Case law Developments in PIL Views and comments

Here lies the Late Brogsitter Ruling

The post below was written by Bernard Haftel, who is Professor of Private International Law at the University of Sorbonne Paris Nord.

This is the fifth 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 were authored by Matthias Lehmann, Adrian Briggs, Gilles Cuniberti and Peter Mankowski

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.


With the Wikingerhof ruling of 24 November 2020, the European Court of Justice once again returns to the seemingly endless question of the distinction between matters relating to contract and tort [1] within the meaning of Article 7 of the Brussels I bis Regulation and once again fails to provide a satisfactory solution.

As in the Brogsitter case, the present case dealt with an action between contracting parties based on the breach of rules which are considered, at least in domestic law, to belong to the law of torts. A German hotelier – the now famous Wikingerhof – decided to take action against the well known online platform Booking, established in the Netherlands, seeking an injunction prohibiting certain conducts provided for in Booking’s general terms and conditions. In particular, the plaintiff alleged that Booking had, without its consent, placed a reference to “preferential prices” or “discounted prices”, that it had been deprived of access to the contact information provided by its contracting partners via the platform and that it had made the hotel’s positioning dependent on a specifically high commission.

The difficulty inherent in classifying this type of situations, based on tort provisions but exercised between contracting parties [2], had been singularly aggravated by the famous Brogsitter judgment which had, in this respect, laid down the following rule: an action for liability based on tort rules in national law but brought between contracting parties is a matter of contract “where the conduct complained of may be considered a breach of the terms of the contract, which may be established by taking into account the purpose of the contract”.

Case law subsequent to the Brogsitter judgment had in fact reflected this, in particular with regard to the thorny question of liability actions for termination of established commercial relations, especially when base on French law (former Article 442-6, I, 5° now Article 442-1, II of the French Code de commerce).

Yet, in every respect, even if nothing expressly indicates it, the Wikingerhof judgment constitutes a complete reversal of the Brogsitter judgment (I), reintroducing, in a questionable manner, the distributive approach of the Kalfélis judgment (II) and substituting a new criterion, loosely based on previous case law (III) and consequently raising the question of the durability of certain recent solutions (IV).

I. A Discreet Turnaround

Even if at no time does the Court say so and even if, in his opinion, Advocate General Saugmadsgaard Øe cleverly tries to claim the contrary, the Wikingerhof judgment is a pure and simple repudiation of the Brogsitter case law.

In this respect, the judgment is particularly laconic, which is in stark contrast to the Advocate General’s opinion, simply stating that an action falls within the scope of the matters relating to a contract within the meaning of point 1 of Article 7 “if the interpretation of the contract between the defendant and the applicant appears indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter” (para. 32), thus taking up a passage along these lines from the Brogsitter judgment (para. 25), and specifying that if the contrary is the case, if it is not necessary to examine the content of the contract, then the action will belong to the matters relating to tort, delict or quasi-delict within the meaning of point 2 of Article 7 (para. 33).

This presentation must be read in the light of Mr Saugmadsgaard Øe’s opinion, which refers to and distinguishes between two possible interpretations of the Brogsitter judgment. According to a first approach, which he calls “maximalist”, a claim would fall within the scope of contractual matters “if the conduct complained of may be considered a breach of the terms of the contract” (para. 69), whereas, according to a “minimalist” interpretation, a claim would fall within the scope of contractual matters when “the interpretation of the contract between the defendant and the applicant appears indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter” (para. 70).

It was this second – minimalist – approach that was advocated by the Advocate General and which was adopted by the Court, thus repudiating the maximalist reading.

However, it will not escape anyone’s notice that the quotation illustrating the so-called maximalist reading is in fact the actual operative part of the Brogsitter judgment. Despite the ingenuity of the Advocate General’s approach, it is quite clear that by repudiating the so-called maximalist reading, the Court of Justice has here made a complete reversal, abandoning the contribution of the Brogsitter Case.

There is a notable difference here with the French Cour de Cassation, which is more and more frequently staging its reversals of case law [3], where, out of loyalty to its predecessors or perhaps out of humility, the judges of the Court of Justice never actually say that they are making a case law reversal.

The judgment thus reverts to a distributive logic, typical of the Kalfelis judgment: actions between contractors will be either tortious or contractual, depending on the rules on which they are based.

II. The Principle of a Distributive Approach

Whereas the Brogsitter judgment largely implied an absorption of the tort by the contractual part, i.e. a submission of all actions between contracting parties to the forum of the contract as soon as the conduct complained of could be regarded as a breach of contractual obligations, the present judgment focuses essentially on the nature of the rules on which the application is based, which has three damaging consequences.

Firstly, a dispersal of the dispute. It will often happen that the same contractual dispute will give rise to both tort and contract aspects, especially when the applicable laws will, like English and German law, leave the plaintiff an option in this respect. In such cases, the two aspects of the dispute, which are like two sides of the same coin, will be dealt with by two different courts. It might be tempting to object that Article 4 remains available in this case and allows the entire dispute to be referred to the judge of the defendant’s domicile, but this option is left to the plaintiff’s discretion, which brings us to the second difficulty.

The solution then aggravates the procedural imbalance between the parties. By multiplying the number of judges likely to be competent, here according to the basis of the claim, we multiply the power of the one who has, in practice, control of the option: the plaintiff. This inequality is in itself an anomaly in a trial which is normally based on the principle of equality of arms, and the Advocate General cannot agree with him when he considers that forum shopping is not in itself a problem and only becomes so in the event of abuse (para. 86 et seq.). In our view, Forum shopping, which benefits only one of the parties, is always, inherently bad.

Finally, the solution becomes truly impracticable when the resolution of the dispute depends on both tort and contractual aspects. Let us take the example of an action brought on the basis of a tort but which comes up against the principle of non-cumul [4]. In such a case, the court hearing only the tort aspect will either have to disregard the contractual aspects for which it has no jurisdiction and therefore give an inappropriate decision, or take them into account in dismissing the tort action but not rule on the contractual aspect.

This second solution, advocated by the Advocate General (para. 88), is not more convincing. It must be understood that the court would then have to consider the contractual aspect in its entirety, and thus determine the content of the contract, the extent of the obligations imposed by the stipulations and by the law applicable to it and the position of that law as regards the option or non-cumul question, but could only draw the consequence, in the event of non-cumul, of dismissing the action based on tort and would be obliged to refer the resolution of the contractual aspect to the forum of the contract. Such a solution would be, at the very least, a very poor administration of justice and a great waste of time and, at worst, a source of major inconsistencies. It is enough to imagine that the two successive judges would adopt different positions as to the law applicable to the question of cumulative liability.

It is therefore in many respects unfortunate that the European Court of Justice has decided to return to the distributive approach of the Kalfelis case law.

However, contrary to what the Kalfelis judgment might have suggested, it is not the classification in national law that will determine the nature of the tort or contract, but an autonomous classification and for the purposes of the Regulation, which presupposes a criterion.

However, in this respect, the desire to maintain the appearance of continuity with the Brogsitter case law leads the Court to endorse a largely flawed criterion.

III. The Chosen Criterion

The concern to maintain the illusion of continuity in the case law, and in particular continuity with the Brogsitter judgment, led the Court to uphold what was probably the most questionable point in that decision: the “test” which, in the logic of that judgment, was to determine “where the conduct complained of may be considered a breach of the terms of the contract”. In order to determine whether this is the case, the Brogsitter judgment advocated checking wether “the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter ” (paras 24 and 25).

This test is particularly questionable because it is completely incapable of taking account of the subtle interweaving of legal rules and contractual provisions, it being furthermore recalled that, as the Advocate General observes, the methods of coordination of the two orders of liability vary from one country to another (paras 55 and 56).

Indeed, the effect of a contract is always to alter the pre-existing legal order, in particular by making unlawful what would have been lawful in the absence of the contract or by making lawful what would have been unlawful in the absence of the contract. Thus, even where the action will be based on an extra-contractual provision in domestic law, it will often be necessary to interpret the contract in order to determine whether or not the conduct complained of was lawful. An example of this is an action brought by the holder of intellectual property rights against his licensee for exceeding the rights granted. The interpretation of the contract is necessary to determine whether or not the rights granted have been exceeded. However, assuming that the rights have been exceeded, illegality would arise from the rules governing the author’s monopoly, in the same way as if there were no contract at all. In this respect, the objections proposed by Mr. Saugmadsgaard Øe, who takes the view that the criterion involving the interpretation of the contract would apply only to the claim and not to any defences, are not really convincing (paras 105 et seq.).

All in all, the other criterion mentioned by the Advocate General, distinguishing between, on the one hand, “the stipulations of a contract and/or rules of law which are applicable because of that contract” and, on the other hand, “rules of law which impose a duty on everyone, independently of any voluntary commitment”, would have seemed infinitely more accurate and more practicable to us.

It corresponds to the idea of “plus contractuel” [5], perfectly expressed by Lord Goff, according to which “the law of tort is the general law, out of which the parties can, if they wish, contract” [6].

It is an approach of this kind that should undoubtedly prevail in matters of conflict of laws, for the application of the Rome I and Rome II Regulations [7].

However, in matters of jurisdiction, the question arises in a different way. The question of jurisdiction often arises at the beginning of the dispute, at a time that necessarily calls for simplicity. In French law, moreover, the question arises concretely in a phase with a single judge – the juge de la mise en état – and it is in this respect necessary to simplify as much as possible the treatment of questions of qualifications. For this reason, as explained above, it is preferable to adopt a global and non-distributive approach, contrary to what might be done for the conflict of laws [8].

IV. The Survival of Intermediate Case Law

This change of course raises a question of scope, in terms of the solutions adopted since the Brogsitter judgment and, at least in part, based on them.

In particular, the European Court of Justice held in a Granarolo case that an action for the termination of commercial relations must be classified as contractual where there is a “tacit contractual relationship” (whatever that is) between the parties. Following the new logic of the Wikingerhof judgment, such a solution could probably not be renewed. In fact, the conduct complained of – i.e. the termination of established commercial relations – is sanctioned by the former Article L. 441-6, I, 5° (now L. 442-1, II) of the French Commercial Code whether or not there is a framework contract binding the parties. This is even its main interest. It is therefore a rule “which imposes a duty on everyone, independently of any voluntary commitment” and, obviously, since it is a mandatory legal obligation, the lawful or unlawful nature of the conduct complained of does not in any way imply an interpretation of the contract which may bind the parties.

This remark reflects on many other hypotheses and in particular the “pratiques restrictives de concurrence” (restrictive practices of competition) which appear in Articles L. 442-1 et seq. of the Commercial Code and similar provisions in other legal systems.

In all these cases, such practices are prohibited in any event, whether or not there is a contract between the parties. In fact, the prohibition of “subjecting or attempting to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties” in Article L. 442-1, I, 2° of the Commercial Code is very similar to the abuse of a dominant position under German law at issue in the commented judgment.

Is it to be inferred from this that, henceforth, all actions based on restrictive practices of competition would necessarily fall within the scope of tort, even between contractors?

And what about actions relating to these unbalanced clauses and seeking their annulment? In the area of conflict of laws, the European Court of Justice has ruled that the assessment of the lawfulness of contractual terms is a matter for the Rome I Regulation, even where the action is brought by a third party to the contract, in this case a consumer protection body. Is this solution obsolete?

Or should a distinction be drawn according to the purpose pursued by the action, holding that an action seeking to have a contractual stipulation declared null and void would be contractual in nature, even where that nullity results from a rule of conduct binding on everyone?

If so, in the event of an action seeking to challenge a clause that is unbalanced, there would then be two competent judges: the forum of the tort for the action for liability stricto sensu and the action for an injunction and the forum of the contract for the annulment, which would add to the dispersion of the litigation.

The judgment provides few answers to all these questions. More than ever, it would be necessary for the Court of Justice to take a higher view and to consider all the solutions that it infers from the qualifications it adopts as a whole.

 

[1] On this matter, see in particular V. Heuzé, “De quelques infirmités congénitales du droit uniforme: l’exemple de l’article 5. 1 de la Convention de Bruxelles du 27 septembre 1968”, Rev. crit. DIP 2000, p. 589 s., M.-E. Ancel, P. Deumier, M. Laazouzi, Droit des contrats internationaux, 2nd ed., 2019, § 106 et s. ; H. Gaudemet-Tallon, M.-E. Ancel, Compétence et exécution des jugements en Europe, 6th ed., 2018, § 186 et seq.; J.-S. Queginer, Le juge du contrat dans l’espace judiciaire européen – Qualification et détermination d’une compétence spéciale, th. Lyon 3, 2012; M. Minois, Recherche sur la qualification en droit international privé des obligations, LGDJ, 2020.

[2] On which see, in particular, S. Bollée, “La responsabilité extracontractuelle du cocontractant en droit international privé », in Mélanges en l’honneur du Professeur Bernard Audit, LGDJ, 2014, p. 119.

[3] For a recent and very clear example, see Cass. civ., 1st, 18 déc. 2019, n° 18-12.327 and n° 18-11.815, D. 2020. 426, note S. Paricard ; ibid. 506, obs. M. Douchy-Oudot; ibid. 843, obs. Régine; AJ fam. 2020.131; ibid. 9, obs. A. Dionisi-Peyrusse ; RTD civ. 2020. 81, obs. A.-M. Leroyer; Dr. fam. 2020, comm. 39, note J.-R. Binet; adde. S. Bollée, B. Haftel, “L’art d’être inconstant – Regards sur les récents développements de la jurisprudence en matière de gestation pour autrui”, Rev. crit. DIP 2020.267.

[4] In some systems, such as French law, where the same fact can theoretically constitute both a tort and a breach of contract, the plaintiff has no choice and can only act on the contractual ground, which is generally referred to as the principle of non-cumul.

[5] J. Huet, Responsabilité délictuelle et responsabilité contractuelle. Essai de délimitation entre les deux ordres de responsabilités, th. Paris II, 1978, especially n° 672; see also B. Haftel, La notion de matière contractuelle en droit international privé – Etude dans le domaine du conflit de lois, th. Paris II, 2008, especially. n° 618 et s.

[6] Henderson v. Merrett Syndicates [1994] 3 All ER 506 [532].

[7] See B. Haftel, op. cit.

[8] On the idea of an independence between the qualifications adopted in the field of jurisdiction and the one to be adopted in the field of conflict of laws, see B. Haftel, “Entre ‘Rome II’ et ‘Bruxelles I’: l’interprétation communautaire uniforme du règlement ‘Rome I'”, JDI 2010, no 3, doctr. 11, and, for the opposite view, see T. Azzi, “Bruxelles I, Rome I, Rome II: regard sur la qualification en droit international privé communautaire”, D. 2009, p. 1621.

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