Brussels Regulation: which takes priority - contract or tort claim?

In Brogsitter -v- Fabrication de Montres Normandes EURL¹ the European Court of Justice considered how to reconcile the two potentially competing alternative bases for establishing jurisdiction under the Brussels Regulation, namely (i) in matters relating to a contract, the place of performance of the obligation in question (Article 5.1); and (ii) in matters relating to tort, where the harmful event occurred or may occur (Article 5.3). Which takes precedence if both could apply?

Facts

The claimant and defendant had entered into a contract under which the defendant was to develop luxury watch movements for the claimant. The defendant, in parallel, developed other watch movements which it marketed. The claimant alleged a breach of contractual exclusivity obligations owed by the defendants.

The claimant began proceedings in tort in Germany under a German Law against Unfair Competition. The defendant contested jurisdiction on the basis that the French courts had jurisdiction as the place of performance of the contract was in France. The German court referred the matter to the ECJ. The question was whether a tortious claim must nevertheless be regarded as "matters relating to a contract" falling within the meaning of Article 5.1 of the Brussels Regulation.

The ECJ decision

The ECJ held that the existence of a binding contractual relationship was not sufficient by itself to mean that a civil liability claim concerned "matters relating to a contract". A claim will concern "matters relating to a contract" where the conduct complained of may be considered a breach of contract which may be established by taking into account the purpose of the contract. This would be the case where the interpretation of the contract is "indispensable" in establishing whether the conduct complained of is lawful or not.

It was for the national court to determine whether it has to take into account the contract to decide the action. If that is the case, those civil claims concern "matters relating to a contract" even if they are also claims in tort under the national law of another state. As a result, if the place of performance of the contract is located in one contracting state, that state shall have jurisdiction in preference to another state in which a tort may have been committed under the latter state's national law.

Please click on the links below for the other articles in the April 2014 Commercial Litigation Newsletter:

• Service: recent developments
• Failure to respond to a request for mediation is in itself unreasonable
• Settlement: recent developments
• Changing experts: full disclosure and timely notice required
• Impact of contractual exclusion clauses on the availability of injunctive relief
• Deciphering Part 36: the saga continues
• Litigation privilege: the dominant purpose test revisited
• Court news: CPR update and other developments
• Collective actions update: "opt-out" coming to a competition claim near you
• Reforms to judicial review: Part II

_Notes:

_{¹ 2014 EUECJ C-548/12, 13 March 2014.}