The Brussels Convention on Jurisdiction and Judgments (an International Treaty laying down rules for which country’s courts have jurisdiction when there is a dispute between contracting parties based in different countries) is presently being reviewed by the European Union’s legislative bodies with a view to introducing an updated version designed to cater for new media.
Topic: Jurisdiction
Who: Montague Evans and Neil Young When: June 2000 (reported September 2000)
Where: Scottish Court of Session, Edinburgh
What happened:
The Brussels Convention on Jurisdiction and Judgments (an International Treaty laying down rules for which country’s courts have jurisdiction when there is a dispute between contracting parties based in different countries) is presently being reviewed by the European Union’s legislative bodies with a view to introducing an updated version designed to cater for new media. Broadly, the B2B rules at present are that absent express contract wording dealing with jurisdiction, the courts of the country where the “obligation in question” in the dispute has to be performed will have jurisdiction. In B2C cases the courts of the country where the consumer is resident will normally have jurisdiction. Whether that remains the same following the current review of the Brussels Convention is a highly charged question. The most recent development in the saga was a vote by the European Parliament to continue with the position where the courts of the consumer have jurisdiction and rejecting a proposed carve-out for sales on-line where the terms of the sale clearly state that the courts of the supplier’s country will have jurisdiction.
In the Scottish case the difficulties that can arise when there is no clause in a contract covering jurisdiction were highlighted. Montague Evan brought proceedings in the Scottish courts against UK-based Neil Young for payment of an introduction fee in respect of the disposal of a portfolio of property in which he had an interest. This was a “B2B” case in which payment was the “obligation in question” in the dispute. The question was whether the Glasgow office of Montague Evans was the sole place of performance of that obligation. The Scottish case law indicated that in order to succeed in this claim Montague Evans had to show that they were entitled as a matter of contract to insist that payment should only be made at their Glasgow offices and not in some other location which might be south of the border. The fact that the initiative for the transaction in the first place had occurred at Montague’s offices in Scotland and the partner in charge had been based there did not prove decisive since the properties in the portfolio were spread across the UK as a whole. The court could find no circumstance which entitled Montague Evans to absolutely require Young to pay the money in Scotland, and on that basis the Scottish courts declined jurisdiction, leaving Montagues to go back to the drawing board and bring proceedings against Young in England.
Why this matters:
In B2C cases it is often the case that a jurisdiction clause will be ineffective so as to deprive the private consumer of certain rights which are protected by public law, for instance rights in the UK under the Sale of Goods Act. However, in B2B cases, a jurisdiction clause in the contract can be decisive and it is critical that all standard form B2B contracts specify the country whose court will have jurisdiction and which country’s law will apply.
