CJEU Rules Claims for Unjust Enrichment need not be Contractual or Delictual for Jurisdictional Purposes
On 9 December 2021, the CJEU delivered its judgment in HRVATSKE ŠUME d.o.o., Zagreb v. BP EUROPA SE (Case C-242/20).
The main issue before the Court was whether a claim for unjust enrichment fell necessarily within the scope of the jurisdictional rule for contracts (Article 5(1) Brussels I Regulation, today Article 7(1) Brussels I bis Regulation) or the jurisdictional rule for delicts and quasi-delicts (Article 5(3) Brussels I Regulation, today Article 7(2) Brussels I bis Regulation), or whether it could fall in neither and thus fall within the scope of the general rule granting jurisdiction to the courts of the domicile of the defendant.
The Court followed the Advocate-General’s Conclusions and ruled that a claim for unjust enrichment which was not contractual in nature would not fall necessarily within the scope of the jurisdictional rule for delicts.
Background
The request was referred by the Visoki trgovački sud Republike Hrvatske (Cour d’appel de commerce, Croatie). The questions, still on the Brussels I Regulation, were asked in the context of a dispute between a company incorporated under Croatian law, and a company established in Hamburg (Germany), over a sum of money seized on the bank account of the first company and transferred to the assets of the second as part of an enforcement procedure. As this procedure was subsequently invalidated, the applicant in the main proceedings sought restitution of the sum in question on the basis of unjust enrichment.
The first question referred by the Croatian court was:
- Do actions for recovery of sums unduly paid by way of unjust enrichment fall within the basic jurisdiction established in Council Regulation (EC) No 44/2001 … in respect of ‘quasi-delicts’, since Article 5(3) thereof provides inter alia:: ‘A person domiciled in a Member State may, in another Member State, be sued … in matters relating to … quasi-delict, in the courts for the place where the harmful event occurred or may occur’?
Judgment
The CJEU ruled that the claim was neither contractual, nor delictual, and thus fell within the scope of the general jurisdictional rule of the domicile of the defendant.
The reasons given by the Court are essentially based on the language of the relevant provisions and, perhaps also on its structure.
First, the Court recognises that claims for unjust enrichment could be related to a contract, and thus be characterised as contractual in character.
The most interesting part of the judgment relates to those claims which are not related to a pre-existing contractual relationship. The Court rules that such claims do not fall within the scope of Article 5(3) / 7(2) either. The main reason given by the Court is that Article 5(3) / 7(2) refers to ‘harmful events’ and thus should be interpreted as applying only where such events are concerned. Yet,
55. A claim for restitution based on unjust enrichment is based on an obligation which does not originate in a harmful event. That obligation arises irrespective of the defendant’s conduct, with the result that there is no causal link that can be established between the damage and any unlawful act or omission committed by the defendant.
A widely shared view, which was defended by the Commission in this case, was that Article 5(3) / 7(2) was a residual rule, and that all claims based on obligations which would not fall within the scope of Article 5(1) / 7(1) should be considered as delictual for jurisdictional purposes. The view is clearly rejected.
The result is indeed the opposite. While it seemed before this case that most claims based on unjust enrichment would fall within the scope of Article 7(2), the Court suggests that it will amost never be the case.
Another potential argument supporting the conclusion of the Court is mentioned at the outset, but it is unclear whether it genuinely considers it as important. The Court reiterates that special rules of jurisdiction should be interpreted restrictively. Thus, if a particular claim does not clearly fall within the scope of any of the special rules (e.g. Article 7(1) and (2) Brussels I bis), they should not apply.
The case was also concerned with the scope of the exclusive rule in Article 22(5) Brussels I. The Court found that:
36. In the absence of any application for enforcement, an action for restitution based on unjust enrichment does not come within the scope of Article 22(5) of Regulation No 44/2001.
Thank you Gilles for this interesting post. I note you have not commented on the decision, which is perhaps wise!
My initial view is that this is another wrong turn by the CJEU in grappling with Art 7(2) [using current numbering from Reg 1215/2012]. Ever since Kalfelis, we have had a bright-line rule that actions seeking to establish liability are within Art 7.1 or 7.2. The Reichert decision provided an exception, but in that case an actio pauliana could be explained away as not seeking to establish liability.
Now, for the first time, we have an action that plainly seeks to establish liability but which deviates from that clear bright line rule. I predict it will cause trouble in all kinds of non-contractual situations which are not obviously founded on a harmful act or omission by the defendant. What about claims for contribution between co-debtors (the Ergo problem) for example? Or cases of strict lability in the absence of either fault or damage?
Yes, this decision is based on a simple reading of the wording; but from Bier onwards we have had a purposive interpretation of this provision. It would have been much better if the court had interpreted Art 7(2) purposively as applying to all non-contractual liability actions.
Oh, and it means I will have to un-teach some of what I have taught my studens this term! Grrr.
At least they got the 22(5) pointright.
Thanks for providing the comment, dear Alex !
I always shared the interpretation, and taught, that Art 7(2) was a residual category. In this context, the judgment is disappointing insofar as it focuses on the language of Art. 7(2). I do agree that the issue was too important to avoid a discussion on the purpose of the provision. But what is it? Is it providing a simple option between contracts and torts and avoiding endless characterization debates?
I have always thought that all matters with a foreign element in EU jurisdiction rules that are civil and not contractual automatically fall within Article 7(2) of Brussels Ibis. In other words, Article 7(1) and Article 7(2) are mutually exclusive.
I will have to read this case to understand the reasoning of the CJEU. This ruling comes as a surprise to me – the creation of a special rule for unjust enrichment in Brussels Ibis.
I agree that the reasoning of the judgment might not be entirely compelling, but I can live with the result. What would persuade me much more than what was said in the judgment is the following: my feeling is to put far more focus on the predictability requirement (Recital 15 Brussels I bis). Let’s say we would allow unjust enrichment to fall under 7(2). The only reasonable criterion for establishing jurisdiction I can think of would be the place where the defendant enriched himself. Now, in plain words, it is not the enriched person’s fault that he was enriched – no action of his contributed to this situation (acknowledged even in para. 55 of the judgment). Is it, therefore, predictable for the enriched person to be sued in the place where the enrichment occurred if his actions had zero contribution to this event? I would answer in the negative – it is not predictable. For the enriched person, the place of enrichment is close to random. If I live in Slovakia and have a bank account in Czechia and I receive money to that account and the payer sues me for unjust enrichment in Czechia (place where the enrichment occurred), should I be forced to defend myself at Czech courts while the whole event is first and foremost the payers fault? I hold that this is not predictable for me. Therefore, I agree with the verdict, but I would be happy to see the aforementioned idea used in the judgment, naturally in a much more sophisticated form.
It is not even whether the court seised would consider liability to be based on a harmful event (is a refusal to return something which one has found a harmful event? is the refusal to repay that which one has received a harmful event?), but whether in some autonomous world, or metaverse, the defendant’s actions are seem as a harmful event, for “matters relating to tort, delict or quasi-delict’ cannot be taken to refer to the way in which the legal relationship at issue before the national court is classified by the applicable national law (see, by analogy, judgment of 24 November 2020, Wikingerhof, C‑59/19, EU:C:2020:950, paragraph 25”. The W variant appears to be spreading. Merry Christmas.