Summary of the Decision
A representative, domiciled in France, sued in France against an undertaking established in Germany for payment of commission, compensation for goodwill, in lieu of notice and in respect of paid holidays. He had offices in France where he collected orders and attended to their execution. The defendant challenged the jurisdiction of the French courts. The lower courts affirmed the existence of an employment contract but disagreed on the obligation to be taken into account in order to determine jurisdiction under Article 5(1) Brussels Convention. The Cour de Cassation (FR) held that the contract was a contract for representation and referred a question to the ECJ for a preliminary ruling on the interpretation of the concept of "place of performance" under Article 5(1) in the case of claims based on different obligations under a single contract for representation which has been classified by the courts seised as a contract of employment.
The ECJ holds that where the national court has before it claims relating to different obligations, it is necessary to interpret Article 5(1) in such a way that the court is not compelled to find that it has jurisdiction to adjudicate upon certain claims but not on others. The court finds, that Article 5(1) is particularly concerned to attribute jurisdiction to the court of the country which has a close connection with the case; that in the case of a contract of employment the connection lies particularly in the law applicable to the contract; and that according to the conflict rules in regard to this matter that law is determined by the obligation characterising the contract in question and is normally the obligation to carry out work. Consequently, the obligation to be taken into account for the purposes of the application of Article 5(1) in the case of claims based on different obligations arising under a contract of employment binding a worker to an undertaking is the obligation which characterises the contract.
JURE case summary, published with the kind permission of the European Commission
1. By judgment of 2 April 1981, received at the Court on 3 June 1981, the French Cour de cassation referred to the Court of Justice for a preliminary ruling pursuant to the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 27 September 1978 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, a question on the interpretation of Article 5 (1) of the Convention.
2. That question was raised in proceedings between Mr Ivenel, who resides in Strasbourg, and the undertaking Schwab Maschinenbau, whose place of establishment is at Oettingen in Bavaria, relating to an alleged breach of a contract for representation which gave rise to a claim for payment of commission, compensation for goodwill, in lieu of notice and in respect of paid holidays.
3. The Conseil de prud’hommes, Strasbourg, before which the claim was brought, dismissed the two objections founded on lack of jurisdiction which were raised by Mr Schwab. It based its jurisdiction ratione materiae on the fact that in its opinion the contract between the parties was to be considered as a contract of employment. As regards its jurisdiction ratione loci it considered that, according to Article 5 (1) of the Convention, in matters of contract an action might be brought against a defendant ordinarily resident in the territory of another Member State before the court for the place where the obligation was, or was to be, performed and that in the case in point the obligation to be taken into account was that of the work carried out by the representative who had his office in Strasbourg where he collated orders and attended to their execution.
4. When an appeal by Schwab was brought before the Cour d’appel, Colmar, that court, whilst confirming the judgment of the Conseil de prud’hommes in so far as it found that there was a contract of employment, set aside that judgment for lack of jurisdiction ratione loci. The Cour d’appel considered that the obligation to be taken into account for the purpose of applying Article 5 (1) of the Convention was that which constituted the basis of the court action. In the case in point that obligation was the payment of the commission and other amounts claimed from Schwab, which were payable at the address of the debtor and not the creditor.
5. Mr Ivenel appealed in cassation against that judgment and maintained that the Cour d’appel had infringed Article 5 (1) of the Convention.
6. The Cour de cassation took cognizance of the grounds relied on by the Cour d’appel in deciding that the French courts had no jurisdiction in the case but nevertheless considered that since the action related to the performance of a contract for representation involving mutual obligations some of which at least were performed in France the question which was the place of performance of the obligation within the meaning of Article 5 (1) raised an issue of interpretation. It therefore stayed the proceedings and asked the Court for a ruling on the interpretation to be given to that provision.
7. It must be observed that, as the Court of Justice has already stated, in particular in its judgment of 6 October 1976 in Case 12/76 Tessili, unalex EU-129, the “place of performance” within the meaning of Article 5 (1) of the Convention is to be determined in accordance with the law which governs the obligation in question according to the conflict rules of the court before which the matter is brought.
8. The question raised by the national court concerns the obligation to be taken into account for the purposes of that definition when the claim before the court is based on different obligations under a single contract for representation which has been classified by the courts concerned with the substance of the case as a contract of employment.
9. In its judgment of 6 October 1976 in Case 14/76 de Bloos, unalex EU-4, the Court has already stated that the obligation to be taken into account for the purposes of Article 5 (1) of the Convention in the case of a claim based on a contract granting an exclusive sales concession between two commercial undertakings is that which forms the basis of the legal proceedings. The problem raised by this case is whether the same criterion must be applied to cases of the kind described by the national court.
10. It is appropriate to examine that problem in the light of the objectives of the Convention and the general scheme of its provisions.
11. Adoption of the special rules of jurisdiction as contained in Articles 5 and 6 of the Convention is justified inter alia by the fact that there must be a close connecting factor between the dispute and the court with jurisdiction to resolve it. The report drawn up by the committee of experts (Official Journal 1979, c 59, p. 1) which drafted the text of the Convention stresses that connection by stating inter alia that the court for the place of performance of the obligation will be useful in proceedings for the recovery of fees since the creditor will have a choice between the courts of the State where the defendant is ordinarily resident by virtue of the general provisions contained in Article 2 of the Convention and the courts of another State within whose jurisdiction the services were provided, particularly where, according to the appropriate law, the obligation to pay must be performed where the services were provided.
12. The above-mentioned report also refers to the reasons why those drafting the Convention did not consider it appropriate to insert into the Convention a provision giving exclusive jurisdiction in contracts of employment. According to the report it is desirable as far as possible for disputes to be brought before the courts of the State whose law governs the contract whereas at the time the Convention was being drafted work was in progress to harmonize the application of the rules of employment law in the Member States of the Community. The report concludes that at present the existing provisions of the Convention, such as Article 2 stipulating the forum for the place where the defendant is ordinarily resident and Article 5 (1) the forum for the place of performance of the obligation, are likely to satisfy the relevant interests.
13. It should be noted that on 19 June 1980 a Convention on the law applicable to contractual obligations was opened for signature by the Member States (Official Journal 1980, l 266, p. 1). Article 6 thereof provides that a contract of employment is to be governed, in the absence of choice of the applicable law, by the law of the country in which the employee habitually carries out his work in performance of the contract unless it appears from the circumstances as a whole that the contract is more closely connected with another country.
14. The experts’ report on the Convention on the law applicable to contractual obligations (Official Journal 1980, c 282, p. 1) explains in that respect that the adopting of a special conflict rule in relation to contracts of employment was intended to provide an appropriate arrangement for matters in which the interests of one of the contracting parties were not the same as those of the other and to secure thereby adequate protection for the party who from the socio-economic point of view was to be regarded as the weaker in the contractual relationship.
15. It follows from the foregoing account that in the matter of contracts Article 5 (1) of the Convention is particularly concerned to attribute jurisdiction to the court of the country which has a close connection with the case; that in the case of a contract of employment the connection lies particularly in the law applicable to the contract; and that according to the trend in the conflict rules in regard to this matter that law is determined by the obligation characterizing the contract in question and is normally the obligation to carry out work.
16. It emerges from an examination of the provisions of the Convention that in establishing special or even exclusive jurisdiction for insurance, instalment sales and tenancies of immovable property those provisions recognize that the rules on jurisdiction, too, are inspired by concern to afford proper protection to the party to the contract who is the weaker from the social point of view.
17. Those factors must be taken into account in answering the question which has been put to the court.
18. In a case such as the one in point, where the national court has before it claims relating to obligations under a contract for representation, some of which concern remuneration due to the employee from an undertaking established in one State and others concern compensation based on the manner in which the work has been done in another State, it is necessary to interpret the provisions of the Convention in such a way that the national court is not compelled to find that it has jurisdiction to adjudicate upon certain claims but not on others.
19. Such a result would be even less compatible with the objectives and general structure of the Convention in the case of a contract of employment for which, as a general rule, the law applicable contains provisions protecting the worker and is normally that of the place where the work characterizing the contract is carried out.
20. It follows from the foregoing considerations, taken as a whole, that the obligation to be taken into account for the purposes of the application of Article 5 (1) of the Convention in the case of claims based on different obligations arising under a contract of employment as a representative binding a worker to an undertaking is the obligation which characterizes the contract.