Wikingerhof: A View from Hamburg

The post below was written by Peter Mankowski, who is Professor of Private International Law at the University of Hamburg. Apart from one section, the post is based on the author’s German-language case note in the Lindenmaier Möhring Kommentierte BGH-Rechtspechung. The translation into English was permitted courtesy of C.H. Beck Verlag, München.

This is the fourth contribution to the EAPIL online symposium on the ruling of the Court of Justice in the case of Wikingerhof v. Booking.com. The previous posts, authored by Matthias Lehmann, Adrian Briggs and Gilles Cuniberti, can be found here, here and here. 

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.

Problem Description

The boundary between contract and tort, between Article 7 pts. (1) and (2) of the Brussels I bis Regulation, has been a mine-field for years.

The CJEU has continued to defer it to the detriment of tort and to the benefit of contract (see paradigmatically Brogsitter, paras 24-27, and flightright, paras 59-64; cf. also Holterman Ferho, paras. 70-71, and Feniks, paras 40-49). This generates enormous uncertainty (see only Baumert, EWiR 2014, 435; Slonina, ecolex 2014, 790; Wendenburg/Maximilian Schneider, NJW 2014, 1633; Dornis, GPR 2014, 352; Brosch, ÖJZ 2015, 958; Wendelstein, ZEuP 2015, 624; Reydellet, RLDA 111 [2016], 33; Pfeiffer, IPRax 2016, 111).

According to the CJEU, for a matter to be contractual, it is sufficient that there has been a breach of contractual obligations because it appears essential for the interpretation of the contract to determine whether the conduct at issue in the main proceedings is lawful or unlawful (Brogsitter, paras 24-27).

The national courts struggle with this and in some cases even make express ‘Brogsitter reservations’ (see in particular OGH ÖJZ 2015, 1051 with note Brenn; discussed by Mankowski, EuZA 2016, 368). By submitting its reference, the German Bundesgerichtshof (GRUR 2019, 320 — booking.com) sought certainty and a general decision from the CJEU on how far the CJEU intends to stick to Brogsitter (Mankowski, EWiR 2019, 157, 158). The CJEU has acknowledged and recognised that the concrete reference for a preliminary ruling in Wikingerhof is important in terms of legal policy, as is clearly evidenced by the fact that the Grand Chamber with the President and Vice-President of the CJEU decides, the fullest brass possible below the full plenum (the latter being reserved for rather constitutional matters).

Legal Assessment

Article 7 pt. (2) Brussels I bis Regulation refers to any action seeking to establish liability for damage on the part of the defendant and which does not relate to ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) (Kalfelis, para. 18; Löber, para 19). An autonomous interpretation is required for both ‘contract’ and ‘tort’, which is more abstract from national understandings (paras 30 et seq.).

Both Article 7 pts. (1) and 2 are exceptions to the general jurisdiction of Article 4 Brussels I bis Regulation and are therefore to be interpreted strictly. According to Recital (16) of the Regulation, they are both justified from the point of view of particular proximity to the facts and evidence. An action therefore has as its object ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) if an interpretation of the contract between the applicant and the defendant appears indispensable in order to determine whether the conduct alleged by the applicant against the defendant is lawful or, on the contrary, unlawful (Brogsitter, para. 25).

This is the case, inter alia, of an action based on the provisions of a contract or on legislation applicable under that contract (Holterman Ferho, para. 53, and Kareda, paras 30-33). On the other hand, where an applicant relies on the rules on liability in tort, delict or quasi-delict, that is to say, a breach of a legal obligation, and it does not appear necessary to examine the content of the contract concluded with the defendant in order to assess whether the conduct alleged against the defendant is lawful or unlawful, since that obligation on the defendant exists independently of that contract, an tort falls within the scope of the action within the meaning of Article 7 pt. (2).

In the present case, Wikingerhof relies on an infringement of German antitrust law, which generally prohibits the abuse of a dominant position irrespective of a contract or other voluntary commitment. More specifically, because of Booking.com’s strong position on the relevant market, Wikingerhof had no choice but to conclude the agreement at issue and to be subject to the effects of the subsequent amendments to Booking.com’s General Sales Conditions, even though some of Booking.com’s conduct was unfair.

The central legal question is therefore whether Booking.com has abused a dominant position for the purposes of antitrust law. In order to determine whether the practices alleged against Booking.com are lawful or unlawful under that competition law, it is not essential to interpret the contract between the parties to the main proceedings, since such an interpretation is, at most, necessary in order to establish the existence of those practices (para. 35).

It follows that, subject to verification by the referring court, the action brought by Wikingerhof, in so far as it is based on the statutory obligation not to abuse a dominant position, must be regarded as constituting a tort.

That is consistent with the objectives of proximity and the sound administration of justice pursued by the Brussels I bis Regulation. The court having jurisdiction under Article 7 pt. (2) — in cartel cases, that of the market affected by the alleged anti-competitive conduct — is best placed to rule on the main question of the merits of that allegation, in particular with regard to the collection and assessment of the relevant evidence (para 37 with reference to Tibor-Trans,  para. 34, and VKI v Volkswagen, para. 38).

Contract vs Tort in European International Procedural Law and Conflict of Laws

The CJEU is trying to engineer a cautious move away from Brogsitter without formally abandoning Brogsitter, and indeed by repeating the central statement from Brogsitter. In any event, for antitrust cases Brogsitter should not pass through.

In a very important situation, the CJEU restores its right to jurisdiction in tort. However, the gain in legal certainty is not as great as if a more general statement had been made. This is because the restriction to a specific situation still leaves the initial question open to all other situations. It may even induce the national courts to make even more complicated attempts to reveal, by comparison parallels or divergences with antitrust law for the situations to be assessed by each of them. AG Saugmandsgaard Øe had launched nothing less than a frontal full-force attack on Brogsitter or at least on a ‘maximalist’ reading of Brogsitter (Opinion of 10 September 2020, paras. 74-115).

Yet the CJEU has not endorsed this and has not distanced itself from Brogsitter at the general level. Wikingerhof does not overrule Brogsitter. It does not finally break with Brogsitter (Matthias Lehmann, Wikingerhof: CJEU Reestablishes Equilibrium between Contract and Tort Jurisdiction). It even cites with seeming approval to the Brogsitter formula – yet eventually opts for partially breaking free from that formula, namely for claims based in antitrust law. On the other hand, Wikingerhof does not firmly shut the door to future deviations from Brogsitter in other fields or in general.

In the age of private enforcement in particular, antitrust law is not a good ground for — as the CJEU is now trying to do — dissolving contract law in particular, but not in general.

Civil actions in the field of antitrust, especially since actions for damages or injunctions to use certain General Terms and Conditions will often come from suppliers or customers of the cartel participants or of the dominant enterprise. They therefore operate in the context of contractual relations. The cartel and abuse of power will be reflected in an arrangement of the contractual terms (service, consideration or conditions) favourable to the cartel or dominant undertaking. Antitrust induced nullity of the contract leads to more than one stage. The cartel or abuse of power becomes the background to the contract in question, and vice versa, it becomes almost a preliminary question of the cartel effect or abuse of power. It is therefore precisely in the case of cartels or abuse of power that contracts are the rule, not the exception (see to a similar avail Briggs, Wikingerhof: A View from Oxford).

However: Preliminary questions do not determine the classification of the main question. Nor do they do so with regard to the distinction between the contract and the tort for the main issue. There is no specific qualification for the main question (Pfeiffer, IPRax 2016, 111).

The CJEU’s departure from Brogsitter in antitrust law and the establishment of a tort/delict qualification could possibly give rise to an argumentum a maiore ad minus (tentatively in a similar direction the comment of Simon Horn to Matthias Lehmann’s post on this blog). If one is already moving in antitrust law with its relative proximity to the contract in tort law, it is necessary to move even more safely into tort law in the case of torts less close to the contractual realm.

However, this would be an attempt to assess parallels to, or divergences from, antitrust law by comparing them. Wikingerhof may indicate a reversal of the trend. The previously seemingly unstoppable rise of contract at the expense of tort/delict does not progress any further at least. However, a full reversal of the trend has not yet been completed, but rather requires further probation samples. But Wikingerhof might be some beginning. That tort regains some ground at the expense of contract is not akin to a catastrophe (but cf. Briggs, Wikingerhof: A View from Oxford), but a necessary correction of the previous over-stretching of ‘contract’ by Brogsitter.

If different, but concurring claims in contract and tort happen to exist, the best way to treat them might possibly be the introduction of annex competences rather than re-characterisation or deferring boundaries by characterisation.

Yet this enters another difficult field of striking balances of competing interests right (Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 notes 34-35). Re-characterizing certain claims in tort as claims in contract if they can be said to be based on a breach of contractual obligations – in essence what Brogsitter boils down to –, and the result that two claims in contract compete would be not more than a bypassing escape strategy (Baumert, EWiR 2014, 435, 436; Kiener/Neumayr, ZFR 2015, 505, 506-507; Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 note 35).

The CJEU’s Missing Look at the Conflict of Laws

Unfortunately, the CJEU in Wikingerhof completely fails to look at the sister area of conflict of laws as well. The mere existence of Article 6(3) Rome II Regulation and the clear attribution of private antitrust law to the unlawful acts in the realm of conflict of laws have provided very strong arguments for classifying private law specifically in tort/delict.

In that realm, Recitals (7) of the Rome I and Rome II Regulations require that the Brussels I bis Regulation be interpreted as well. Unfortunately, there is no parallel Recital in the Brussels I bis Regulation. At the occasion of the next recast, a future Brussels I ter Regulation should receive such a Recital in order to draw the current missing third line to the interpretation triangle with Rome I and Rome II and make the triangle so obvious that it can no longer be ignored by the CJEU.

Does an Overarching Notion of ‘Contract’ Exist under the Brussels I bis Regulation?

A major part of the discussion subsequent to Wikingerhof, in particular on Conflictoflaws.net, has focused on whether ‘contract’ has the same meaning throughout the entire Brussels I-bis Regulation, i.e. in essence, whether Wikingerhof gets also relevant for insurance, consumer or employment contracts; opinions are divided (see Lutzi, Briggs, Van Calster, Poesen, Álvarez-Armas ).

Undeniably, there is a certain tendency particularly in Králová, paras. 58-63, pointing towards the CJEU tentatively favouring different notions of ‘contract’ for the purposes of Article 7 pt. (1) Brussels I bis Regulation, on the one hand, and Article 17 of the same Regulation, on the other (a then isolated predecessor might be found in Ilsinger, paras 56-57). AG Saugmandsgaard Øe expressed such tendency even more clearly in Wikingerhof (Opinion of 10 September 2020, para. 113).

Furthermore, Brogsitter has some counterparts extending the domain of consumer contracts to claims which under national law might have their fundament in tort (see in particular BGH NJW 2011, 532; BGH NJW 2011, 2809; BGH IPRax 2013, 168, 171; BGH WM 2012, 646; BGH ZIP 2013, 93). Reliantco, decided after Králová, is the current highwater mark (see paras. 58-73). In the background informing Article 17(1) in general, the desire for adequate consumer protection – mandated by Art. 153 TFEU – is a strong and specific influence. Yet ‘contract’ should follow the same concept throughout which is essentially based on economic ideas and categories of voluntary or involuntary creditorship plus cooperating mechanisms and the meeting of the minds (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub III). ‘Consumer contract’ adds the B2C element to ‘contract’, but is nevertheless based on ‘contract’ (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub IV).

‘Hotels Can Sue in Germany’: Marketplace Court for Cartel Victims and Danger of Derogation

Broken down from the high and abstract plane to the small change: The poster titles on Wikingerhof in the relevant internet publications have the tenor ‘Hotels can sue in Germany’ (in particular LTO, 24 November 2020; Hamburger Abendblatt, 25 November 2020).

In fact, under Article 7 pt. (2) Brussels I bis Regulation, the Court of Justice of the European Union establishes a market jurisdiction for the victims of the cartel. However, there is no reason why it should apply only to certain sectors, or even only to hotels, and not to all sectors, as Article 7 pt. (2) does not differentiate anywhere according to bananas, nor does Article 6(3) Rome II Regulation in the conflict of laws.

However, the counter-reaction seems obvious for cartels and dominant companies if it has not been implemented proactively for a long time: in its own general terms and conditions for contracts with suppliers or customers, by means of a jurisdiction clause, the courts have exclusive jurisdiction in their own place of residence. This is because Article 7 pt. (2) Brussels I bis Regulation creates only a ground of special jurisdiction and not a ground of exclusive jurisdiction which would bar any derogation. Article 7 pt. (2) gives way to Art. 25 Brussels I bis Regulation, and the Brussels I bis Regulation does not provide protection against derogating choice of court agreements (on antitrust claims and jurisdiction agreements under Article 25 Brussels I bis Regulation / Article 23 Brussels I Regulation, see Cartel Damages Claims, and Apple Sales International; see also Mankowski, EWiR 2015, 687; id., TBH 2020, 45; Stammwitz, Internationale Zuständigkeit bei grenzüberschreitenden Kartelldelikten [2018] pp. 391-437; Pfeiffer, LMK 2018, 412366; C. Krüger/Seegers, WuW 2019, 170; Goffinet/R. Spangenberg, J. dr. eur. 2019, 199).

However, this is not yet the final step in the assessment. The market power of internet portals in particular is a well-known phenomenon and a significant problem. In turn, it has provoked a specific counter-reaction by the European legislator. This counter-reaction is the P2B Regulation, i.e. Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services.

That said, the P2B Regulation only grants protection to business users by means of (unsystematic) individual standards (Nadine Schneider/Kremer, WRP 2020, 1128, 1129; Stefan Ernst, CR 2020, 735, 739), but not comprehensive. It requires transparency and mandatory content in general terms and conditions. On the other hand, it refers only exceptionally to orders for annulment in respect of general terms and conditions, in particular in Article 3(3) P2B Regulation. In particular, it does not lose any word on choice-of-court agreements. This fits with the general line that recent EU special acts for the online sector – e.g. the Geo-Blocking Regulation in its Article 1(6) – in principle respect the Brussels I bis Regulation (see e.g. Recital (9) P2B Regulation).

It is true that the P2B Regulation favours mediation as the preferred method of dispute resolution. However, Art. 12 (5) P2B Regulation expressly states that the P2B Regulation does not affect the enforcement of rights by way of court action. The Brussels I bis Regulation protects its species, namely Articles 15, 19 and 23. However, only typically weaker parties with derogation bans, but not business users within the meaning of the P2B Regulation and small enterprises such as the Wikingerhof Hotel.

The market-based jurisdiction under Article 7 pt. (2) Brussels I bis Regulation, which has now been confirmed by the Court of Justice of the European Union, thus enables cartel victims against foreign internet portals to form a forum actoris, a forum actoris at their own domicile, but is subject to a derogation. In the broad legal policy perspective, de regulatione ferenda it can be considered to include special protection standards for SMEs (small and medium-sized enterprises) in a future Brussels I ter Regulation, i.e. to treat C2SME contracts as a separate category.

This is, however, a new round of the game, to be played in the future, and would in any event be the subject of a major debate which will certainly feature fiercely competing lobbying interests, with an uncertain outcome as to the final result.