Case law Developments in PIL

Danish Supreme Court on the Existence of a Contract for the Purposes of Brussels I bis

According to Article 7 point 1 of the Brussels I bis Regulation, proceedings in matters relating to a contract may be brought in the courts for the place of performance of the obligation in question.

For the rule to be applied, it needs to be a matter relating to a contract. The issue of whether there was a contractual relation or not arose before Danish courts in a case between a Swedish and a Danish company.

In a judgment of 27 September 2022, the Danish Supreme Court held that the existence of a contract must be made “sufficiently probable”.

The background to the case was that the two companies, both in the real estate sector, had had informal cooperation with each other. In an exchange of e-mails representatives for the companies discussed future businesses. The Danish company meant that the exchange of e-mails constituted contractual obligations for the Swedish company under the Brussels I bis Regulation. As arguments for this understanding, the Danish company meant that there was an agreement on payment for the potential broking of a deal. On the other hand, the Swedish company meant that the parties traditionally had had a “friendly relation”, in which they had helped each other without the payment of any fees.

The Danish Supreme Court held that according to established Danish case law, the legal burden of proof in those matters is that the existence of a contract must be “sufficiently probable” (“tilstrækkeligt sandsynliggjort”). The court held that this burden of proof was met as the e-mails indicated that the Swedish company was willing to pay a broker’s fee if it could establish contact with a buyer of its Swedish property portfolio. Hence, the court concluded that the relation between the companies had a contractual ground and that it was a service agreement in the meaning of the simplification rule in article 7 point 1, lit. (b). As the place of performance for such contracts is in the country where the services are provided, Danish courts should have jurisdiction according to the Supreme Court.

It is notable that the Danish Supreme Court referred to Danish case law instead for CJEU case law for the issue of whether a tacit contractual relationship existed. Older CJEU case law indicated that the issue was to be done according to national law (see e.g. Effer SpA v. Kantner, C-38/81 para 7). However, in its more modern case law, the CJEU has given more detailed instructions for how a tacit contractual relation should be proven. In the CJEU judgment Granarolo, C-196/15, the CJEU held that

[d]emonstration of the existence of a tacit contractual relationship of that kind must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.

Even if the Danish burden of proof rule seems to be compatible with the Granarolo test, it would have been preferable if the Danish Supreme Court expressly recognized the modern developments of the CJEU by referring to the CJEU case law and applying the criteria set out there.

4 comments on “Danish Supreme Court on the Existence of a Contract for the Purposes of Brussels I bis

  1. Dear Erik, Many thanks for the news. Since the Brussels Ibis Regulation is not applicable in Denmark, I am wondering whether the decision relates to the agreement between Denmark and the EU dated 19 October 2005, which is identical to the Brussels I Regulation. Do you know by any chance whether this agreement has been updated since? Best regards, Matthias

  2. Erik Sinander

    Dear Matthias,

    Thanks for your comment. Yes, the 2005 agreement was updated in 2013 and Denmark applies the Brussels I bis Regulation. The notification on this update was published in the Official Journal in 2013, see the following link: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:079:0004:0004:EN:PDF

    Best,

    Erik

  3. Zarmanian Thalin

    I believe that the attempt of the ECJ to overcome the limits of characterization made by national courts might be harming rather than helping a uniform application of IPL. The ECJ should abstain from trying to find “autonomous concepts” of law: this search for simplification does trump years of legal evolution in member states and creates an absurd double standard whereby a “contract is a contract is a contract” when a matter is entirely domestic and it ceases to be one (for non-compelling reasons) the moment there’s a transnational element to it.

    • Erik Sinander

      I am not sure I fully understand your comment. The fact that the legal concepts in the EU PIL regulations are to be interpreted autonomously is, at least as I see it, crucial for uniformity and foreseeability. Therefore, certain criteria need to be met for e.g. a legal relationship to be a contract under the Brussels I bis Regulation. Here, the ECJ has reiterated that a contract must consist of obligations that the parties have freely assumed towards each other (see e.g. Handte, C-26/91). The burden of proof issue, which was in question in the Danish case above, is not explicitly regulated in the Brussels I bis Regulation. It is therefore a matter for national law to fill out and complete the regulation. When doing so, the EU principle of effectiveness sets the limit. The national burden of proof level may not undermine the application of EU law. I think it is in the light of this that one shall read the burden of proof test made in the Granarolo judgment. As I see it, the burden of proof issue is still to be made under national procedural law. Granarolo only sets some minimum requirements for what to consider in that evaluation.

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