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Document 82020EE1208(51)

Ringkonnakohus Tallinn; 2020-12-08; YY;XX; 2-20-3168/45

JURE summary

JURE summary

This case regards a question of international jurisdiction of the Estonian courts in a dispute arising from a sale contract, which was resolved by the Tallinna Ringkonnakohus (hereinafter ‘the Court of Appeal’).

At the centre of this dispute was a real estate owned by a Latvian company which was mortgaged in favour of the Estonian company (hereinafter ‘the defendant’). However, the mortgage obligation was later declared null and void by an arbitrary court. The real estate was later sold to another company and the defendant was involved in the sale contract as a third party. Pursuant to the sales contract, the existing obligations in favour of the third parties had to be cancelled and therefore, the defendant received EUR 425 000 because of the mortgages.

An Estonian debt collection company (hereinafter ‘the plaintiff’) acting on behalf of the owner claimed that the sum was paid without any legal basis, since the mortgages in question, previously agreed in favour of the defendant, were already declared null and void. The plaintiff applied before the Harju Maakohtu (hereinafter ‘the Court of First Instance’) and sought an order declaring unjust enrichment and the repayment of EUR 425 000.

The defendant relied on the jurisdiction clause of the sales contract, agreed in favour of the courts in Latvia, and objected to the jurisdiction of the Court of First Instance. The plaintiff replied that the jurisdiction clause in the sales contract cannot be automatically applied to the subsequent claim based on alleged unjust enrichment and, pursuant to Article 4 of the Brussels I Regulation (recast), the action was correctly brought before the Court of First Instance as the court for the place of defendant’s domicile.

The Court of First Instance held that the dispute was still initially based on the sales contract. The jurisdiction must respect the prorogation of jurisdiction as agreed in the sales contract in compliance with Article 25 of the Brussels I Regulation (recast). The Court of First Instance a declared lack of its jurisdiction and dismissed the action.

The plaintiff appealed arguing that the defendant was only a third party to the contract, it was neither seller nor a buyer and, therefore, cannot invoke the jurisdiction clause contained in the sales contract. Conversely, the jurisdiction must be assessed under the general jurisdictional clause provided by Article 4 of the Brussels I Regulation. The Court of First Instance dismissed the appeal and forwarded it to the Court of Appeal.

The Court of Appeal assessed the documents of the case as well as new evidence submitted by the plaintiff. It was a judgment of a court in Riga (Latvia), according to which a claim between the same parties based on the same cause of action was already dismissed by the Latvian courts due to a lack of jurisdiction of the Latvian courts, suggesting that the Estonian courts would be proper to hear the dispute. The Court of Appeal cited Recital 22 of the Brussels I Regulation (recast) and the legal literature, according to which only the court designated by the agreement conferring jurisdiction may assess its own jurisdiction over the specific dispute. The Court of Appeal cannot come to a different conclusion as the one already presented by the Latvian court. The plaintiff must have the opportunity to enforce its rights in at least one national court. In a situation where an Estonian court would also refuse to hear the case, this would lead to a negative conflict of jurisdiction, where both of two Member States refused to hear the action on the grounds of a lack of jurisdiction. As the Latvian court has already found that there is no agreement on jurisdiction between the parties applicable, then the jurisdiction must be determined according to Article 4 of the Brussels I Regulation (recast). Therefore, the jurisdiction lies with the Estonian courts, especially with the Court of First Instance.

The Court of Appeal granted the appeal, annulled the first instance order and referred the case back to the Court of First Instance for further proceedings.

(1) Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.