Case law Developments in PIL Views and comments

Wikingerhof: CJEU Reestablishes Equilibrium between Contract and Tort Jurisdiction

The EAPIL blog hosts an online symposium on the ruling of the Court of Justice in the case of Wikingerhof v. Booking. The first contribution to the symposium, which is found below, is by Matthias Lehmann, who is Professor of Private International Law at the University of Vienna (as well as an editor of this blog).

Other contributions will follow (the next one will be out later today). Readers are encouraged to share their views by making comments to the posts. Those wishing to submit longer contributions for publication are invited to get in touch with the managing editor of the blog, Pietro Franzina, at pietro.franzina@unicatt.it.


In its judgment dated 24 November 2020 in Wikingerhof, the CJEU has recalibrated the relation between the heads of jurisdiction for contracts (Article 7(1) Brussels I bis Regulation) and for torts / delicts (Article 7(2)).

Facts

A hotel sued booking.com in Germany for abuse of a dominant position. The hotel alleged having been strong-armed by the booking platform into an unfavourable contract.

Booking.com denied the German court’s jurisdiction over the claim, citing a choice-of-forum clause in the contract in favour of a Dutch court. This clause was however held to be invalid by the referring German Federal Court.

If the case fell under the head of jurisdiction for torts/delicts in Art. 7(2) Brussels Ibis, German courts could have jurisdiction given that the harmful event could be said to have occurred in Germany. In contrast, if the case concerned a contractual claim in the sense of Art. 7(1) Brussels Ibis, the jurisdiction of the German courts would have been more doubtful, as it was not sure that the contract between Wikingerhof and booking.com was to be performed in Germany.

Issue

The legal issue was therefore whether an alleged abuse of a dominant position that consists in forcing another person into an unfavorable contract is tortious/delictual or contractual in nature.

Holding and Rationale

The CJEU held the claim concerned a tort/delict matter. It cites its previous case law on the relation between the jurisdiction for contractual and tort claims, in particular the Kalfelis and the Brogistter case. In Kalfelis, the court had ruled that both heads of jurisdiction were mutually exclusive. In Brogsitter, the CJEU had held that a case is contractual in nature “where the interpretation of the contract … is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of” (Brogsitter, para 25).

According to the CJEU in Wikingerhof, the interpretation of the contract was not indispensable to establish the unlawful nature of booking.com’s behaviour. True, the abuse of a dominant position resulted from the unfavourable clauses of the contract. Yet the CJEU highlights that the interpretation of the clauses was necessary only to establish the existence of an abuse. In other words, the contract is needed as factual evidence, not as a legal standard. The Advocate General basically states the same when he calls the interpretation of the contract a “preliminary question” (Wikingerhof, para 124).

Assessment

After the CJEU judgment in Brogsitter, one could have feared that the head of jurisdiction for contracts would be dominated by that for torts. The new decision in Wikingerhof reestablishes the equilibrium between the two. It clarifies that Article 7(2) Brussels I bis applies in cases of abuse of a dominant position, even those made by the conclusion of an unfavourable contract.

Indeed, violations of competition law are typical torts. It would be ill-advised to force the victim of such uncompetitive behaviour to sue at the place of performance foreseen in the contract because it is precisely this contract about which the victim complaints. The fact that the victim only pleads an abuse does not mean that one could disregard its complaint: For the purpose of establishing jurisdiction, the standard of proof has never been the same as that which applies for the merits of the case. It is for the court at the alleged place of abuse to find out whether the complaint is justified or not.

The new judgment in Wikingerhof does not break with the Brogsitter ruling, but is actually compatible with the latter. According to Brogsitter, a case is contractual in nature where the contractual provisions determine the outcome of the claim. Wikingerhof adds that this is only true where the contractual provisions are used as a normative standard, and not as factual proof of competitive misbehaviour. The delineation may be difficult to understand, but it is nonetheless necessary and reasonable.

1 comment on “Wikingerhof: CJEU Reestablishes Equilibrium between Contract and Tort Jurisdiction

  1. I fully agree that the distinction drawn between interpretation of the contract being indispensable in order to establish the unlawful nature of the behaviour at stake and such interpretation being indispensable for the mere establishment of an anticompetitive behaviour is difficult to understand. In my view this delineation is oversubtle and disregards the particularities of competition law: legitimate interest considerations like necessity or duress which form a separate step of reasoning (“Rechtswidrigkeit”) in general tort law are already taken into account for the means of establishing anticompetitive behaviour in competition law. The border between the establishment of anticompetitive behaviour and the establishment of unlawfulness is thus naturally blurred in competition law.

    Apart from that critique I think that the decision fails to actually clarify the uncertainty about the concept and scope of contract in European conflict of laws and jurisdiction as one might have expected after the announcement of a Grand Chamber ruling and GA Saugmandsgaard Øe’s urgent call for clarification: the Court mentioned three possible criteria (the applicability of contractual rules in para. 32, the existence of an obligation imposed by law in para 33 and the indispensable interpretation of the contract in para. 32) which seem synonymous at first glance but which might lead to considerably different outcomes. Even if the latter one seems to prevail in the Court’s reasoning, the discussion about the evolution of the concept of contract seems far from settled to me.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: