We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
17 December 2013
On July 30 2013 the High Court ruled(1) that in decisions with international jurisdiction, the term 'services' must be interpreted through the use of EU law as a whole, in a way that it encompasses all contracts that cover the achievement of a certain factual result in exchange for payment. For delimitation in relation to employment contracts, they must not cover an obligation where the performance of the activity itself is the subject of the contract.
Article 5(1) of the EU Brussels I Regulation (44/2001) must be interpreted openly and requires delimitation only for those contracts belonging to special matters (eg, insurance, consumer or employment contracts). The European legal term for contracts on services encompasses service contracts, agency contracts, contracts of commercial agents and brokers, franchise and distribution contracts, mixed contracts and others, as long as they contain the essential element of an activity.
The place of performance, which (according to Article 5(1)(b) of the regulation) establishes jurisdiction, must be determined autonomously and with the help of factual not legal criteria.
The plaintiff had argued that the defendant had accepted the obligation to set up a distribution organisation and to perform various other tasks. Based on this, the High Court ruled that the lower courts had been correct in classifying the monetary claim under this agreement as a claim that had arisen from a service contract in the meaning of Article 5(1)(b) of the regulation.
The court argued that the place of performance is the only connecting factor for any claim arising from a purchase contract or service contract, and hence also for all secondary contractual claims. Jurisdiction is determined based on the information in the complaint, unless the court is already aware that this information is wrong. It is of no relevance that the subject of the lawsuit was not the main contractual obligation or a claim for damages (as had been claimed in the proceeding for the payment order), but the return of the balance in the current account that had remained with the defendant. The court argued that the European legislature had intended the autonomous determination of the place of performance to concentrate jurisdiction for all contractual disputes in one venue and create a single jurisdiction for all lawsuits arising under the same contract.
The term 'services' must be interpreted in a way that encompasses any contract that covers the achievement of a certain result, as opposed to the mere performance of an activity, as in an employment contract.
For further information on this topic please contact Klaus Oblin at Oblin Melichar by telephone (+43 1 505 37 05), fax (+43 1 505 37 05 10) or email (email@example.com). The Oblin Melichar website can be accessed at www.oblin.at.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.