European jurisdiction: be aware of implementation clauses!
By Michiel Teekens, TeekensKarstens advocaten notarissen
The Council Regulation (EC) No 44/2001 of 22 December 2000 (“the Regulation”) regulates jurisdiction between persons, including companies, located in Member States. The Regulation provides general principles for jurisdiction, but also allows contractual parties to agree to deviate through an implementation clause or a forum clause.
As a general principle, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State (clause 2). Special rules according to jurisdiction apply to contracts related to the place of performance of the obligation in question.
This place is further defined for specific contracts, unless otherwise agreed (clause 5). For example, regarding the sale of goods, the place of performance is executed in a Member State where, under the contract, the goods were delivered.
As previously mentioned, parties can agree upon the place of performance and deviate from the general and specific principles. This is called an “implementation clause”. Often, contractual parties are not aware of the consequences of such a deviation, because the implementation clause applies implicitly through applicable terms and conditions. For example: regarding an agreement concerning the sale of goods, the terms and conditions state that the place of payment is The Netherlands.
If the goods are legally delivered in Spain, it could be argued that the Dutch court has jurisdiction regarding the contractual payment obligation and the Spanish court is authorised to deliver the goods. This situation is created due to the term “unless otherwise agreed” in clause 5 of the Regulation.
Creating or preventing jurisdiction through an implementation clause could be helpful in situations where the contractual party is not willing to agree upon an acceptable forum clause as set out in clause 23. Furthermore, the requirements for an implementation clause are far fewer than those for a forum clause. Finally, it should also be pointed out that it has been generally accepted for the explanation and scope of implementation clauses and forum clauses to be defined through a Regulation-autonomous approach. Local laws and/or law principles (usually) do not play any role. Case law about the subject is limited. It is fair to say that the approach of the European Commission’s Court of Appeal is formal, which should result in jurisdiction if an implementation clause clearly defines an (alternative) place of performance and there is some relation between this place and the contractual obligation.
TeekensKarstens advocaten notarissen,Leiden, The Netherlands
T: +31 71 535 80 00
Michiel Teekens is an (international) corporate and commercial litigator and an active participant at the GGI EasyMeets. He is also a member of the International Dispute Resolution Practice Group. He participated in the Global Village on the Move 2012 programme through GGI.
TeekensKarstens attorneys and notaries (TK) is the largest legal services provider in the Rijnland area of the Netherlands, which is centrally located between Amsterdam, The Hague and Utrecht, and just fifteen minutes from Amsterdam Schiphol Airport. From its offices in Leiden and Alphen aan den Rijn, more than fifty lawyers and (candidate) notaries operate and provide full services to predominantly large and medium enterprises, (semi-) public sector companies and individuals hailing from the Netherlands and beyond.
published: March 2014