European Union: Civil and commercial matters

Point 1 of art 24 of Regulation (EU) No 1215/2012 should be interpreted as meaning that an action by which a co-owner of immovable property sought to prohibit another co-owner of that property from carrying out changes, arbitrarily and without the consent of the other co-owners, to the designated use of his or her property subject to co-ownership, as provided for in a co-ownership agreement, had to be regarded as constituting an action ‘which has as its object rights in rem in immovable property’ within the meaning of that provision, provided that that designated use could be relied on not only against the co-owners of that property, but also erga omnes, which it was for the referring court to verify. The Court of Justice of the European Union (First Chamber) so held, among other things, in proceedings between Ellmes Property Services Ltd, established in the UK, and the respondent, concerning the use of immovable property subject to co-ownership.

The applicant (EPSL), was a company established in the United Kingdom. That company and the respondent were co-owners of an apartment building in Zell am See, Austria. EPSL was also the owner of an apartment in that building which had been designated for residential purposes. It used that apartment for touristic purposes by regularly renting it out to holidaymakers.

By an action for a cessation order brought before the District Court, Zell am See, Austria, SP sought the cessation of that ‘touristic use’, on the ground that it was contrary to the designated use of that building and arbitrary, failing any consent on the part of the other co-owners, with the result that such use interfered with SP’s right of co-ownership. As regards the jurisdiction of that court, SP relied on the exclusive jurisdiction provided for in the first subparagraph of point 1 of art 24 of Regulation (EU) No 1215/2012 (the Regulation), which stated that: ’The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated. …’

That court declined jurisdiction, holding that the dispute before it concerned a private-law use agreement between the co-owners concerned and did not directly affect the legal position of those co-owners with regard to a right in rem. On appeal, the Regional Court, Salzburg, Austria varied that order, dismissing the objection of lack of jurisdiction raised by EPSL. According to that court, the designated use of a property subject to co-ownership was based on a private-law agreement of the co-owners in the form, as a rule, of a co-ownership agreement. The designation of such property for a specific use and the adherence to the use thus defined were among the absolutely protected rights in rem of co-owners.

EPSL appealed on a point of law to the Supreme Court, Austria (the referring court). That court took the view that the action in question could fall under exclusive jurisdiction under the first subparagraph of point 1 of art 24 of the Regulation (point 1 of art 24) or, alternatively, special jurisdiction under point 1(a) of art 7 of that regulation. In that context, the referring court noted that, under Austrian law, co-ownership, as the right of a co-owner exclusively to use property subject to co-ownership, constituted a right in rem protected against interference by third parties and by the other co-owners. It further noted that, under Austrian law, the co-owners had entered into a contractual relationship voluntarily by virtue of the co-ownership agreement.

In those circumstances, the Supreme Court stayed the proceedings and referred certain questions to the Court of Justice of the European Union (the Court) for a preliminary ruling.

(1) Whether point 1 of art 24 of the Regulation should be interpreted as meaning that an action by which a co-owner of immovable property seeks to prohibit another co-owner of that property from carrying out changes, arbitrarily and without the consent of the other co-owners, to the designated use of his or her property subject to co-ownership should be regarded as constituting an action ‘which has as its object rights in rem in immovable property’ within the meaning of that provision.

Article 24 of the Regulation provided for rules of exclusive jurisdiction, in particular in proceedings which had as their object rights in rem in immovable property, which, as a derogation from the general rule in art 4 that the courts of the member state in which the defendant was domiciled were to have jurisdiction, should be interpreted strictly. As regards the exclusive jurisdiction of the courts of the member state in which the property was situated, provided for in point 1 of art 24 of Regulation, an independent definition should be given in EU law to the phrase ‘in proceedings which have as their object rights in rem in immovable property’, in order to ensure its uniform application in all the member states (see [22], [23] of the judgment).

That jurisdiction did not encompass all actions concerning rights in rem in immovable property, but only those which both came within the scope of that regulation and were actions which sought, first, to determine the extent, content, ownership or possession of immovable property or the existence of other rights in rem therein and, second, to provide the holders of those rights with protection for the powers which attached to their interest. In that context, the Court had also ruled that it was not sufficient that the action concerned a right in rem in immovable property or that the action had a link with immovable property in order to give rise to the jurisdiction of the court of the member state in which the property was situated. On the contrary, the action had to be based on a right in rem and not on a right in personam. Further, according to settled caselaw, the difference between a right in rem and a right in personam lay in the fact that the former, existing in corporeal property, had effect erga omnes, whereas the latter could be claimed only against the debtor (see [24]-[26] of the judgment).

Consequently, point 1 of art 24 of Regulation should be interpreted as meaning that an action by which a co-owner of immovable property sought to prohibit another co-owner of that property from carrying out changes, arbitrarily and without the consent of the other co-owners, to the designated use of his or her property subject to co-ownership, as provided for in a co-ownership agreement, should be regarded as constituting an action ‘which has as its object rights in rem in immovable property’ within the meaning of that provision, provided that that designated use could be relied on not only against the co-owners of that property, but also erga omnes, which it was for the referring court to verify (see [33] of the judgment).

Norbert Reitbauer and Others v Enrico Casamassima C-722/17 considered; Milivojevic v Raiffeisenbank St. Stefan-Jagerberg-Wolfsberg eGen C-630/17 considered.

(2) Whether point 1(a) of art 7 of the Regulation should be interpreted as meaning that, where the designated use of immovable property subject to co-ownership provided for by a co-ownership agreement could not be relied upon erga omnes, an action by which a co-owner of immovable property sought to prohibit another co-owner of that property from carrying out changes, arbitrarily and without the consent of the other co-owners, to that designated use had to be regarded as constituting an action ‘in matters relating to a contract’, within the meaning of that provision. If so, the referring court sought to ascertain whether the place of performance of the obligation on which that action was based was the place where the property was situated.

It was essential, for point 1(a) of art 7 to apply, to identify an obligation, since the jurisdiction of the national court under that provision was determined by the place of performance of the obligation in question. Accordingly, the application of that rule presupposed the establishment of a legal obligation freely consented to by one person towards another and on which the claimant’s action was based. Further, the Court had already held that co-ownership of an apartment building was established through voluntary acquisition of an apartment together with ownership shares of the communal areas of the property, so that an obligation on the co-owners in respect of the co-ownership had to be regarded as a legal obligation freely consented to (see [37], [38] of the judgment).

Point 1(a) of art 7 had to be interpreted as meaning that, where the designated use of immovable property subject to co-ownership provided for by a co-ownership agreement could not be relied upon erga omnes, an action by which a co-owner of immovable property sought to prohibit another co-owner of that property from carrying out changes, arbitrarily and without the consent of the other co-owners, to that designated use had to be regarded as constituting an action ‘in matters relating to a contract’, within the meaning of that provision. Subject to verification by the referring court, the place of performance of the obligation on which that action was based was the place where the property was situated (see [47] of the judgment).

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