The CJEU on the Breach of a Jurisdiction Clause as a Ground for Non-Recognition of a Judgment

On 21 March 2024, the CJEU delivered its judgment in case C-90/22, Gjensidige. 

The case is concerned with two main issues. The first one is the interplay between the CMR and the Brussels I bis Regulation regarding their respective provision on choice of court agreement. Based on Article 31, read in conjunction with Article 41, (1) of the CMR, the plurality of jurisdiction grounds offered to the plaintiff should not be limited by a jurisdiction clause. By contrast, the prorogation of jurisdiction under the Brussels I bis Regulation is, in principle, exclusive unless the parties have agreed otherwise (Article 25 (1)). The second issue deals with the grounds for non-recognition of a foreign judgement, in case of breach by the court of origin of a jurisdiction clause, under Brussels I bis Regulation (Article 45).

The CJEU resolved both issues by “dissolving” the first into the second. It held that the infringement of a jurisdiction clause by the court of a Member State is not a ground for non-recognition of the judgment in another Member State.

Background

The case was concerned with the aftermath of the theft of computers during their transportation from the Netherlands to Lithuania. Gjensidige, the insurance company of the transport company, paid an indemnity to the client under the insurance contract. The transport company brought proceedings in the Netherlands seeking a declaration that its liability was limited.

The contract for international carriage contained a clause granting jurisdiction to a Lithuanian court. However, the transport company brought the action seeking the declaration of limited liability before a Dutch court, based on CMR grounds of jurisdiction. Gjensidige, the insurer, challenged – unsuccessfully – the jurisdiction of the Dutch court based on the said jurisdiction clause. Then, it brought a recourse action against the transport company before the Lithuanian court designated by the clause.

The Lithuanian supreme court raised several questions of interpretation summarised above, i.e. CMR/Brussels I bis interplay on jurisdiction clauses and grounds for non-recognition of judgments based on the breach of a jurisdiction clause. It provided extensive elements of analysis for the CJEU with the dominant underlying idea of “giving precedence to the will of the parties”. However, the Court of justice, with no surprise, does not follow this path.

Contours of the Requested Interpretation

To begin with, the CJUE makes two key adjustments to the request for interpretation. First, it reformulates the questions referred in order to solely focus on the question of recognition of foreign judgments. Second, the Court “removes” the complex issue of the relationship between the CMR and the Brussels I bis Regulation by referring to Article 71(2) (b) of the Regulation (which provides that “judgments given in a Member State by a court in the exercise of jurisdiction provided for in a convention on a particular matter [here the CMR] shall be recognised and enforced in the other Member States in accordance with this Regulation”).

I leave it to CMR specialists to assess this “interpretative rationalisation”.  But the political orientation is clear: the CJEU’s objective is to ensure that the intra-EU circulation of decisions prevails, including in an international multi-level regulatory scheme (i.e. here in relation to the CMR, see in particular paras 45-46 of the judgment).

CJEU Response

The Brussels I bis Regulation prohibits (in principle)  any review of indirect jurisdiction. Infringement of a clause granting jurisdiction, even if it is exclusive with respect to direct jurisdiction, is no exception. It is therefore not allowed in the European judicial area to limit the circulation of a foreign judgment (here, in Lithuania) delivered in another Member State (here, in the Netherlands) on the ground of breach of a jurisdiction clause by the court of origin (in casu the Dutch court).

Two uncertainties raised by the referring court are dispelled by the CJEU. The first relates to the exceptions allowing review of indirect jurisdiction pursuant to Article 45 (1) (e): cases of exclusive jurisdiction under Article 24 and protective jurisdiction grounds for weaker parties. Article 25 is “literally” not covered. The second stems from the classic ground of breach of public policy pursuant to Article 45 (1) (a), in its procedural dimension. According to the Court, it does not operate because the breach of the relevant jurisdiction clause cannot be analysed in casu as infringing the fundamental right to a fair trial.

Assessment

The solution is a further confirmation of the prevalence of the principle of mutual recognition of foreign judgments in civil matters. We already had strong examples in the past of this strict interpretation of non-recognition grounds under the “Brussels system”, such as in the Liberato case regarding the non-compliance with the lis pendens rules by the court of origin. By requiring recognition of the foreign judgment, the ruling is therefore consistent with the existing case law.

At the same time, as regards its substantive result, the predictability for the parties is failing. The transport company obtained a solution on the merits in the Netherlands that it would maybe/probably not have been able to obtain before Lithuanian courts. But the CMR itself may encourage forum shopping by multiplying the number of grounds of jurisdiction for the plaintiff. Eventually, this interpretation of the Brussels I bis Regulation might not contradict the CMR ratio legis.

In a comparative law perspective, the French common law of foreign judgments provides for a different solution with respect to foreign judgments not covered by EU law. French courts assess the indirect competence of the foreign court liberally, unless the foreign court taking of jurisdiction violated an exclusive  ground jurisdiction in favor of French courts (see Civ., 1st Chamber, 6 February 1985, Simitch, n° 83-11.241). The French Cour de cassation recently held that such exclusive grounds of jurisdiction include a jurisdiction clause disregarded by the court of origin (see Civ., 1st Chamber, 15 mai 2018, Sopam, n° 17-17.546) and denied enforcement to the foreign judgment on that ground. Outside the scope of EU law, mutual trust is not a valid motto!