The Never-Ending Diesel Saga – CJEU Rules in MA v FCA Italy et al.
So-called ‘defeat devices’, which mimic low carbon dioxide emissions of Diesel cars during tests, have been a problem not just for car purchasers but also for the CJEU. In the case VKI v VW, the Court had to decide on the place at which the purchaser may file a claim against the car manufacturer. As will be remembered, it ruled there that the place of damage under Article 7 No 2 Brussels I bis Regulation is where the vehicle “has been purchased”. Right away, it was remarked that it may be challenging to determine, especially when the place of contracting diverges from that of delivery (see my comment on VKI v VW).
The New Case
The recent decision in MA v FCA Italy et al. proves the point. An Austrian resident had bought a caravan from a German dealer, which was produced by Fiat Chrysler Automobiles (FCA) and fitted with a defeat device (yes, the Italians have cheated too!). The contract was signed in the dealer’s office in Germany, yet it was delivered at the dealer’s warehouse in Salzburg, Austria (picture: RT&Partner). This led to the question of where the vehicle had been ‘purchased’ in the sense of the precedent
The referring court (the Austrian Supreme Court) had three different possibilities for the place of purchase: (1) the place where the contract was concluded, (2) the place where the car was delivered, or (3) the place where the car was normally used.
The Ruling
The CJEU discards possibility (1) because the contractual arrangements for acquiring the vehicle would be irrelevant for the manufacturer’s tortious liability (para 37). It also rejects (3) because it would not meet the objective of predictability (para 42).
Instead, it opts for (2), i.e. the place where the car was delivered to the final purchaser. This place would meet the objective of predictability, as the manufacturer must expect to be sued there (para 41).
Assessment
The CJEU’s reasoning is not free from doubt. Imagine the parties had signed the contract in the purchaser’s country of residence, where the car was also used primarily, but delivery had taken place abroad, e.g. to save taxes. Would the court have still given priority to the place of delivery in this situation? Or would it have rather considered this place as being coincidental and instead preferred the home country of the purchaser?
The hypothetical shows that the delivery alone was probably not the only reason why the court sustained the jurisdiction of the Austrian courts. More likely, the place of residence of the purchaser and the place where the car was to be used also played a role in the equation.
Reifying the place of delivery as the place of damage is in itself not a good idea. It creates further problems, as is already well known from Article 7 No 1 Brussels I bis, e.g. in case of delivery by carriage. Also, it would be strange from a conceptual point of view if the contractual stipulations between the seller and the buyer could determine where the manufacturer can be sued. Such a ‘contractualisation’ of the place of damage would not only be contrary to the quintessential distinction between contractual and tortuous liability under Art 7 No 1 and 2 Brussels Ibis , but also violate the principle res inter alios acta. And without further limits, manufacturers may find themselves in the courts of a country in which they have never marketed their cars, which would undermine the predictability of the forum.
Conclusion
While the result achieved in the present case was certainly right, the CJEU may have created bad law by referring exclusively to the place of delivery. One should read the decision with a pinch of salt. Despite the overly rigid tenor of the judgment, a holistic approach to damage localisation, which takes into account all the circumstances of the case, still seems most apt.
— Thanks to Paul Eichmüller for reviewing this post.
The decision almost gives the impression that the ECJ borrowed from Art. 5 Rome II in order to assess international jurisdiction. This is also supported by the ECJ’s explicit reference in para. 41 to the foreseeability of the goods being placed on the market in Austria.
Many thanks for this comment, Mr Savigny! The idea of a parallel to Art 5 Rome II is really interesting, but nothing less was expected from a PIL genius. There are three major differences, though: 1. the reference to the place of acquisition of the product in Art 5(1)(b) is only the second connecting factor of the provision (if Art 4(2) is included, even only the third), 2. the provision does not refer to the place of acquisition in isolation, but only when the product was also marketed there, and 3. the application of this law is subject to the foreseeability from the point of view of the manufacturer, Art 5(1) subpara 2. The latter two points could be seen as an expression of a more holistic approach.