CJEU CONFIRMS APPLICABILITY OF SPECIAL JURISDICTION PROVISIONS UNDER THE BRUSSELS IA REGULATION

On 24 November 2020, the Court of Justice of the European Union (CJEU) handed down a decision on the applicability of Article 7(2) of Regulation No 1215/2012 (the Brussels Ia Reg) to competition law disputes in a preliminary reference relating to an action by German hotel Wikingerhof GmbH & Co. KG (Wikingerhof) against Booking.com BV (Booking.com).

The question before the CJEU was whether Article 7(2) Brussels Ia Reg – which allows claimants to bring actions before the national courts in the jurisdiction in which a harmful act has occurred – was applicable to a claim regarding an alleged breach of competition law where the parties concerned had entered into a contractual relationship.

The CJEU confirmed that Wikingerhof could, in principle, bring an action before a court in a Member State in which the hotel was established (i.e. where the harmful act has occurred) in order to oppose a possible abuse of a dominant position by Booking.com. It clarified that the special provision in Article 7(2) Brussels Ia Reg was applicable even though the contested conduct was implemented in the context of a contractual relationship.

Background to the case

In 2009, Wikingerhof concluded a contract with online platform and hotel-booking service provider Booking.com to list its rooms on the online platform. Part of the contractual provisions were Booking.com’s mandatory terms and conditions (T&Cs). The T&Cs – which the company updated periodically – contained a dispute resolution clause affording the Amsterdam (NL) courts exclusive jurisdiction in case of a future dispute between the parties.

In 2015, following a new iteration of the T&Cs, Wikingerhof contested in writing to the new terms and subsequently brought proceedings before the German Regional Court in Kiel opposing them. Wikingerhof stated that – although it disagreed with the T&Cs – it did not have a choice but to accept them and various of Booking.com’s practices due to the latter’s strong position in the market. In particular, Wikingerhof asserted that certain practices constituted abuse of a dominant position in breach of German competition law and asked the court for an injunction in respect of the relevant conduct. This included Booking.com’s practices of:

• Marking Wikingerhof’s prices as “discounted” or “rebated” on its website without the hotel’s consent;
• Not giving the hotel access to customers’ contact details to allow communication other than through the online platform; and
• Only accepting to include Wikingerhof in the ranking on its website if Wikingerhof paid an additional 15% in commission fees.

The first instance court dismissed the action on the ground of lacking jurisdiction. A decision which was upheld by the appellate Higher Regional Court in Schleswig. On further appeal, the German Federal Supreme Court held that the exclusive jurisdiction clause in favour of the Dutch courts, as contained in the T&Cs, had not been validly entered into so as to comply with the requirements under Article 25 Brussels Ia Reg. However, this left the question (i) whether Article 7(2) Brussels Ia Reg applied to competition law claims – as asserted by Wikingerhof – and thus allowed for proceedings at the place where the harmful act has occurred, i.e. in this case Germany; or (ii) whether Article 7(1) Brussels Ia Reg was applicable which provided for legal recourse at the place where the contractual obligation was performed, i.e. in this case, Booking.com’s offices in the Netherlands.

The German Federal Supreme Court referred the case for clarification to the CJEU enquiring:

“whether [Article 7(2) Brussels Ia Reg] applies to an action seeking an injunction to stop certain practices implemented in the context of the contractual relationship between the applicant and the defendant, based on an allegation of abuse of a dominant position by the latter in breach of competition law”.

CJEU confirms applicability of Article 7(2) Brussels Ia Reg

In its decision, the CJEU followed the recommendations by Advocate General Saugmandsgaard Ør (the AG). The Court acknowledged that, whilst Article 4 Brussels Ia Reg envisaged for proceedings to generally be brought at the seat of the defendant, Articles 7(1) and (2) Brussels Ia Reg constitute special provisions which allow deviation from the general rule.

The applicability of those special provisions depended on two main factors: (i) the applicant bringing an action has to seek reliance on one of the provisions; and (ii) the subject-matter of the action has to fall within the established scope of either Article 7(1) (i.e. contractual matters) or Article 7(2) (i.e. matters relating to tort or delict). Whether this is the case is for the court to decide before which the action was lodged. The CJEU went on to clarify that an action concerns:

• a contractual matter if the interpretation of the contract between the parties constitutes an indispensable aspect in determining whether the conduct in question was lawful or not; and
• a matter relating to tort or delict (e.g. breach of a statutory obligation) if “it does not appear indispensable to examine the content of the contract” in order to establish the lawfulness of the conduct.

The CJEU further adopted the ‘minimalist’ approach recommended by the AG in respect of ‘mixed’ cases, i.e. actions which could, depending on the interpretation of the circumstances, relate to either (i) obligations deriving from contractual arrangements between the parties or (ii) statutory obligations that existed irrespective of the parties’ contractual commitments. As such cases could give rise to the dilemma of which special provision should take precedence, AG Saugmandsgaard Ør had advised that the relevant court should ‘zoom in’ and determine the core subject-matter on which a claim was based. If a claimant brought an action relying in essence on a right derived from a contract or voluntary commitment between the parties, then Article 7(1) Brussels Ia Reg would be invoked. In contrast, if the substance of the claim concerned the breach of a general obligation and rights derived from such a misconduct, then Article 7(2) Brussels Ia Reg would apply.

The action brought by Wikingerhof was based on German competition law which contains a general prohibition of abusive conduct by a dominant undertaking in the market. This obligation of competition compliance is separate from and applies irrespective of any contractual provisions or voluntary commitments between the parties. The substantive question at the core of the dispute was therefore, in the CJEU’s view, whether Booking.com had abused a dominant position in Germany. The fact that the relevant conduct formed part of contractual provisions between the parties was secondary in nature.

Whilst leaving the ultimate assessment to the referring court, the CJEU opined that in such circumstances, where a claimant is claiming on the basis of a statutory competition obligation, the legal action relates to a matter of tort or delict in the meaning of Article 7(2) Brussels Ia Reg and thus allows that claimant to bring its action in the Member State where the harm has occurred.

According to the CJEU, this interpretation was also in line with the Regulation’s aims of geographic proximity and the administrative of justice, as the competent court under Article 7(2) Brussels Ia Reg – i.e. the court in the Member State in which the anticompetitive conduct has allegedly occurred and whose market is most likely affected – would be best placed to decide on the substantive aspects of the claim.

Implications

The Wikingerhof decision provides some clarity on the jurisdiction in which affected parties may bring damages actions or other forms of legal recourse in the context of competition law infringements.

It is particularly noteworthy that the CJEU stresses the question whether a contract is “indispensable” to decide on the matter, as this seemingly establishes a new threshold test for national courts which did not exist in this form before. It remains to be seen how courts will deal with this criterion. Prima facie, one could assume that contractual arrangements are of less importance in case of competition law motivated disputes. Based on this reading, the decision would take a step in the direction of allowing claimants to bring actions in the jurisdiction where the harmful act has occurred (which often coincides with the claimants’ home jurisdictions).

On the other hand, if a claimant decides to base its claim mainly on contractual obligations or rights arising out of them (which might be less likely in competition law cases), a court would likely have to come to the conclusion that the contract is “indispensable” to determine the lawfulness of the conduct.

Moving forward, the question of jurisdiction will, therefore, still depend on how a case is presented to a court and a creative claimant might still have the choice of a forum shopping between the contractually foreseen place of jurisdiction and where the alleged harm occurred.

If parties would like to have more certainty on the jurisdiction question, Article 25 Brussels Ia Reg might of course provide a way out, provided the parties comply with the necessary requirements listed in the article. If they follow all the steps, the provision offers parties the possibility to specify a  particular court (or courts) that should have jurisdiction in the event of a dispute. In that case, a potential assessment of the applicability of Articles 7(1) or (2) Brussels Ia Reg by the national court may be circumvented.

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