Alberto De Franceschi

Jurisdiction over sales contracts under the Brussel I regulation: the relevance of standard trade terms

In Electrosteel Europe SA v Edil Centro SpA the Court of Justice of the European Union was asked to determine whether and under which circumstances standard trade terms may be relevant to the operation of Article 5(1) of the Brussels I regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.1 Under this provision, a person domiciled in a Member State may be sued in another Member State, “in matters relating to a contract”, before the courts for the place of performance of the obligation in question. The Court was concerned, more particularly, with the first indent of Article 5 (1)(b), whereby, “unless otherwise agreed”, the place of performance is, “in the case of the sale of goods”, the place in a Member State where the goods have been delivered, or should have been delivered, “under the contract”. In its judgment of 9 June 2011,3 the Court held that the seised court, in order to verify its jurisdiction under the said provision, must ascertain in the first place whether the parties have agreed on a place of delivery. For this, account must be taken “of all the relevant terms and clauses ... which are capable of clearly identifying that place, including terms and clauses which are generally recognised and applied through the usages of international trade or commerce, such as the Incoterms drawn up by the International Chamber of Commerce in the version published in 2000”. Relying on its own judgment of 25 February 2010 in the case of Car Trim GmbH v Key Safety Systems Srl, the Court further held that, where the place of delivery cannot be determined in accordance with the provisions of the contract, without referring to the applicable substantive law, Article 5(1)(b) should be understood as conferring jurisdiction to the courts for the place “where the physical transfer of the goods took place, as a result of which the purchaser obtained, or should have obtained, actual power of disposal over those goods at the final destination of the sales transaction”.5 In this paper, we argue that the Court’s reasoning in Electrosteel is not entirely convincing. Our remarks are twofold. On one side, we claim that the judgment fails to distinguish between two different functions that standard trade terms are in principle capable of performing in respect of the substantive (and jurisdictional) regulation of a contractual relationship. Trade terms, in fact, may either be incorporated into the contract by virtue of an agreement of the parties, or come into play on “objective” grounds so as to supplement the contractual terms and statutory provisions by which the contract is governed. On the other side, we contend that the Court’s judgment, by stating that standard trade terms are relevant to Article 5(1) provided that they are capable of “clearly identifying” the place of performance of the obligation in question, fails to give an appropriate account of the issues that may arise in connaction with those terms in transnational commercial litigation.