Two connected cases ruled upon by two courts from two different member states, that’s possible!
Article 8.1 of the EU regulation 1215/2012 defines the principles:
«A person domiciled in a Member State may also be sued (outside his domicile and the place of contract):
1°) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings».
What do we mean by «so closely connected» and «irreconcilable judgments»?
The Court of Justice of the European Union (first chamber, 20 April 2016, No C-366/13) gave its opinion and clarified as follows: «where two actions — which have different subject-matters and bases and which are not connected by a link of subordination or incompatibility — are brought against several defendants, the fact that the upholding of one of those actions is potentially capable of affecting the extent of the right whose protection is sought by the other action does not suffice to give rise to a risk of irreconcilable judgments within the meaning of that provision.»
The Court ruled by enforcing article 6.1 of EU regulation 44/ 2001 whose provisions are similar to those of EU regulation 1215/2012.
In that instance, a company governed by Italian law, issued proceedings before the court of Milan against its holding company, who had purchased bond securities, seeking a declaration of liability for mismanagement, and against the German bank, seeking a declaration of nullity of the bond acquisition agreements.
According to the CJEU, the fact that the outcome of one of the proceedings may have an impact on the other proceedings is not sufficient to consider that there is a risk of irreconcilable judgments.
It is the national judges’ responsibility to assess the existence of a related action as well as the existence of a risk of irreconcilable judgments. The Court’s reasoning shows that these are two independent conditions and that the risk of irreconcilable judgments only appears in cases where the actions are linked. There must be a dependency link between the actions, to the extent that the result of one dispute would impact the result of the other.
In France, the Court of cassation (5 April 2016 N° 13- 22491) deemed that the presence of identity of fact and law was solely sufficient to characterise the risk of irreconcilable judgments.
This was a forgery case where a French court was asked to rule on companies incorporated in different member states for forgery acts of a community model and unfair competition.
The defenders belonged to the same group, did business under the same trading name, had the same supplier of contentious product and sold on the European territory the same and only product, under the same brand and presented in the same way on website that were different but similar.
Another example of enforcement of this regulation 1215/2012 is a decision from the Court of Appeal of Rouen dated 26 October 2017. In that instance, a Belgian company had completed in Brussels the sale of a movable item with a French company. As payment of the price, the French company had given a cheque for the amount agreed. Later, the buyer had requested a stop payment on the cheque on the grounds of theft in the first instance, then for fraudulent use in the second instance, deeming that the sale was invalid. The seller company had obtained release of the stop payment and the cheque had been paid.
The buyer had then initiated proceedings before the French court against the bank for paying the cheque despite the stop payment, and the bank had called in guarantee the Belgian seller by asserting that if the cheque needed to be reimbursed, the bank would be subrogated to the rights of the buyer and could ask for invalidity of the sale on the grounds of vitiated consent. The Belgian seller had pleaded the French court’s lack of jurisdiction in favour of the Belgian court, place of residence of the defender and place of the sale. The court had to decline jurisdiction.
The Court of appeal deemed that the two cases were based on different legal grounds, with the proceedings for payment of the cheque on the one hand, and for invalidity of the sale on the other hand, and that article 8.1 should not apply, because there was no risk of irreconcilable judgments.
Also, the bank invoked article 8.2 of EU regulation 1215/ 2012 on guarantee proceedings which provides that the defender can also be sued in the court seised of the original proceedings: «if it is an action in guarantee or an application for action in the court seised of the original proceedings, unless these were instituted solely with the object of removing the party sued from the jurisdiction of the court which would be competent in his case».
The Court of Appeal of Rouen deemed the connection between the two cases insufficient enough to justify application of the provisions in article 8.2, especially since the proceedings against the Belgian seller required the assessment of the contractual relationship with the French buyer, contract which was naturally within the Belgian courts’ jurisdiction.
To conclude, proceedings for stop payment of a cheque given as payment of the selling price and invalidity of the sale proceedings can be ruled on by two courts from different member states.
Paris & Normandy