Commercial law

By Coral Hill, editor, Legal Network TV

Suing holiday tenants outside the jurisdictionDansommer A/S Case C-8/98 ECJ (2000)The Dansommer case concerns art.16(1) of the Brussels Convention.

This states that when there is a claim in relation to immovable property the country where the property is situated has exclusive jurisdiction.

The reason for giving the court local to the property jurisdiction is that it will be better placed to carry out any assessments, inspections etcetera, which may be required.

In addition, the court will be aware of the local practices and rules of the tenancy.

This resulted in some unfairness where the property was let for short holidays.

As a result art.16(1) was amended by the San Sebastian Convention.

Art.16(1)(a) still gives exclusive jurisdiction to the country where the property is situated.

However, art.16(1)(b) adds that where the property is let for a maximum of six months there is a choice of courts.

The claimant can either sue where the property is situated or the place where the defendant is domiciled provided that both the tenant and landlord are domiciled in the same state and are natural persons.

In Dansommer, a German national rented a holiday property in Denmark for a period of two weeks.

The contractual relationship was with a Danish company, the agent for the owner of the property.

The owner of the property was a Danish individual domiciled in Denmark.

At the end of the two week holiday, the property was found to be in a bad state and Dansommer, the agent, paid money to the owner of the property for that damage.

Dansommer was subrogated to the owner's rights and brought a claim against the German national for breach of contract.

Proceedings were brought by Dansommer in Germany as that was where the tenant was domiciled.

However, the question arose as to whether Denmark in fact had exclusive jurisdiction pursuant to art.16(1)(a) of the Brussels Convention.

Clarification was sought from the ECJ.

The substance of the question referred to the ECJ in Dansommer was whether art.16(1)(a) applies where all that the tour operator does is to provide accommodation together with some insurance but no other services and where the owner of the property and the lessee of the property are not domiciled in the same state.

The issue of other services which may have been provided is important because of the ECJ case of Hacker [1992] ECR I-IIII Case C-280/90.

Here there was a short let of a property but it was part of a complex contract concerning a range of services and so was not caught by art.16.

As a result in Hacker the defendant could be sued in his place of domicile.

In the Dansommer case the ECJ ruled that the issue of domicile was not relevant given the characteristics of this particular tenancy.

Equally the intermediary of the company as agent prevented it falling within art.16(1)(b).

Whether a tenancy falls within the ambit of art.16(1)(a) depends ultimately on the attributes of the particular tenancy which is before the court.

Where, for example, the tenancy is a bare letting, it is much easier for the court to regard that as falling within the scope of art.16(1)(a).

Where there are other attributes, such as the provision of cleaning services by one of the parties, there may be some difficulty in fitting that contract within art.16 in which case the domicile of the parties will be relevant.

Although art.16(1)(b) was designed to assist a holiday-maker renting a property it would seem that in practice there will still be situations where the jurisdiction of the court will depend on art.16(1)(a) because for example a company has been used as a letting agency.

Reform of the Brussels Convention 1968Proposal for a council regulation on jurisdiction and enforcement of judgments in civil and commercial matters COM (1999) 348 final 99/0154 (CNS)It has been recognised for some time that the Brussels Convention needs to be modernised.

Wholesale revision of the convention is not anticipated but clearly there needs to be provision for issues such as e-commerce which did not exist when the convention was originally drafted.

The proposed regulation will also improve the uniformity of rules applied and simplify the formalities for rapid recognition and enforcement of judgements.At present the proposal includes four main innovations.

First in relation to art.2 the concept of domicile of natural persons is maintained but an autonomous definition of the seat of a legal person is suggested.

Second, the alternative jurisdiction for contracts under art.

5(1) has been reframed.

A new rule has been adopted for provision of services and sale of goods which decreases the possibility for member states to apply a non-uniform approach.

A specific rule has been introduced to determine the place of performance of the obligation in question and therefore to determine the court which will have jurisdiction in relation to those disputes.

Third, the scope of the provisions on consumer contracts has been extended and finally, an autonomous definition provided of the date on which a case is 'pending'.

The CPR & pending proceedings under the Brussels Convention Molins plc v GD SpA, Court of Appeal, The Times, 29 March 2000Part 6 of the CPR provides that proceedings may be served by fax subject to certain restrictions, in particular, that a party must have indicated in writing a willingness to receive proceedings by fax and have specified the fax number to be used.

In this case Molins had issued proceedings in the English court and served them on GD in Italy on 30 July.

GD had also issued proceedings relating to the same substantive issues in Italy.

It arranged for service by fax on Molins in England on 19 July.

The requirements of Part 6 of the CPR were not observed.

The dispute concerned which court was first seised of the action.

Art.21 of the Brussels Convention provides that any subsequent court 'shall of its own motion stay its proceedings...'

Proceedings are pending under English law once service is effected.

The service by GD by fax was defective and therefore the English court was the first seised.

The Court of Appeal held that no stay would be granted.