The European Court of Justice (“ECJ”) in its preliminary ruling in Refcomp SpA v. Axa Corporate Solutions Assurance SA and Others recently confirmed that within the context of cross-border contracts, the jurisdiction clause agreed between a manufacturer and a buyer cannot be relied on against a sub-buyers unless the sub-buyer consented to the jurisdiction clauses. This judgment is particularly relevant for contracts governing cross-border supply chains.

The case originated in France and concerned the interpretation of Article 23 of Council Regulation (EC) No. 44/2001 of 22 December 200 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I Regulation”). Under the Brussels I Regulation, generally speaking, the domicile of the defendant determines jurisdiction. In certain limited cases proceedings may be brought against the defendant before the courts of another Member State. For instance, Article 23(1) provides that:

“If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

a.        in writing or evidenced in writing; or

b.        in a form which accords with practices which the parties have established
          between themselves; or

c.        in international trade or commerce, in a form which accords with a usage of
          which the parties are or ought to have been aware and which in such trade
          or commerce is widely known to, and regularly observed by, parties to 
          contracts of the type involved in the particular trade or commerce
          concerned.”

In the present case, a property developer had carried out renovation works on a building in France. The building was insured by a French insurer. An Italian fitter had installed new air conditioning units produced by an Italian manufacturer. The units turned out to be faulty as a result of a manufacturing defect. The French insurer in a French court commenced proceedings for payment of compensation against the Italian manufacturer of the units, the Italian fitter and the French supplier.

The Italian manufacturer challenged the jurisdiction of the French courts, instead relying on a jurisdiction clause in favour of the Italian courts contained in the contract concluded between the manufacturer and the Italian fitter of the air-conditioning units. The manufacturer argued that all participants to the chain of contracts which successively transferred ownership of the units were also bound by this jurisdiction clause. As a result, the French Court of Cassation stayed proceedings and turned to the ECJ. It asked for a preliminary ruling on whether a jurisdiction clause agreed between a manufacturer and a buyer may be relied on against a third party sub-buyer who, in the course of a succession of contracts transferring ownership concluded between parties established in different Member States, purchases goods and plans on bringing an action for damages against the manufacturer.

The ECJ held that Article 23(1) clearly indicated that its scope was limited to cases in which the parties had agreed on a court. It followed that “the jurisdiction clause incorporated in a contract may, in principle, produce effects only in the relations between the parties who have given their agreement to the conclusion of that contract. In order for a third party to rely on the clause it is, in principle, necessary that the third party has given his consent to that effect”. Within the context of an action for damages brought by the sub-buyer of goods against the manufacturer, the court concluded that – unlike under French law – there was no contractual relationship between the sub-buyer and the manufacturer. The latter had not undertaken any contractual obligations towards the former nor had the sub-buyer consented to the jurisdiction clause in line with the provisions of Article 23.

The court confirmed that different rules may apply to cases involving bills of lading.

European Court of Justice, decision dated 7 February 2013 – Refcomp SpA v. Axa Corporate Solutions Assurance SA, Axa France IARD, Emerson Network, Climaveneta SpA (Case C-543/10)

Stefanie Slapke, Solicitor (England & Wales)