1. 

The Convention of Brussels of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters provides, as the Court is aware, that in the field of contracts the “courts for the place of performance of the obligation in question” may also have jurisdiction (Article 5 (1)). That place is not always defined by rules of law alone; the contracting parties may agree to fix it, thereby producing the indirect result of invoking a “special jurisdiction” in terms of the Brussels Convention.

On the other hand, the exclusive jurisdiction of a court or of the courts of a Contracting State may be directly conferred by the parties, by means of an appropriate agreement conferring jurisdiction, which is required by Article 17 to meet certain conditions of form and substance. The issue raised by the request for a preliminary ruling on a question of interpretation which has been referred to the Court by the German Bundesgerichtshof [Federal Court of Justice], and which is the basis of this case, is that of comparing contractual clauses determining the place of performance and agreements conferring jurisdiction, in order to see whether the restrictive conditions applicable to the latter ought to be considered applicable to clauses of the former kind.

In this case a German national, resident in Munich, Bavaria, (Zeiger), claiming to have lent a sum of money to an Italian national, resident in Sicily (Salinitri), and to be still owed a part of that sum, sued the alleged debtor in the Landgericht München [Munich Regional Court]. According to the plaintiff, that court had jurisdiction because, at the time, the parties had agreed orally that the repayment of the loan would be made in Munich. The defendant disputed the existence of both the obligation and any agreement concerning the place of performance.

The Landgericht, by judgment of 18 April 1977, declared that it did not have international jurisdiction since it was unable to hold that an oral agreement on the place of performance could have any bearing on jurisdiction, within the meaning of Article 5 (1) of the Convention, and thus circumvent the provisions of Article 17 which permit the prorogation of jurisdiction only by means of an agreement in writing or an oral agreement evidenced in writing. In holding that it lacked jurisdiction, the German court proceeded upon the rule of German law which provides that, unless otherwise agreed, the place of performance of a contractual obligation is the residence of the debtor (Article 269 of the Bürgerliches Gesetzbuch) [German Civil Code].

The decision at first instance was upheld on appeal by the Oberlandesgericht München [Munich Higher Regional Court] by judgment dated 9 November 1977. That court held that the rule laid down in Article 17 of the Convention of Brussels, in the absence of express provision to the contrary, applied to all agreements conferring jurisdiction; and that agreements specifying the place of performance could therefore have no effect upon jurisdiction unless they fulfilled the formal requirements set out in Article 17.

The Bundesgerichtshof, to which the matter was taken on a point of law, by order of 15 March 1979 referred to the Court of Justice of the European Communities the following preliminary question:

“Does an informal agreement which is effective under national — in this case German — law between full-scale merchants (Vollkaufleute) concerning the place of performance of the obligation which is at issue in the proceedings suffice to found jurisdiction in that place under Article 5 (1) of the Convention, or is the capacity of such an agreement to found jurisdiction dependent upon observance of the form laid down in Article 17 of the Convention?”

2. 

I make the observation first of all that the issue has to be considered upon the hypothesis that two parties to a contract have concluded an oral agreement concerning the place of performance of the obligation which later forms the subject of dispute; it is not necessary to know whether, in this case, the hypothesis matches the true facts. For what it is worth, the plaintiff in the main proceedings maintained that there was also agreed, at the time, an oral agreement conferring jurisdiction, but that remains outside our purview.

In the view of the German courts of first and second instance, clauses conferring jurisdiction and those relating to the place of performance must be subjected to the same rules of form before the latter clauses may have a bearing on the issue of jurisdiction. But, in truth, the issue concerns two wholly different types of agreement: the one has a purely procedural purpose, the other a substantive purpose accompanied by a procedural result arising, independently of any specific intention of the parties, from the provisions of Article 5 (1). Further, agreements conferring jurisdiction give exclusive jurisdiction to the court or courts specified, with the consequence that they suspend the operation of both the general rule on jurisdiction (Article 2) and the rules relating to special jurisdiction (Article 5); whereas the place of performance, however determined, is the basis of a special jurisdiction which is concurrent with the general jurisdiction and any other equally special jurisdictions. Finally, jurisdiction settled upon pursuant to Article 17 leaves out of account any objective factor connecting the legal relationship in dispute and the chosen tribunal whereas jurisdiction based on Article 5 (1) is really warranted by the objective link which exists between an important aspect of the contract and the court recognized as having jurisdiction.

On a purely exegetical level, it has to be said that Article 17, in referring to agreements whereby the parties have “agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connexion with a particular legal relationship”, precisely describes their particular content, clearly distinguishing them from agreements which settle the place at which performance must take place.

In turn, Article 5 (1) contains nothing which would lead one to hold that it has in contemplation only the place of performance of the contractual obligation fixed ex lege and excludes a place agreed upon for that purpose by the parties in the exercise of the freedom of contract recognized by law.

In regard to the manner in which the criterion for jurisdiction laid down in Article 5 (1) is to be interpreted, reference has properly been made in the course of the present proceedings to the Judgment of the Court of 6 October 1976 in Case 12/76 Tessili v Dunlop [1976] ECR 1474. That judgment laid down that it was for the national court to determine, in accordance with its own rules of conflict of laws, the law governing the legal relationship in question and accordingly to determine, on the basis of that law, the place of performance of the contractual obligation in question. If, therefore, the law which is applicable gives to the contracting parties power to determine the place in which the obligation to be concluded is to be performed, without imposing any special requirements of form, the choice freely arrived at by the parties will be binding both for the purposes of the law governing the substantive elements of the contract and for the purposes of Article 5 (1) of the Convention of Brussels. To separate the one consequence from the other would mean holding that, although the contract was to be performed in the place fixed by the parties, the jurisdiction of the courts of that place could nevertheless not be recognized; but that would strike against both the letter and the spirit of the provision which has been cited and which, as I have already mentioned, reflects the idea that the location of the contract during the phase of its performance is sufficient to found jurisdiction in that same place.

A further support for the view which I have just set forth is provided by the argument which the Commission properly drew from Article I of the Protocol annexed to the Convention of Brussels. In the first paragraph of that article it is provided that any person domiciled in Luxembourg who is sued in a court of another Contracting State pursuant to Article 5 (1) may refuse to submit to the jurisdiction of that court; if the defendant does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction. In the second paragraph, a rule, also making an exception in favour of persons domiciled in Luxembourg, is drawn up in regard to Article 17, it being there laid down that agreements conferring jurisdiction shall be valid with respect to such persons only if they are expressly and specifically agreed. The manner in which the aforesaid two provisions are formulated and set out evidently implies that the system applying to the court of the place of performance and that applying to the selected court are two quite distinct things.

3. 

The answer to the question which has been referred to the Court therefore seems so clear that one may wonder how the courts of first and second instance were ever able to decide it differently. It is likely that they were influenced to a certain degree by the direction recently taken in the law of civil procedure in the Federal Republic, which has restricted both cases of prorogation of jurisdiction (by amending Article 38 of the Zivilprozeßordnung [Code of Civil Procedure]) and the possibility of founding jurisdiction on the place of performance of the contract where that is determined by means of agreement between the parties (Article 29 (2) of that Code has also been amended). There are naturally good reasons for this approach: the intention was to avoid the formal barriers against agreements conferring jurisdiction being circumvented by the specifying of the place of performance in agreements free of all formality so as to achieve, in the end, the same result — that of specifying a different court from the one generally having jurisdiction — by different and simpler means.

In my opinion the risk of that happening may be neither excluded nor ignored. The conditions prescribed by Article 17 are generally known to have been conceived with the intention of protecting the weaker party to the contract and, for the same reasons, a solution such as that recently adopted by German law in regard to the procedural result of agreements on the place of performance would be very welcome. Even though, during the oral procedure, the Commission declared itself satisfied with Article 5 as it stands, I consider that de lege ferenda the problem deserves to be examined again and I personally regret that the negotiation of the Convention of 9 October 1978 relating to the accession of the other three States to the Convention of Brussels of 1968 did not give rise to such a reexamination. Nor does it appear to me that the nature of the problem has been changed merely because, as the British Government observed in this case, the recent Convention diminished the formal requirements of Article 17; in truth, that diminution consisted in the recognition, as regards international trading relationships, of the forms which accord with practice and of which the parties are presumed to have ben aware but the rule has retained the criterion of subjecting the validity of an agreement conferring jurisdiction to certain conditions of form and substance.

The Commission concluded by saying that, if the selection of the place of performance is effective, then jurisdiction is well founded, leaving it to be seen what will be required to establish the true or fictional nature of the agreement to determine the place of performance. It will however be for the applicable national law to establish whether, and in what circumstances, a national court may possibly hold the selection to be fictitious and therefore of no effect or else declare that the parties have abused the power given to them in order to circumvent the formalities necessary for agreements conferring jurisdiction.

None the less, it remains settled that, under the scheme of the Convention, jurisdiction is effected by the place selected for performance of the contract, in whatever way that place may be determined (whether ex lege or by agreement between the parties and without any additional formality being required for the latter). Accordingly, in my opinion, the answer which ought to be given to the request for an preliminary ruling made by the Bundesgerichtshof by order of 15 March 1979 is as follows:

If the place of performance of a contractual obligation has been determined by the parties in an agreement which is valid under the national law applicable to the contract, the courts for that place have jurisdiction to take cognizance of disputes relating to that obligation by virtue of Article 5 (1) of the Convention of Brussels of 27 Septemer 1968, irrespective of whether the formal conditions laid down by Article 17 have been observed.