The long arm of the law - ECJ confirms French courts' jurisdiction over Amazon foreign website

On 21 December 2017, the European Court of Justice (ECJ) ruled that the French courts had jurisdiction to hear an action where the harm from infringement of a selective distribution agreement occurred in France, even though the breach of the agreement happened outside France, through foreign websites.

>Concurrence, a French retailer of consumer electronics, entered into a selective distribution agreement with Samsung. However, Samsung terminated the agreement following the breach by Concurrence of a prohibition on online sales. Concurrence contested the Samsung online sales policy, which it considered to be inconsistently applied to Samsung distributors, some of whom sold the products via various Amazon websites. It launched an action requiring Samsung to continue to supply it and, separately, ordering Amazon to stop selling certain Samsung products through its websites. The lower French courts ruled that they had no jurisdiction over foreign Amazon websites, as they operated outside France and were not directed at French customers, but the French Supreme Court, the Cour de cassation, referred the question of jurisdiction to the ECJ.

The "Brussels I Regulation" sets out the EU rules which govern the jurisdiction of Member State courts where litigation has a cross-border aspect. Article 5(3) of the Regulation provides that in matters relating to non-contractual liability, a person domiciled in a Member State may be sued in the courts of "the place where the harmful event occurred or may occur". The Cour de cassation asked the ECJ to rule, essentially, on whether the French courts had jurisdiction simply because the foreign websites were accessible from France or whether some additional connecting factor was needed.

The ECJ found two connecting factors which were sufficient to give jurisdiction to the French courts. First, a natural link existed between France and the dispute since the contractual provision in question was given effect by French law. Secondly, the harm claimed by Concurrence (reduced sales and resulting loss of profits) occurred in France. It was therefore irrelevant that the websites concerned operated outside France.

The ECJ's ruling reflects a trend towards cross-border jurisdiction of national courts. It is also consistent with the European Commission's current drive to remove borders and barriers for cross-border online sales within the EU. The wider question of whether it is legal at all for a supplier to prohibit sales by its distributor via online marketplaces has also been referred to the ECJ, and judgment is awaited.

We would like to acknowledge the contribution of Julie Tirtiaux, Ashurst. 

If you would like to view any other articles in the Competition newsletter February 2017 please click on the links below:

• Open Banking: can APIs transform the banking landscape?
• Audible and Apple agree to end exclusive deal in relation to audiobooks
• An open and shut case? CMA draws furniture parts cartel case to a close
• Is the tide turning for MasterCard?
• EU court slaps its own wrist with damages for excessively long proceedings