdiction apply only to cases in which under United Kingdom or Irish law a trust has been expressly constituted or for which provision is made by Statute. This is important, because these legal systems solve many problems with which Continental systems have to deal in a completely different way, by means of so-called 'constructive 'or 'implied' trusts. Where the latter are involved, the new Article 5 (6) is not applicable, as for instance where, after conclusion of a contract of sale, but prior to the transfer of title, the vendor is treated as holding the property on trust for the purchaser (see paragraph 172). Trusts resulting from the operation of a statutory provision are unlikely to fall within the scope of the 1968 Convention. Since in the United Kingdom, for example, children cannot own real property, a trust in their favour arises by operation of statute, if the circumstances are such that adult persons would have acquired ownership. 118. It should be noted that the new provision is not exclusive. It merely establishes an additional jurisdiction. The trustee who has gone to Corsica (see paragraph 113) can also be sued in the courts there. However, a settlor would be free to stipulate an exclusive jurisdiction (see paragraph 174). 119. If proceedings are brought in a Contracting State relating to a trust which is subject to a foreign legal system, the question arises as to which law determines the domicile of that trust. The new version of Article 53 proposes the same criterion as that adopted in the 1968 Convention for ascertaining the 'seat' of a company. As far as the legal systems of England and Wales, Scotland Northern Ireland and Ireland are concerned application of this provision should present no, serious difficulty. There are at present no rules of private international law in the legal systems of the Continental Member States of the Community for determining the domicile of a trust. The courts of those States will have to evolve such rules to enable them to apply the trust provisions of the 1968 Convention. Two possibilities exist. It could be contended that the domicile of a trust should be determined by the ...
120. In principle, the exclusive jurisdictions provided for by Article 16 take priority over the new Article 5 (6). However, it is not easy to establish The precise extent of that priority. In legal disputes arising from internal trust relationships, the legal relations referred to in the provisions in question usually play only incidental role, if any. The trustee requires court approval for certain acts of management. Even where the management of immovable property is concerned, any such applications to the court do not affect the proprietary rights of the trustee, but only his fiduciary obligations under the trust. Article 16 (1) does not apply. One could however, envisage a dispute arising between two people as to which of them was trustee of certain property. If one of them instituted proceedings against the other in a German court claiming the cancellation of the entry in the land register showing the defendant as the owner of the property and the substitution of an entry showing the plaintiff as the true owner, there can be no doubt that, under Article 16 (1) or (3), the German court would have exclusive jurisdiction. However, if a declaration is sought that particular person is a trustee of a particular trust which includes certain property, Article 16 (1) does not become applicable merely because that property includes immovable property. 121. The exercise of jurisdiction in maritime matters has traditionally played a far greater role in the United Kingdom than in the Continental States of the Community. The scope of the international competence of the courts, as it has been developed in the United Kingdom, has become of worldwide significance for admiralty jurisdiction. This factor is reflected not least in the Brussels Conventions of 1952 and 1957 (see paragraph 238 et seq.). It would have been inappropriate to limit the exercise of admiralty jurisdiction to the basis of jurisdiction included in the 1968 Convention in its original form. If a ship is arrested in a State because of an internationally recognized maritime claim it would unreasonable to expect the creditor to seek a decision on his claim before the courts of the ship-owner domicile. For this reason the Working Party gave lengthy consideration to the possible inclusion of special section on admiralty jurisdiction in Title II. Article 36 of the Accession Convention is derived from an earlier draft prepared for that purpose (see paragraph 131). Parallel negotiations on Article 57 of the 1968 Convention did, however lead to a generally acceptable interpretation which will enable States party to a Convention on maritime law to assume jurisdiction on any particular matter dealt with in that Convention, even in respect of persons domiciled in a Community State which is not a party to that Convention (see paragraph 236 et seq.). Furthermore all delegations are in support of a Joint Declaration urging the Community States to accede to the most important of all the Conventions on maritime law, namely the Brussels Convention of 10 May 1952 (see paragraph 238). The Working Party, confident that this Joint Declaration will be adopted and implemented, finally dropped its plans for a section dealing with admiralty jurisdiction. This would also avoid interfering with the general principles of the 1968 Convention, and maintain a clear dividing line between its scope and that of other Conventions. Two issues remain outstanding, however, since they are not fully covered by the Brussels Conventions of 1952 and 1957: jurisdiction in the event of the arrest of salvaged cargo or freight (the new Article 5 (7)) (1) and actions for limitation of liability in maritime matters (the new Article 6a) (2). Moreover, until Denmark and Ireland accede to the Brussels Arrest Convention of 10 May 1952, transitional provisions had also to be introduced (3). Finally, a particularity affecting only Denmark and Ireland (4) still remained to be settled.
122. (a) The Brussels Convention of 1952 allows a claimant, inter alia to invoke the jurisdiction of a State in which ship has been arrested on account of a salvage claim (Article 7 (1) (b)). Implicit in this provision is a rule of substantive law. A claim to remuneration for salvage entitles ...
Accordingly United Kingdom law provides that a salvage firm may apply for the arrest of the salvaged cargo of the freight claim preserved due to its intervention and may also apply to the court concerned for a final decision on its claims to remuneration for salvage. Jurisdiction of this kind is similar in scope to the provisions of Article 7 of the Brussels Convention of 1952. As there is no other Convention on the arrest of salvaged cargo and freight which would remain applicable under Article 57, the United Kingdom would, on acceding to the 1968 Convention, have suffered an unacceptable loss of jurisdiction if a special provision had not been introduced. 123. (b) The proposed solution applies the underlying principle of Article 7 of the Brussels Convention of 1952 to jurisdiction after the arrest of salvaged cargo or freight claims. Under Article 24 of the 1968 Convention, there is no limitation on national laws with regard to the granting of provisional legal safeguards including arrest. However, they could not provide that arrest, whether authorized or effected, should suffice to found jurisdiction as to the substance of the matter. The exception introduced in Article 5 (7) (a) is confined to arrest to safeguard a salvage claim. Article 5 (7) (b) introduces an extension of jurisdiction not expressly modelled on the Brussels Convention of 1952. It is a result of practical experience. After salvage operations - whether involving a ship, cargo or freight - arrest is sometimes ordered, but not actually carried into effect, because bail or other security has been provided. This must be sufficient to confer jurisdiction on the arresting court to decide also on the substance of the matter. The object of the provision is to confer jurisdiction only with regard to those claims which are secured by a maritime lien. If the owner of a ship in difficulties has concluded a contract for its salvage, as his contract with the cargo owner frequently obliges him to do, any disputes arising from the former contract will not be governed by this provision.
124. It is not easy to say precisely how the application of Article 57 of the 1968 Convention links up with that of the International Convention of 10 October 1957 relating to the limitation of the liability of owners of seagoing ships [34] (see end of paragraph 128) and with relevant national laws. The latter Convention contains no express provisions directly affecting international jurisdiction or the enforcement of judgments. The Working Party did not consider that it was its task to deal systematically with the issues raised by that Convention and to devise proposals for solving them. It would, however, be particularly unfortunate in certain respects if the jurisdictional lacunae of the 1957 Convention on the limitation of liability were carried over into the 1968 Convention and were supplemented accordance with the general provisions on jurisdiction of that Convention. A distinction needs to be drawn between three differing aspects arising in connection with the limitation of liability in matters of maritime law. First, a procedure exists for setting up and allocating the liability fund. Secondly, the entitlement to damages against the ship-owner must be judicially determined. Finally, and distinct from both, there is the assessment of limitation of liability regarding a given claim.
125. Under one system, which is followed in particular in the United Kingdom, limitation of liability necessitates an action against one of the claimants either by way of originating proceedings or, if an action has already been brought against the ship-owner, as a counterclaim. The liability fund is set up at the court dealing with the limitation of liability issue, and other claimants must also lodge their claims with the same court. 126. Under the system obtaining in Germany, for example proceedings for the limitation of liability are started not by means of an action brought against a claimant, but by a simple application which is not directed 'against' any person, and which leads to the setting up of the fund. If the application is successful, all claimants must lodge their claims with that court. If any disputes arise about the validity of any of the claims lodged, they have to be dealt with by special proceedings taking the form of an action by the claimant against the fund administrator, creditor or ship-owner contesting the claim. Under this system an independent action by the ship-owner against the claimant in connection with limitation of liability is also possible. Such an action leads not to the setting up of a liability fund or to an immediately effective limitation of liability, but merely establishes whether liability is subject to potential limitation, in case of future proceedings to assess the extent of such liability. 127. The new Article 6a does not apply to an action by a claimant against the ship-owner, fund administrator or other competing claimants, nor to the collective proceedings tor creating and allocating the liability fund, but only to the independent action brought by ship-owner against a claimant (a). Otherwise the present provisions of the 1968 Convention which are relevant to limitation of maritime liability apply (b). 128. (a) The actual or potential limitation of the liability of a ship-owner can, however, in all legal systems of the Community be used otherwise than as a defence. If a ship-owner anticipates a liability claim, it may be in his interest to take the initiative by asking for a declaration that he has only limited or potentially limited liability for the claim. In that case he can choose from one of the jurisdictions which are competent by virtue of Articles 2 to 6. According to these provisions, he cannot bring an action in the courts of his domicile. Since, however, he could be sued in those courts, it would be desirable also to allow him to have recourse to this jurisdiction. It is the purpose of Article 6a to provide for this. Moreover, apart from the Brussels Convention of 1952, this is the only jurisdiction where the ship-owner could reasonably concentrate all actions affecting limitation of his liability. The result for English law (see paragraph 125) is that the fund can be set up and allocated by that same court. In addition, Article 6a makes it clear that proceedings for limitation of liability can also be brought by the ship-owner in any other court which has jurisdiction over the claim. It also enables national legislations to give jurisdiction to a court within their territory other than the court which would normally have jurisdiction. 129. (b) For proceedings concerning the validity as such of a claim against a ship-owner, Articles 2 to 6 are exclusively applicable. In addition, Article 22 is always applicable. If proceedings to limit liability have been brought in one State, a court in another State which has before it an application to establish or to limit liability may stay the proceedings or even decline jurisdiction. 130. (c) A clear distinction must be drawn between the question of jurisdiction and the question which substantive law on limitation of liability is to be applied. This need not be the law of the State whose courts have jurisdiction for assessing the limitation of liability. The law applicable for the limitation of liability also defines more precisely the type of case in which limitation of liability can be claimed at all.
131. All the delegations hope that Denmark and Ireland will accede to the Brussels Convention of 10 May 1952 (see paragraph 121). This will however, naturally take some time, and it is reasonable to allow a transitional period of three years after the entry into force of the Accession Convention. It would be harsh if, within that period, in the two States concerned jurisdiction in maritime matters were to be limited to what is authorized under the terms of Articles 2 to 6a. Article 36 of the Accession Convention therefore contains transitional provisions in favour of those States. These provisions correspond, apart from variations in the drafting, to the provisions which the Working Party originally proposed to recommend for the special section on maritime law as general rules of jurisdiction regarding the arrest of seagoing ships. In preparing these provisions the Working Party drew heavily, in fact almost exclusively, on the rules of the 1952 Brussels Convention relating to the arrest of seagoing ships (see paragraph 121). Since they are temporary, the transitional provisions do not merit detailed comments on how they differ from the text of that Convention.
132. The new Article Vb of the Protocol annexed to the 1968 Convention is based on a request by Denmark founded on Danish tradition. This has become part of the Danish Seamen s Law No 420 of 18 June 1973 which states that disputes between a crew member and a shipmaster of a Danish vessel may not be brought before foreign courts. The same principle is also embodied in some consular conventions between Denmark and other States. Following a specific request from the Irish delegation, the scope of this provision has also been extended to Irish ships.
133 .In the course of the negotiations it emerged that the French and Dutch texts of Article 5 (1) were less specific than the German and Italian texts on the question of the designation of the obligation. The former could be misinterpreted as including other contractual obligations than those which were the subject of the legal proceedings in question. The revised versions of the French and Dutch texts should clear up this misunderstanding [35]. 134. Article 5 (3) deals with the special tort jurisdiction. It presupposes that the wrongful act has already been committed and refers to the place where the harmful event has occurred. The legal systems of some States provide for preventive injunctions in matters relating to tort. This applies, for example, in cases where it desired to prevent the publication of a libel or the sale of goods which have been manufactured or put on the market in breach of the law on patents or industrial property rights. In particular the laws of the United Kingdom and Germany provide for measures of this nature. No doubt Article 24 is applicable when courts have an application for provisional protective measures before them, even if their decision has, in practice, final effect. There is much to be said for the proposition that the courts specified in Article 5 (3) should also have jurisdiction in proceedings whose main object is to prevent the imminent commission of a tort.
135. In Article 6 (2), the term 'third party proceedings' relates to a legal institution which is common to the legal systems of all the original Member States, with the exception of Germany. However a jurisdictional basis which rests solely on the capacity of a third party to be joined as such in the proceedings cannot exist by itself. It must necessarily be supplemented by legal criteria which determine which parties may in which capacity and for what purpose be joined in legal proceedings. Thus the provisions already existing , or which may in future be introduced into, the legal systems of the new Member States with reference to the joining of third parties in legal proceedings, remain unaffected by the 1968 Convention.
136. The accession of the United Kingdom introduced a totally new dimension to the insurance business as it had been practised hitherto within the European Community. Lloyds of London has a substantial share of the market in the international insurance of large risks [36]. In view of this situation the United Kingdom requested a number of adjustments. Its main argument was that the protection afforded by Articles 7 to 12 was unnecessary for policy-holders domiciled outside the Community (I) or of great economic importance (II). The United Kingdom expressed concern that, without an adjustment of the 1968 Convention, insurers within the Community might be forced to demand higher premiums than their competitors in other States. There were additional reasons for each particular request for an adjustment. As regards contracts of insurance with policy-holders domiciled outside the Community the United Kingdom sought the unrestricted admissibility of agreements conferring jurisdiction to be vouchsafed so that appropriate steps could be taken with regard to the binding provisions contained in the national laws of many policy-holders insuring with English insurers (I). Requests for adjustments also referred, in conjunction with the other requests for adjustments, to the scope of Articles 9 and 10 which seemed to require clarification (III). Finally there were requests for a few minor adjustments (IV). The original request of the United Kingdom respect of the first two problems, namely that the insurance matters in question should be excluded from the scope of Articles 7 to 12 was too far-reaching in view of the general objectives of the 1968 Convention. In particular a number of features of the mandatory rules of jurisdiction which differ for the various types of insurance had to be retained (see paragraphs 138, 139 and 143). However, the special structure of the British insurance market had to be taken into account - not least so that it would not be driven to resort systematically to arbitration. Although the 1968 Convention does not restrict the possibility of settling disputes by arbitration (see paragraph 63), national law should be careful not to encourage arbitration simply by making proceedings before national courts too complicated and uncertain for the parties. The Working Party therefore endeavoured to extend the possibilities of conferring jurisdiction by consent. For the form of such agreements see paragraph 176.
137. As already indicated earlier (see note 36), insurance contracts with policy-holders domiciled outside the Community account for a very large part of the British insurance business. The 1968 Convention does not expressly stipulate to what extent such contracts may provide for jurisdiction by consent. Article 4 applies only to the comparatively rare case where the policy-holder is the defendant in subsequent proceedings. In so far as the jurisdiction of courts outside the Community can be determined by agreement, the general question arises as to what restrictions should be imposed on such agreements having regard to the exclusive jurisdictions provided for by the 1968 Convention (see paragraphs 148 162 et seq.). The main problem in this connection was the jurisdiction under Articles 9 and which, it was thought, could not be excluded. However, this difficulty did not affect insurance contracts only with policy-holders domiciled outside the Community. It also affects, more generally, agreements on jurisdiction which are authorized by Article 12. In view of the great importance for the United Kingdom of the question of agreements on jurisdiction with policy-holders domiciled outside the Community, it was necessary to incorporate the admissibility in principle of such agreements on jurisdiction expressly in the 1968 Convention. If, therefore, a policy-holder domiciled outside the Community insures a risk in England exclusive jurisdiction may be conferred by agreement on English courts as well as on the courts of the policy-holder s domicile or others.
This basic rule had however to be limited again in two ways in the new paragraph (4) of Article 12. Fire insurance for owners of buildings which are subject to a charge, usufructuaries warehouse occupiers, pawnbrokers; Goods insurance for pawnbrokers; 138. Where a statutory obligation exists to take out service. insurance no departure from the provisions of Articles 8 to 11 on compulsory insurance can be permitted, even if the policy-holder is domiciled outside the Community. If a person domiciled in Switzerland owns a motor car which is normally based in Germany, then the car must, under German law, be insured against liability. Such an insurance contract may not contain provisions for jurisdiction by consent concerning accidents occurring in Germany. The possibility of invoking the jurisdiction of German courts (Article 8) cannot be contractually excluded. This is so even although the relevant German law of 5 April 1965 on compulsory insurance (Bundesgesetzblatt I, page 213) does not expressly prohibit agreements on jurisdiction. However, in practice German law prevents the conclusion of agreements on jurisdiction in the area of compulsory insurance because approval of conditions of insurance containing such a provision would be withheld. Compulsory insurance exists in the following Member States of the Community for the following articles, installations activities and occupations, although this list does not claim to be complete:
1. Federal Liability insurance compulsory for owners of motor vehicles, airline
companies, hunters owners of nuclear installations and handling of nuclear
combustible materials and other radioactive materials road haulage accountants
and tax advisers, security firms those responsible for schools for nursing,
infant and child care and midwifery, automobile experts, notaries professional
organizations those responsible for development aid, exhibitors, pharmaceutical
firms; 2. Länder There is no uniformity as between the Lander of the Federal Republic of Germany, but there is in particular compulsory fire insurance for buildings, compulsory pension funds for agricultural workers, the liberal professions (doctors, chemists, architects notaries) and (in Bavaria, for example) members of the Honourable Company of Chimney Sweeps and for example, a supplementary pension fund for workers in the Free and Hanseatic City of Bremen. In Bavaria there is compulsory insurance for livestock intended for slaughter. BELGIUM: Motor vehicles, hunting, nuclear installations accidents at work, transport accidents (for paying transport by motor vehicles). DENMARK: Motor vehicles, dogs, nuclear installations, accountants. FRANCE: Operators of ships and nuclear installations, sand motor vehicles, operators of cable-cars, chair-lifts and other such mechanical units, hunting, estate agents, managers of property, syndics of co-owners, business managers operators of sports centres, accountants, agricultural mutual assistance schemes, legal advisers, physical education establishments and pupils, operators of dance halls, managers of pharmacists’ shops in the form of a private limited liability company (S. 1.), blood transfusion centres, architects motor vehicle experts, farmers. LUXEMBOURG Motor vehicles hunting and hunting organizations hotel establishments nuclear installations, fire and theft insurance for hotel establishments;
NETHERLANDS: Motor vehicles, nuclear installations, tankers. UNITED KINGDOM: Third party liability in respect of motor vehicles;
139. The second exception referred to at the end of paragraph 137 is particularly designed to ensure that Article 9 continues to apply even when the policy-holder is domiciled outside the Community. However, this exception has further implications. It prohibits jurisdiction agreements conferring exclusive jurisdiction on the courts mentioned in Article 9. This applies even where the national law of the State in which the immovable property is situated allows agreements conferring jurisdiction in such circumstances.
140. The United Kingdom s request for special rules for the insurance of large risks was probably the most difficult problem for the Working Party. The request was based on the realization that the concept of social protection underlying a restriction on the admissibility of provisions conferring jurisdiction in insurance matters is no longer justified where the policy-holders are powerful undertakings. The problem was one of finding a suitable demarcation line. Discussions on the second Directive on insurance had already revealed the impossibility of taking as criteria abstract, general factors like company capital or turnover. The only solution was to examine which types of, insurance contracts were in general concluded only by policy-holders who did not require social protection. On this basis, special treatment could not be conceded to industrial insurance as a whole. Accordingly, the Working Party directed its attention to the various classes of insurance connected with the transport industry. In this area there is an additional justification for special treatment for agreements on jurisdiction: the risks insured are highly mobile and insurance policies tend to change hands several times in quick succession. This leads to uncertainty as to which courts will have jurisdiction and the difficulties in calculating risks are thereby greatly increased. On the other hand, there are here, too, certain areas requiring social protection. Particular complications were caused by the fact that there is a well integrated insurance market for the transport industry. The various types of risk for different means of transport are usually covered under one single policy. The British insurance industry in particular has developed standard policies which only require for their completion a notification by the insured that the means of transport (which can be of many different types) have set off. The result of a consideration of all these matters is the solution which figures in the new paragraph (5) of Article 12, as supplemented by Article 12a: agreements on jurisdiction are in principle to be given special treatment in marine insurance and in some sectors of aviation insurance. In the case of insurance of transport by land alone no exceptional rules of any kind appeared justified. In order to avoid difficulties and differences of interpretation, a list had to be drawn up of the types of policy for which the admissibility of agreements on jurisdiction was to be extended. The idea of referring for this purpose to the list of classes of insurance appearing in the Annex to the First Council Directive of 24 July 1973 (731239/EEC) proved inadequate. The classification used there took account of the requirements of State administration of insurance, and was not directed towards a fair balancing of private insurance interests. There was thus no alternative but to draw up a separate list for the purposes of the 1968 Convention. The following comments apply to the list and the classes of insurance not included in it.
141. This provision applies only to hull insurance and not to liability insurance. The term 'seagoing ships' means all vessels intended to travel on the sea. This includes not only ships in the traditional sense of the word but also hovercraft, hydrofoils barges and lighters used at sea. It also covers floating apparatus which cannot move under its own power, e.g. oil exploration and extraction installations which are moved about on water. Installations firmly moored or to be moored on the seabed are in any event expressly included in the text of the provision. The provision also covers ships in the course of construction, but only in so far as the damage is the result of a maritime risk. This is damage caused by the fact that the ship is on the water and not therefore damage which occurs in dry-dock or in the workshops of shipyards. 142. In the same way as (1) (a) covers the value of the hull of a ship or of an aeroplane, (1) (b) covers the value of goods destroyed or lost in transit, but not liability insurance for any loss or damage caused by those goods. The most important single decision taken on the provision was the addition of the words 'consists of or includes'. The reason for this is that goods in transit are frequently not conveyed by the same means of transport right to their final destination. There may be a sequence of journeys by land, sea and air. There would be unwarranted complications for the insurance industry in drafting policies and settling claims, if a fine distinction had always to be drawn as to the section of transit in which loss or damage had occurred. Moreover it is often impossible to ascertain this. One has only to think of container transport to realize how easily a loss may be discovered only at the destination. Practical considerations therefore required that agreements on jurisdiction be permitted, even where goods are carried by sea or by air for only part of their journey. Even if it can be proved that the loss occurred in the course of transport on land agreements on jurisdiction permitted by the new paragraph (5) of Article 12 remain effective. The provision applies even if the shipment does not cross any national border. 143. The exception in respect of injury to passengers and loss of or damage to their baggage, which is repeated in Article 12a (2) (a) and (b), is justified by the fact that such persons as a group tend to have a weaker economic position and less bargaining power. 144. Whether these provisions also cover all liability arising in connection with the construction modification and repair, of a ship; whether therefore the provision includes all liability which the shipyard incurs towards third parties and which was caused by the ship; or whether the expression 'use or operation' has to be construed more narrowly as applying only to liability arising in the course of a trial voyage all these are questions of interpretation which still await an answer. The exception for compulsory aircraft insurance is intended to leave the Member States free to provide for such protection as they consider necessary for the policy-holder and for the victim. 145. As there is no reason to treat combined transport any differently for liability insurance than for hull insurance, it is equally irrelevant during which section of the transport the circumstances causing the liability occurred (see paragraphs 142 and 143). 146. The most important application of this provision is stated in the text itself. In the absence of a provision to the contrary in the charter party, an air crash would cause the carrier to lose his entitlement to freight and the owner his charter-fee from the charterer. Another example might be loss caused by the late arrival of a ship. For the rest the notion is the same as that used in Directive 73/239/EEC. 147. Insurance against ancillary risks is a familiar practice, especially in United Kingdom insurance ....
The provision does not require an ancillary risk to be insured under the same policy as the main risk to which it relates. The Working Party therefore deliberately opted for a somewhat different wording from that in Directive 73/239/EEC for the 'ancillary risks' referred to in that Directive. The definition in that Directive could not be used since it is concerned with a different subject, the authorization of insurance undertakings.
148. The revised text of Article 12, like the original text, does not expressly deal with the effect of agreements on jurisdiction or the special jurisdictions for insurance matters set out in Section 3. Nevertheless, the legal position is clear from the systematic construction of Section 3 of the 1968 Convention, as amended. Agreements on jurisdiction cover all legal proceedings between insurer and policy-holder, even where the latter wishes, pursuant to the first paragraph of Article 10, to join the insurer in the court in which he himself is sued by the injured party. However jurisdiction clauses in insurance contracts cannot be binding upon third parties. The provisions of the second paragraph of Article 10 concerning a direct action by the injured party are thus not affected by such jurisdiction clauses. The same is true of the third paragraph of Article 10.
149. The substantive amendment in the first paragraph of Article 8 covers jurisdiction where several co-insurers are parties to a contract of insurance. What usually happens is that one insurer acts as leader for the other co-insurers and each of them underwrites a part of the risk, possibly a very small part. In such cases, however, there is no justification for permitting all the insurers including the leader, to be sued in the courts of each State in which any one of the many co-insurers is domiciled. The only additional international jurisdiction which can be justified would be one which relates to the circumstances of the leading insurer. The Working Party considered at length whether to refer to the leading insurer s domicile, but the effect of this would have been that the remaining co-insurers could be sued there even if the leader was sued elsewhere. An additional jurisdiction based on the leading insurer s circumstances is justifiable only if it leads to a concentration of actions arising out of an insured event. The new version of the first paragraph of Article therefore refers to the court where proceedings are brought against the leading insurer. Co-insurers can thus be sued for their share of the insurance in that court, at the same time as the leading insurer or subsequently. However, the provision does not impose an obligation for proceedings to be concentrated in one court; there is nothing to prevent a policy-holder from suing the various co-insurers in different courts. If the leading insurer has settled the claim out of court, the policy-holder must ,bring any action against the other co-insurers in one of the courts having jurisdiction under points (1) or (2) of the new version of the first paragraph of Article 8. The remaining amendments to the first paragraph of Article 8 merely rephrase it for the sake of greater clarity.
150. There was discussion on the present text of the second paragraph of Article 8 of the 1968 Convention because its wording might give rise to the misunderstanding that jurisdiction could be founded not only on the intervention of an agent of the insurer, but also on that of an independent insurance broker of the type common in the United Kingdom. The discussion revealed that this provision was unnecessary in view of Article 5 (5). The Working Party therefore changed the present paragraph three into paragraph two. The addition of the words 'or other establishment' is intended merely to ensure consistency between Article 5 (5) and the third paragraph of the new Article 13. The latter provision is necessary in addition to the former in order to prevent Article 4 being applicable.
151. Reinsurance contracts cannot be equated with insurance contracts. Accordingly, Articles 7 to 12 do not apply to reinsurance contracts. Jurisdiction over consumer contracts. 152. The previous authentic texts of the 1968 Convention use the term 'preneur d'assurance' and the equivalent in German, Italian and Dutch; the nearest English equivalent of the term proved to be 'the policy-holder'. However, this should not give rise to the misunderstanding that the problems arising from a transfer of legal rights are now any different from those existing before the accession of the new Member States to the Convention. The rightful possessor of the policy document is not always the 'preneur d'assurance' It is of course conceivable that the whole legal status of the other party to the contract with the insurer might pass to another person by inheritance or some other means, in which case the new party to the contract would become the preneur d'assurance. However, this case must be clearly distinguished from the transfer of individual rights arising out of the contract of insurance, especially in the form of assignment of the sum assured to a beneficiary. Such an assignment may be made in advance and may be contingent, for instance, upon the occurrence of a claim. In this event it is conceivable that the insurance policy might be passed on to the beneficiary at the same time as the assignment of the right to the sum assured so that he can claim his entitlement from the insurer, if the case arises. The beneficiary would not thereby become the preneur d'assurance. Hence, where a court jurisdiction is dependent on individual characteristics of the preneur d'assurance, the situation remains unchanged as a result of prior assignment of any claim to the sum assured which might arise, even if the policy document is transferred at the same time.
152. For the amendment to Article 12 (3) ('at the time of conclusion of the contract ), see paragraph 161 (a).
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