In a recently reported ruling (No 423/2018, in Chronicles of Private Law, 2019, p. 204), the Greek Supreme Court (Άρειος Πάγος) addressed the thorny issues of choice of forum and choice of law agreements relating to agency and distribution. The judgment basically follows the path paved by the CJEU. However, its analysis is noteworthy, allowing hopes for a shift in the established course of action.
A Dutch company entered into a distribution agreement with a Greek company in 2004, followed by an agency agreement in 2007. The agreements included a choice of forum clause granting exclusive jurisdiction to the courts of Amsterdam and a clause stating that the contracts were governed by Dutch law. The Dutch principal terminated the agreements in 2009.
The Greek company started litigation in Athens. The defendant challenged the jurisdiction of the Greek courts on the basis of the choice of court clause. Both first and second instance Greek courts found they lacked jurisdiction.
The Grounds of Appeal
The claimant filed a (final) appeal before the Supreme Court, arguing that the choice of forum clause was abusive, and contrary as such to public policy. The Greek company submitted, among other things, that it had no real negotiating power with the principal, and that the choice of law clause resulted in the circumvention of Greek mandatory provisions.
The Supreme Court confirmed the lower courts’ finding and dismissed the case for want of jurisdiction. The forum selection clause, the Court noted, was agreed upon as a result of sound negotiations, with no abuse on the part of the Dutch company. A draft of the agreement had been previously submitted to the claimant, who had sufficient time to reflect and did not raise any objections or reservations.
The Supreme Court emphasized that the Greek company had a high turnover and significant profits. Its representatives, the Court noted, were familiar with travelling abroad for discussions and negotiations; hence, any difficulty and increased costs associated with the exclusive jurisdiction of Dutch courts did not make litigation before the latter courts impossible or unreasonably burdensome.
The combined choice of Dutch courts and Dutch law, the Court added, did not affect the validity of the choice of forum clause. A circumvention of Greek mandatory law provisions was not established. No abuse of the principal’s position was evidenced. In any case, Dutch law could not be regarded as completely alien to the case, given that the principal is in fact based in the Netherlands.
The Supreme Court finally approved the Athens Court of Appeal decision not to turn to the choice of law clause for the purposes of assessing the validity of the choice of forum agreement. It relied for this on the ruling of the CJEU in Trasporti Castelletti, where the Court of Justice stated that “the national court seised should be able readily to decide whether it has jurisdiction on the basis of the rules of the [Brussels] Convention [of 1968, the predecessor of the Brussels I bis Regulation], without having to consider the substance of the case”, adding that the “substantive rules of liability applicable in the chosen court must not affect the validity of the jurisdiction clause”.
In a nutshell, the show must go on. In spite of the scepticism voiced in legal scholarship, the foundations of the CJEU ruling in Trasporti Castelletti are too hard to shake, let alone demolish.
Still, the Supreme Court did not refuse to examine the public policy defence raised by the agency, and in fact accepted to discuss the issue of the abusive character of the clause. One may not agree with the result; however the sheer fact that the court dared the step, raises ambitions for a further scrutiny in future cases.
I finish with a suggestion for further reading: Many esteemed colleagues have published notes on the above and subsequent rulings of the Court which followed suit. One of the most recent articles dealing extensively with the issue was authored by Matthias Weller, whose analysis gave me ample food for thought [Matthias Weller, Choice of court agreements under Brussels Ia and under the Hague convention: coherences and clashes, Journal of Private International Law, 2007, 13:1, 91-129, in particular pp. 107-109].
Good decision by the Areopagus. It is simply not understandable why distributors should be the only commercial parties that are not bound by forum selection clauses. Art 25 Brussels Ibis Regulation does not contain a public policy exception. We should trust the Dutch courts to be able to apply distribution law correctly.
Since the substantive validity of choice of court agreements has been subject in the Brussels I bis Regulation to the lex fori prorogati, it would be interesting to know whether the Greek Supreme Court explicitly or implicitly referred to the conflict of laws rules of the chosen forum, i.e. Dutch conflict rules, to identify the law according to which assessing whether the claimant’s consent to the choice of forum agreement was genuine or whether it resulted from an abusive conduct of the Dutch company. Based on Article 25 of the Regulation, it seems that the judge, when ruling on the substantive validity of choice of court agreements, must refer to the applicable substantive law, with no option to decide on mere factual circumstances.
No Caterina, the Supreme Court did not dive that deep…
For the sake of accuracy, the case belongs to the Brussels I era, so Article 23 was applied.