Schlosser Report

Official Journal of the European Communities No C 59/71

REPORT ON THE CONVENTION

on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of GreatBritain and Northern Ireland to the Convention on jurisdiction and the enforcement ofjudgments in civil and commercial matters and to the Protocol on its interpretation by the

Court of Justice

(Signed at Luxembourg, 9 October 1978)

by Professor Dr Peter SCHLOSSER

of the Chair of German, international and foreign civil procedure, of the general theory ofprocedure and of civil law at the University of Munich

Pursuant to Article 3 (2) of the Act of Accession of 22 January 1972 a Council workingparty, convened as a result of a decision taken by the Committee of PermanentRepresentatives of the Member States, prepared a draft Convention on the accession of theKingdom of Denmark, Ireland and the United Kingdom of Great Britain and NorthernIreland to the Convention of 27 September 1968 on jurisdiction and the enforcement ofjudgments in civil and commercial matters and to the Protocol of 3 June 1971 on itsinterpretation by the Court of Justice. This working party was composed of governmentexperts from the nine Member States and representatives from the Commission. Therapporteur, Mr P. Schlosser, Professor of Law at the University of Munich, drafted the

explanatory report which was submitted to the governments at the same time as the draftprepared by the experts. The text of this report, which is a commentary on the ConventioJ!of Accession signed at Luxembourg on 9 October 1978 , is now being published in this issueof the Official Journal.

No C 59/72 Official Journal of the European Communities

INDEX

CHAPTER 1

Preliminary remarks

..........................................................

CHAPTER 2

Reasons for the Convention

....................................................

A. The law in force in the new Member States

1. TheUnitedKingdom ............

....................................

2. Ireland ............................................................3. Denmark

.,........................................................

B. ExistingConventions ...................................................

C. General arrangement of the proposed adjustments

. . . . . . . . . . . . . . . . . . . . . . . . . .

1. Special structural features of the legal systems of the new Member States. . . .

2. Ambiguities in the existing text

.......................................

3. Further developments in the law of the original Member States of the EEC

4. Specific economic effects

.............................................

CHAPTER 3

Scope of the Convention .

......................................................

I. Matters involving international legal relationships

. . . . . . . . . . . . . . . . . . . . . . . . . .

II. Binding nature of the Convention

.........................................

III.Civilandcommercialmatters

............................................

A. 'Administrative law in Ireland and the United Kingdom

. . . . . . . . . . . . . . . . . . .

B. Administrative law in the Continental Member States

..................

1. The varying extent of public law

...................................

2. Choice of type of law

............................................

3. Relationship of public authorities to one another

. . . . . . . . . . . . . . . . . . . . .

C. Civilandcriminallaw

...............................................

IV. Matters expressly excluded

.........................................

A. Status or legal capacity of natural persons , rights in property arising out of amatrimonial relationship, wills and succession

. . . . . . . . . . . . . . . . . . . . . . . . . .

1. Maintenance judgments ancillary to status proceedings (Ancillarymaintenance judgments)

.........................................

2. Rights in property arising out of a matrimonial relationship

. . . . . . . . . . .

3. The remaining contents of Article 1 , second paragraph , point (1) of theConvention

.....................................................

Para. Page


B. Bankruptcyandsimilarproceedings "

1. General and individual types of proceedings excluded from the scope ofthe 1968 Convention "

2. Bankruptcy law and the dissolution of companies

. . . . . . . . . . . . . . . . . . . .

C. Social security "

D. Arbitration

......................................................

1. Decisions of national courts on the subject matter of a dispute despite theexistenceofanarbitrationagreement "

2. Other proceedings connected with arbitration before national courts

. . . .

judicial nature of proceedings and judgments............ "

1. Thelegalpositioni.nDenmark "

2. Article V of the Protocol and its effect

..............................

CHAPTER 4

jurisdiction

A. Generalrelnarks .

.....................................................,

1. First instance jurisdiction of the Superior Courts

. . . . . . . . . . . . . . . . . . . . . . . .

2. The concept of 'domicile ' and the application of the Convention

. . . . . . . . . . .

3. Discretionary powers regarding jurisdiction and transfer of proceedings

. . . .

B. Comments on the Sections of Tide II

Section 1 General provisions "

I. Detailed comments

1. Belgium 2. Denmark .

......~...............................................

3. Ireland.........................................................4. United Kingdom "

II. The relevance of the second paragraph of Article 3 to the whole structure the 1968 Convention

1. The special significance of the second paragraph of Article 3

....,......

2. Impossibility of founding jurisdiction on the location of property

. . . . .

Section2 Special jurisdictions "

I.Maintenanceclaims

..........................................,......

1. Theterm nlaintenance

' "

2. Adjustmentofmaintenanceorders "

II. Trusts

1. Problems which the Convention in its present form would create withregardtotrusts .......................................,..........

2. The solution proposed "

Para. Page

100

100

100

101

101

101

103

109

114

105

106


III. Admiralty jurisdiction ..............................

;................

1. Jurisdiction in connection with the arrest of salvaged cargo or freight

. . .

2. Jurisdiction to order a limitation of liability

. . . . . . . . . . . . . . . . . . . . . . . . .

3. Transitionalprovisions

...................................,.......

4. Disputes between a shipmaster and crew members. . . .

. . , . . . . . . . . . . . . .

IV. Other special matters

1. Jurisdiction based on the place of performance. . .

. . . . . . . . . . . . . . . . . . . .

2. Jurisdiction in matters relating to tort

............................,.

3. Third party proceedings and claims for redress.

. . . . . . . . . . . . . . . . . . . . . .

Section 3 Jurisdiction in insurance matters. . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I. Insurance contracts taken out by policy-holders domiciled outside theCommunity

..........................................,...........

1. Compulsory insurance ...................................,.......

2. Insuranceofimmovableproperty

................................,.

II. Insurance of large risks, in particular marine and aviation insurance

. . . . . . . .

1. Article 12a(1) (a)

.............................................,.

2. Article 12a(l) (b) .............................................,.

3. Article 12a(2) (a)

.......................................,.......

4. Article 12a(2) (b)

...............................................

5. Article 12a(3)

................................................,.

6. Article 12a(4)

................................................,.

III. The remaining scope of Articles 9 and 10

...............................

IV. Other problems of adjustment and clarification in insurance law

1. Co-insurance ...................................................

2. Insurance agents, the setting up of branches

. . . . . . . . . . . . . . . . . . . . . . . . .

3. Re-insurance

......................................,.............

4. The term 'policy-holder

' ..........................................

5. Agreements on jurisdiction between parties to a contract from the sameState

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 4 Jurisdiction over consumer contracts

I.Principles

..........................................................

II. The scope of the new Section

.........................................

1. Persons covered

.................................................

2. Subject matter covered

...........................................

3. Only a branch , agency or other establishment within the Community

. . .

4. Contracts of transport

...........................................

III. The substance of the provisions of Section 4

1. Subsequent change of domicile by the consumer

. . . . . . . . . . . . . . . . . . . . .

2. Agreements on jurisdiction "

Para. Page

121 108

122 108

124 109

131 111

132 111

133 111

134 111

135 111

136 112

137 112

138 113

13~ 114

140 114

141 115

142 115

144 115

145 115

146 115

147 115

148 116

149 116

150 116

151 117

152 117

152a 117

153 117

154 118

155 118

156 118

159 119

160 119

161 119

119161a


Section 5 Exclusivejurisdiction

.........................................

1. Rights in rem i:1 immovable property in the Member States of theCommunity

.....................................................

2. Actions in connection with obligations to transfer immovable property

. .

3. Jurisdiction in connection with patent disputes. . .

. . . . . . . . . . . . . . . . . . . .

Section6 Jurisdiction by consent

........................................

1. Choice-of-Iaw clause and international jurisdiction

. . . . . . . . . . . . . . . . . . .

2. Agreements conferring jurisdiction on courts outside the Community

. . .

3. Jurisdiction clauses in trusts

.......................................

4. The form of agreements on jurisdiction in international trade

. . . . . . . . . .

Section 7 Examination of own motion

Section 8 Lis pendens and inter-related actions

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Discretion of the court

...........................................

2. Moment at which proceedings become pending

. . . . . . . . . . . . . . . . . . . . . .

Section9 Provisional measures

.........................................

CHAPTER 5

Recognition and enforcement

A. General remarks interlocutory court decisions

. . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Relationship of the Continental States with each other

. . . . . . . . . . . . . . . . . .

2. Relationship of the United Kingdom and Ireland with the other MemberStates .......................................,.....................

3. Precise scope of Title III of the 1968 Convention

. . . . . . . . . . . . . . . . . . . . . . . .

B. Comments on the individual sections

Section 1 Recognition

....................................................

1. Article 26

..........................................................

2. Article27(1)- publicpolicy ..........................

;.............

3. Right to a hearing (Article 27 (2))

.....................................

4. Ordinary and extraordinary appeals

..................................

5. Conflicts with judgments given in non-contracting States which qualify forrecognition

.........................................................

Section 2 Enforcement

1. Preliminary remarks

..................................................

2. Formal adjustments as regards courts having jurisdiction and authorizedappeals ............................................................

3. Other adjustment problems

..........................................

Section 3 Common provisions

..........................................

Para. Page

162 120

166 120

169 121

173 123

174 123

175 124

176 124

178 124

179 124

180 125

181 125

182 125

183 126

184 126

185 126

186 126

187 127

188 127

189 127

192 128

194 128

195 128

205 130

206

214

219

225

131

133

134

136


CHAPTER 6

Authenticinstrumentsandcourtsetdements

......................................

CHAPTER 7

Generalprovisions ............................................................

CHAPTER 8

Transitionalprovisions

......................................................

I.Jurisdiction

............................................................

II. Recognitionandenforcement

............................................

1. End of the transitional period

.........................................

2. Among the original Member States of the Community

. . . . . . . . . . . . . . . . . . .

3. Where new Member States are involved

................................

CHAPTER 9

Relationship to other conventions

I. Articles 55 and 56

......................................................

II. Article 57

1. The basic structure of the proposed provision

. . . . . . . . . . . . . . . . . . . . . . . . . . .

2. Examples "

....

3. Undertakings in conventions between States not recognize judgments. . .

4. Precedence of secondary Community law

...............................

5. Consultations before future accession by Member States of the Community tofurther agreements

..................................................

III.Article59 .............................................................

. CHAPTER 10

Final provisions

(1) Ireland

...............................................................

(2) United Kingdom

(3) Denmark

.............................................................

(4) ChangesinaState sterritory ............................................

CHAPTER 11

Adjustment to the Protocol of 3 June 1971 on the interpretation by the Court of Justiceof the European Communities of the 1968 Convention

(1) Formal adjustments

....................................................

(2) The special nature of implementing legislation in the United Kingdomand Ireland

Para. Page

226 136

227 136

228 136

229 137

231 137

231 137

232, 137

233 138

237 139

238 139

241 140

246 141

247 142

248 142

249 142

251 143

252 143

253 143

254 143

255

256

143

144


CHAPTER 1

PRELIMINARY REMARKS

. Under Article 3 (2) of the Act of Accession , thenew Member States undertook 'to accede to theConventions provided for in Article 220 of theEEC Treaty, and to the Protocols on theinterpretation of those Conventions by the Courtof Justice, signed by the original Member Statesand to this end to enter into negotiations with theoriginal Member States in order to make thenecessary adjustments thereto . As a first step theCommission of the European Communities madepreparations for the impending discussions on thecontemplated adjustments. On 29 November1971 , it submitted to the Council an interimreport on the additions considered necessary to

the two Conventions signed in 1968, namely theConvention on jurisdiction and the enforcementof judgments in civil and commercial matters(hereinafter referred to as ' the 1968 Conventionand the Convention on the mutual recognition ofcompanies and kgal persons. Followingconsultations with the new Member States, theCommission on 15 September 1972 drew up a

comprehensive report to the Council on the mainproblems arising from adjusting bothConventions to the legal institutions and systemsof the new Member States. On the basis of thisreport, the Committee of PermanentRepresentatives decided on 11 October 1972 toset up a Working Party which was to composed of delegates of the original and thenew Member States of the Community and of arepresentative of the Commission. The WorkingParty held its inaugural meeting on 16 November1972 under the chairmanship of the Netherlandsdelegate in accordance with the rota. On thisoccasion, it decided to focus its attention initiallyon negotiations concerning adjustments to the1968 Convention which had already been ratifiedby the original Member States of the EEC and tothe Protocol of 3 June 1971 on its interpretationthe Interpretation Protocol of 1971' ), and to

postpone the work entrusted to it regarding theConvention on the mutual recognition ofcompanies and legal persons. At its secondmeeting, the Working Party elected the author of'this report as its rapporteur. On the basis of arequest made by the Working Party at its thirdmeeting in June 1973 the Committee Permanent Representatives appointed Mr Jenard,the 'Directeur d'administration aupres duministere belge des Affaires ttrangeres , as itspermanent chairman.

2. The Working Party initially considered proposingthe legal form of a Protocol for the accession of

the new Member States to the 1968 Conventionand that the adjustments contemplated should beannexed thereto. However, this method wouldhave introduced some confusion into the subject.A distinction would then have had to be madebetween three different Protocols, i.e. theProtocol referred to in Article 65 of the 1968Convention, the Interpretation Protocol of 1971and the new Protocol on accession. Furthermorethere were no grounds for dividing the newprovisions required in consequence of theaccession of the new Member States to the 1968Convention by putting some into a protocol andothers into an act of accession annexed to it. TheWorking Party therefore presented the outcomeof its discussions in the form of a draftConvention between the original Member Statesand the new Member States of the EEc. Thisdraft Convention makes provision for accessionboth to the 1968 Convention and to theInterpretation Protocol of 1971 (Title I) as well asfor the necessary changes to them (Titles II andIV). The accession of Denmark, Ireland and theUnited Kingdom to the 1968 Convention extendsalso to the Protocol referred to in Article 65

which is an integral part of the 1968 Convention.The Working Party also proposed adjustments tothis Protocol (Title III).

The decision of the Working Party to adopt thelegal form of Convention incorporatingadjustments instead of replacing the 1968Convention by a new Convention has theadvantage that the unchanged provisions of the1968 Convention do not require renewedratification.

Accordingly three different 'Conventions ' will infuture have to be distinguished:

The Convention on jurisdiction and theenforcement of judgments in civil and commercialmatters in its original form will be referred to asthe 1968 Convention ' (1).

The expression 'Accession Convention ' refers tothe draft Convention proposed by the WorkingParty.

After ratification of the Accession Conventioncertain provisions of the 1968 Convention willexist in an amended form. References in this


report to the amended form will be indicated bythe addition of that word, e.g. 'Article 5 (2) asamended' .

3. The structure of this report does not closelyfollow the structure of the proposed newAccession Convention. In many places thisreport can only be understood, or at any rate is

CHAPTER 2

easier to understand, if it is read in conjunction

with the corresponding parts of the reports on the1968 Convention and on the InterpretationProtocol of 1971 which were drawn up by thepresent permanent chairman and erstwhilerapporteur of the Working Party (hereinafterreferred to as ' the Jenard report'). The structureof this report is based on that of these earlierreports.

REASONS FOR THE CONVENTION

4. The second chapter of the Jenard report sets outthe reasons for concluding a Convention. Theyapply with at least as much force to the newMember States as they did to the relationshipsbetween the original Member States of the EEC,but they do not call for further close examinationhere. The obligation on the new Member Statesto accede to the 1968 Convention is laid down inArticle 3 (2) of the Act of Accession to the EECTreaty. However, in order to give a clear view ofthe legal position, it may be helpful tosupplement the references in the Jenard report tothe laws in force in the original Member States ofthe EEC and to the existing Conventions betweenthese States with details concerning the newMember States.

THE LA W IN FORCE IN THE NEW MEMBERSTATES

1. UNITED KINGDOM

5. The legal position in the United Kingdom ischaracterized by six significant features.

6. (a) In the first place, there is a distinctionbetween recognition and enforcement at commonlaw on the one hand and under the Foreignjudgments (reciprocal enforcement) Act 1933 onthe other.

At common law, a judgment given in a foreignState may serve as a basis for proceedings beforecourts in the United Kingdom , if the adjudicatingcourt was competent to assume jurisdiction. This

legal consequence follows irrespective of whetheror not there is reciprocity. In this connectionrecognitidn and enforceability are not limited tothe use of the foreign judgment as evidence. TheUnited Kingdom court dealing with the case maynot in general review the substance of the foreignjudgment. There are , of course, a limited numberof grounds for refusing recognition.

For recognition and enforcement under theForeign judgments (reciprocal enforcement) Act1933 on the other hand the successful party doesnot have to institute fresh proceedings beforecourts in the United Kingdom on the basis of theforeign judgment. The successful party merelyhas to have the judgment registered with theappropriate court. However this simplifiedrecognition and enforcement procedure isavailable only where the judgment to berecognized was given by a Superior Court, andmore important, where a convention on thereciprocal recognition and enforcement ofjudgments is in force between the State of originand the United Kingdom. Once the foreignjudgment is registered, it has the same legal forceand effect as a judgment given by the court registration.

7. (b) Both these methods are available in theUnited Kingdom only for the enforcement of

judgments which order payment of a specific sumof money. Consequently maintenance ordersmade by foreign courts which stipulate periodicpayments are not generally enforceable in the

United Kingdom. However, the Maintenanceorders (reciprocal enforcement) Act which cameinto force in 1972 makes it possible forinternational treaty obligations to be concludedin this field. '


8. (c) Both at common law and under the 1933 Act,it is a requirement for recognition andenforcement that the judgment should be ' finaland conclusive between the parties Thisrequirement is clearly satisfied where theadjudicating court can no longer alter itsjudgment or can only do so in very exceptionalcircumstances. Similarly, neither the fact that theperiod during which an appeal may be made isstill running nor even a pending appeal preventthis requirement from being satisfied. Howevermaintenance orders which stipulate periodicpayments are excluded from recognition sincethey may be varied to take account of changedcircumstances unless they are covered by theabovementioned Maintenance orders (reciprocalenforcement) Act 1972.

9. (d) It is possible to institute proceedings on thebasis of a foreign judgment or to make anapplication for its registration under the 1933 Actduring a period of six years from the date onwhich the judgment was given.

10. (e) United Kingdom law distingl.\ishes betweenthe recognition and enforcement of foreignjudgments in the same way as the other States ofthe Community. If a foreign judgment fulfils thecommon law requirements for its recognition orif it is registered with a United Kingdom court, itbecomes effective also in fields other thanenforcement. A clear distinction is made betweenrecognition and enforcement of foreignjudgments in for example the bilateralConventions with France and Germany.

The requirements mentioned in paragraphs and 9 are not set out in those Conventions asrequirements for recognition.

11. (f) Finally, it should be noted that the UnitedKingdom although not a federal State, is not asingle legal and judicial area. It consists of threeareas with different legal systems: England andWales , Scotland and Northern Ireland. Whilst thecommon law rules described in paragraph 6apply uniformly to the whole of the United King-

dom, the different judicial systems in each of thethree legal areas of this State have to be takeninto consideration when the 1933 Act is applied.Applications for registration have to be made inEngland and Wales to the High Court of Justicein Scotland to the Court of Session, and Northern Ireland to the High Court of Justice of

Northern Ireland. If registration is granted, the

judgment can be enforced only in the area in

which the relevant courts have jurisdiction, whichextends to the whole of England and Wales, ofScotland or of Northern Ireland respectively (seeparagraph 209; for maintenance orders, seeparagraphs 210 and 218)., Recognition of ajudgment is, nevertheless, independent of itsregistration.

2. IRELAND

12. The common law provlSlons of Irish law aresimilar to those which apply in the UnitedKingdom. The only statutory provisions of Irishlaw on the recognition and enforcement offoreign judgments are contained in theMaintenance orders (reciprocal enforcement)Act 1974. This Act gives effect to international agreement between Ireland and theUnited Kingdom for the reciprocal recognition ofmaintenance orders made by courts in thoseStates. The agreement is expressed to terminateon the coming into force of the 1968 Conventionfor both States.

3. DENMARK

13. Under paragraph 223a of the Law of 11 April1916 , foreign judgments can be recognized only ifa treaty providing reciprocity has been concludedwith the State of origin, or if binding effect hasbeen given to judgments of a foreign State by

Royal Decree. Denmark has concluded nobilateral conventions on recognition andenforcement. There is only one Royal Decree ofthe type referred to and it concerns judgmentsgiven by German courts (2).

EXISTING CONVENTIONS

14. Apart from Conventions relating to particularmatters (see paragraph 238 et seq.

),

the United

Kingdom is the only new Member State to bebound to other Member States of the EEC bybilateral Conventions on the recognition andenforcement of judgments. These are theConventions with France, Belgium, the Federal

Republic of Germany, Italy and the Netherlandslisted in the new version of Article 55 (see


paragraph 237). These bilateral Conventionsserve to implement the, Foreign judgments(reciprocal enforcement) Act for the United

Kingdom (see paragraph 6) and therefore containprovisions which more or less follow the samepattern. The requirements for recognition andenforcement correspond to the criteria mentionedin paragraphs 6 to 11 above. Rules providing for

direct' jurisdiction (3) are not included.

GENERAL ARRANGEMENT 9F THE PROPOSEDADJUSTMENTS

15. Neither Article 3 (2) of the Act of Accession northe terms of reference given to the Working Partyprovide any clear guide of what is meant bynecessary adjustments

The term could be given a very narrowinterpretation. The emphasis would then have tobe laid above all on the requirement of necessity,in the sense of indispensability. At the beginningof the Working Party s discussions it becameclear, however, that such a narrow view of thecontemplated adjustments was bound to make itmore difficult for the 1968 Convention to takeroot in the legal systems of the new MemberStates. There are a variety of reasons for this.

1. SPECIAL STRUCTURAL FEATURES OF THELEGAL SYSTEMS OF THE NEW MEMBERSTATES

16. The 1968 Convention implicitly proceeded from alegal background common to the originalMember States of the EEc. By contrast the legalsystems of the new Member States unmistakablycontain certain special structural features. Itwould hardly have been reasonable to expectthese States to adjust their national law to thelegal position on which the 1968 Convention isbased.

On the contrary, adjustment of the Conventionseemed the more obvious course on occasion.This applies, for example, to the distinction madein Articles 30 and 38 between ordinary andextraordinary appeals (see paragraph 195

seq.), which does not exist in United Kingdomand Irish law, to the system of registeringjudgments in the United Kingdom instead of thesystem of granting enforcement orders (see para-

graph 208) and to the concept of the trust whichis a characteristic feature of the common law (4(see paragraph 109 et seq.). The same also appliesto th~ inter-relation existing in Denmark betweenjudicial and administrative competence inmaintenance cases (see paragraph 66 et seq.

2. AMBIGUITIES IN THE EXISTING TEXT

17. In certain cases, enqumes about the precisemeaning of some provisions of the 1968Convention by the States obliged to accede to itclearly showed that their interpretation was oftenuncertain and controversial. The Working Partydecided therefore to propose that certainprovisions of the 1968 Convention should begiven a more precise wording or an authoritativeinterpretation. This applies , for example, to theprovisions about granting legal aid enforcement proceedings (see paragraph 223).The Working Party also dealt in this way with theprovisions of Article 57 on the relation betweenthe 1968 Convention and other Conventions , (seeparagraph 238 et seq.

).

In most cases, howeverthe information requested could be given in a

sufficiently clear and uniform way, so that thisreport need do no more than refer to it.

3. FURTHER DEVELOPMENTS IN THE LA

THE ORIGINAL MEMBER STATES OF THEEEC

18. In yet other cases, enquiries by the new MemberStates about the content of some provisions of the1968 Convention revealed that in the originalMember States of the EEC too the law had in themeantime evolved in such a way that generaladjustments rather than adjustments restricted torelations with the new Member States seemedadvisable. This applies particularly to proceedingsin matters of family law in which ancillary reliefand especially maintenance claims , are now oftencombined with the main proceedings concerningstatus. In family and matrimonial matters, suchcombined proceedings have replaced thetraditional system of separating statusproceedings from subsequent proceedings inmany countries during the years following thesigning of the 1968 Convention. This is thereason for the revised Article 5 (2) proposed bythe Working Party (see paragraphs 32 and 90).The development of consumer protection law inthe Member States led to a completely newversion of Section 4 of Title II, and in one casethe 1968 Convention was amended as a result ofjudgments of the Court of Justice of the EuropeanCommunities (see paragraph 179).


4. SPECIFIC ECONOMIC EFFECTS

19. Finally, it became apparent that certainprovisions of the 1968 Convention in theirapplication to the new Member States wouldhave economic repercussions unequalled in the

original Member States. Thus, the worldwide

CHAPTER 3

significance of the British insurance marketprompted the Working Party to recommendamendments concerning jurisdiction in insurancematters (see paragraph 136). The new paragraph(7) of Article 5 (see paragraph 122) is justified bythe special position occupied by British maritimejurisdiction.

SCOPE OF THE CONVENTION

20. As already discussed in the Jenard report, the

provisions governing the scope of the 1968

Convention contain four significant elements.These required some further explanation in thecontext of the relationship of the originalMember States to each other. They are:

1. Limitation to proceedings and judgments onmatters involving international legalrelationships (I).

2. Duty of the national courts to observe the

provisions governing the scope of the 1968Convention of their own motion (II).

3. Limitation of the Convention to civil andcommercial matters (III).

4. A list (Article 1 , second paragraph) of mattersexcluded from the scope of the Convention

(IV).

In the relatJonship of the original Member Statesto each other there was no problem about a fifthcriterion which is much more clearly brought outin the title of the 1968 Convention than in Article1 which defines its scope. The 1968 Conventiononly applies where court proceedings and courtdecisions are involved. Proceedings and decisionsof administrative authorities do not come withinthe scope of the 1968 Convention. This gave riseto a particular problem of adjustment in relationto Denmark (V).

I. MA TIERS INVOLVING INTERNATIONAL LEGALRELATIONSHIPS

21. The accession of the new Member States to the1968 Convention in no way affects theapplication of the principle that only proceedings

and judgments about matters involvinginternational legal relationships are affected, so

that reference need only be made to Section I ofChapter III of the Jenard report.

II. BINDING NATURE OF THE CONVENTION

22. Under Articles 19 and 20 of the 1968 Conventionthe provisions concerning ' direct jurisdiction ' areto be observed by the court of its own motion: insome cases, i.e. where exclusive jurisdictionexists , irrespective of whether the defendant takesany steps; in other cases only where thedefendant challenges the jurisdiction. Similarly, acourt must also of its own motion considerwhether there exists an agreement on jurisdictionwhich excludes the court s jurisdiction and whichis valid in accordance with Article 17.

An obligation to observe the rules of jurisdictionof its own motion is by no means an unusualduty for a court in the original Member States.However, the United Kingdom delegation pointedout that such a provision would mean afundamental change for its courts. Hitherto

United Kingdom courts had been able to reach adecision only on the basis of submissions of factor law made by the parties. Without infringingthis principle, no possibility existed of examiningtheir jurisdiction of their own motion.

However, Article 3 (2) of the Act of Accessioncannot be interpreted as requiring the amendmentof any provisions of the Conventions referred toon the ground that introduction of thoseprovisions into the legal system of a new MemberState would necessitate certain changes in its long-established legal practices and procedures.


It does not necessarily follow from Articles 19and 20 of the 1968 Convention that the courts

must, of their own motion, investigate the facts

relevant to deciding the question of jurisdictionthat they must for example inquire where thedefendant is domiciled. The only essential factoris that uncontested assertions by the partiesshould not bind the court. For this reason the

following rule is reconcilable with the 1968Convention: a court may assume jurisdiction onlyif it is completely satisfied of all the facts onwhich such jurisdiction is based; if it is not sosatis~ied it can and must request the parties toprovide the necessary evidence, in default ofwhich the action will be dismissed asinadmissible. In such circumstances the lack ofjurisdiction would be declared by the court of itsown motion, and not as a result of a challenge byone of the parties. Whether a court is itselfobliged to investigate the facts relevant tojurisdiction, or whether it can , or must, place theburden of proof in this respect on the partyinterested in the jurisdiction of the courtconcerned, is determined solely by national law.Indeed some of the legal systems of the originalMember States, for example Germany, do notrequire the court itself to undertake factualinvestigations in a case of exclusive jurisdictioneven though lack of such jurisdiction has to beconsidered by the court of its own motion.

III. CIVIL AND COMMERCIAL MA TIERS

23. The scope of the 1968 Convention is limited tolegal proceedings and judgments which relate tocivil and commercial matters. All suchproceedings not expressly excluded fall within itsscope.

In particular, it is irrelevant whether an action isbrought 'against' a named defendant (seeparagraphs 124 et seq.

).

It is true that in such acase Article 2 et seq. cannot operate; butotherwise the 1968 Convention remainsapplicable.

The distinction between civil and commercialmatters on the one hand and matters of publiclaw on the other is well recognized in the legalsystems of the original Member States and is , inspite of some important differences , on the wholearrived at on the basis of similar criteria. Thusthe term ' civil law also includes certainimportant special subjects which are not publiclaw, especially, for example, parts of labour law.

For this reason the draftsmen of the original textof the 1968 Convention , and the Jenard reportdid not include a definition of civil andcommercial matters and merely stated that the1968 Convention also applies to decisions ofcriminal and administrative courts , provided theyare given in a civil or commercial matter, whichoccasionally happens. In this last respect, the

accession of the three new Member Statespresents no additional problems. But as regards

the main distinction referred to earlierconsiderable difficulties arise.

In the United Kingdom and Ireland thedistinction commonly made in the original EECStates between private law and public law ishardly known. This meant that the problems ofadjustment could not be solved simply by areference to these classifications. In view of theJudgment of the Court of Justice of the EuropeanCommunities of 14 October 1976 (5), which wasdelivered during the final stages of the discussionsand which decided in favour of an interpretationwhich made no reference to the 'applicablenational law, the Working Party restricted itselfto declaring, in Article 1 , paragraph 1 , thatrevenue, customs or administrative matters arenot civil or commercial matters within themeaning of the Convention. Moreover, the legalpractice in the Member States of the Community,including the new Member States, must takeaccount of the above judgment which states thatin interpreting the concept of civil andcommercial matters, reference must be madefirst, to the objectives and scheme of theConvention and secondly, to the generalprinciples which stem from the corpus of thenational legal systems

As a result of this all that this report can do is tbthrow light on the Court's instructions by settingout some details of comparative law.

ADMINISTRATIVE LAW IN IRELAND AND THEUNITED KINGDOM

24. In the United Kingdom and in Ireland theexpression ' civil law' is not a technical term andhas more than one meaning. It is used mainly as


the opposite of criminal law. Except in thislimited sense, no distinction is made betweenprivate ' and ' public' law which is in any waycomparable to that made in the legal systems ofthe original Member States, where it is offundamental importance. Constitutional law,administrative law and tax law are all included incivil law . Admittedly the United Kingdom isalready a party to several Conventions whichexpressly apply only to ' civil and commercialmatters These include all the bilateralConventions on the enforcement of foreignjudgments concluded by the United Kingdom.

None of these , however, contains any rules whichdecide the circumstances under which an originalcourt before which an issue is brought mayassume jurisdiction. They govern only therecognition and enforcement of judgments anddeal with questions of jurisdiction only indirectlyas a condition of recognition. Moreover, theseConventions generally only apply to judgmentsordering the payment of a specific sum of money(see paragraph 7). In drafting them, a pragmaticapproach dispensing with a definition of ' civiland commercial matters ' proved , therefore, quiteadequate.

ADMINISTRATIVE LAW IN THE CONTINENTALMEMBER STATES

25. In the legal systems of the original MemberStates, the State itself and corporations exercisingpublic functions such as local authorities maybecome involved in legal transactions in twoways. Having regard to their special functionsand the fact that they are formally part of publiclaw they may act outside private law in a ' sove-reign ' capacity. If they do this , their administra-tive ac ('Verwaltungsakt

, '

decision executoire

is of a special nature. The State and some otherpublic corporations may, however, also engage inlegal transactions in the same way as privateindividuals. They can conclude contracts subjectto private law, for example with transportundertakings for the carriage of goods or personsin accordance with tariffs generally in force orwith a property owner for the lease of premises.The State and public corporations can also incurtortious liability in the same way as privateindividuals, for example as a result of a traffic

accident in which an official car is involved. Thereal difficulty arises from distinguishing betweeninstances in which the State and its independentorgans act in a private law capacity and those inwhich they act in a public law capacity. A fewguidelines on how this difficulty may overcome are set out below.

The difficulties of finding a dividing line are ofthree kinds. The field of activities governed bypublic law differs in the various continentalMember States (1). Public authorities frequentlyhave a choice of the form in which they wish toact (2). The position is relatively clear onlyregarding the legal relations between the Stateand its independent organs (3).

1. THE V AR YING EXTENT OF PUBLIC LA

26. The most important difference between nationaladministrative laws on the continent consists inthe legal rules governing the duties of publicauthorities to provide supplies for themselves andfor public tasks. For this purpose the French legalsystem has established the separate concept ofadministrative contracts which are governedindependently of the ' Code civil' by a special lawthe 'Code des marches publics Theadministrative contract is used both when publicauthorities wish to cover their own requirementsand when public works, such as surface orunderground construction , land development, etc.have to be undertaken. In such situations the

French State and public corporations do not actin the capacity of private persons. Thecharacteristic result of this is that, if the otherparties to the contract do not perform theirobligations, the State and public corporations donot have to bring an action before the courts, butmay impose unilaterally enforceable sanctions byan administrative act (' decision executoire ). Thelegal situation in Germany is quite different.There the administrative contract plays acompletely subordinate role. Supplies to theadministrative agencies, and in particular theplacing of contracts for public works, are carriedout solely on the basis of private law. Even wherethe State undertakes large projects like theconstruction of a dam or the channelling of ariver, it concludes its contracts with the firmsconcerned like a private individual.

No C 59/84

2. CHOICE OF TYPE OF LA

Official Journal of the European Communities

27. However, the borderline between the public lawand the private law activities of public agencies isnot rigidly prescribed in some of the legalsystems. Public authorities have, within certain

limits, a right to choose whether in carrying outtheir functions they wish to use the method of asovereign act', i.e. an administrative contract, or

merely to conclude a private transaction.

In respect of those areas where public authoritiesmay act either under private or public law, it is

not always easy to decide whether or not they

have acted as private individuals. In practice aclear indication is often lacking.

3. RELATIONSHIP OF PUBLIC AUTHORITIESTO ONE ANOTHER

28. Relations between public authorities may also begoverned either by private or by public law. Ifgoverned by public law, such relations are notsubject to the 1968 Convention , even if, as inItaly, they are not considered part administrative law. However, relations of Statesand public corporations with each other wouldfall almost without exception within the sphere ofprivate law, if they contain international aspects(and are not subject to public international law).It is hard to imagine how, for example, it wouldbe possible for relations under public law to existbetween two local authorities in different States.However, such relations could, of course, beestablished in future by treaties.

CIVIL AND CRIMINAL LAW

29. The Working Party considered it obvious thatcriminal proceedings and criminal judgments ofall kinds are excluded from the scope of the 1968Convention, and that this matter neededtherefore, no clarification in the revised text (seeparagraph 17). This applies not only to criminalproceedings stricto sensu. Other proceedingsimposing sanctions for breaches of orders orprohibitions intended to safeguard the publicinterest also fall outside the scope of civil law.Certain difficulties may arise in some cases inclassifying private penalties known to some legalsystems like contractual penalty clauses , penaltiesimposed by associations , etc. Since in many legal

systems criminal proceedings may be brought bya private plaintiff, a distinction cannot be madeby reference to the party which instituted theproceedings. The decisive factor is whether thepenalty is for the benefit of the private plaintiff orsome other private individual. Thus the decisionsof the Danish industrial courts imposing fineswhich are for the benefit of the plaintiff or someother aggrieved party, certainly fall within thescope of the 1968 Convention.

IV. MATTERS EXPRESSLY EXCLUDED

30. The second paragraph of Article 1 sets out underfour points the civil matters excluded from thescope of the 1968 Convention. The accession ofthe new Member States raises problems in respectof all four points.

STATUS OR LEGAL CAPACITY OF NATURALPERSONS RIGHTS IN PROPERTY ARISING OUTOF A MATRIMONIAL RELA TIONSHIP, WILLS

AND SUCCESSION

31. The Working Party encountered considerabledifficulties when dealing with two problemsrelating to point (1) of the second paragraph ofArticle 1. The first problem was that ofmaintenance proceedings ancillary to statusproceedings (1) and the second problem was themeaning of the term ' regimes matrimoniaux(rights in property arising out of a matrimonialrelationship) (2). Apart from these two problemsthe enquiries directed to the Working Party bythe new Member States in respect of point (1) ofthe second paragraph of Article 1 were relativelyeasy to answer (3).

1. MAINTENANCE JUDGMENTS ANCILLARYTO STATUS PROCEEDINGS (ANCILLARYMAINTENANCE JUDGMENTS)

32. When the 1968 Convention was drawn up, theprinciple still applied in the original MemberStates that disputes relating to property could notbe combined with status proceedings, nor could


maintenance proceedings be combined withproceedings for the dissolution of a marriage orpaternity proceedings. It was therefore possible

without running the risk of creatingdisadvantages caused by artificially separatingproceedings which in reality belonged together, toexclude status matters, but not maintenanceproceedings, from the scope of the 1968Convention. Once this rule comes up againstnational legislation which allows combinedproceedings comprising maintenance claims andstatus matters, it will perforce give rise to greatdifficulties. These difficulties had already becorpeserious in the original Member States, as soon asthe widespread reform of family law had led toan increasing number of combined proceedings inthose countries. Accordingly a mere adjustmentof the 1968 Convention as between the originaland new Member States would have providedonly a piecemeal solution. Time and oppohunitywere ripe for an adjustment of the 1968Convention, even as regards , the relationshipsbetween the original Member States, to takeaccount of the developments in the law which

had taken place (see paragraph 18).

33. (a) The solution proposed by the Working Partyis the outcome of a lengthy and intensive study ofthe possible alternatives. A distinctive feature ofthe 1968 Convention is the inter-relation of theapplication of its rules of jurisdiction at the

adjudicating stage and the prohibition againstreopening the question of jurisdiction at the

recognition stage. Consequeijtly, on the basis ofthe original text of the Convention only twocompletely clear-cut solutions present themselvesas regards the treatment of ancillary maintenancejudgments. The first is that the adjudicating courtdealing with a status matter may give an ancillarymaintenance judgment only when it hasjurisdiction under the 1968 Convention; themaintenance judgment must then be recognizedby the foreign court which may not re-examinewhether the original adjudicating court hadjurisdiction. The second possible solution is thatancillary maintenance judgments should also beexcluded from the scope of the 1968 Conventionunder point (1) of the second paragraph of

Article 1 as being ancillary to status judgments.However both solutions have practicaldrawbacks. The second would result in ancillarymaintenance judgments being generally excludedfrom recognition and enforcement under the1968 Convention , even though the great majorityof cases are decided by courts which would havehad jurisdiction under its provisions. In unacceptably high number of cases establishedmaintenance claims would then no longer be ableto move freely. The first solution would

constitute a retrograde step from the progressiveand widely acclaimed achievement of combinedproceedings and judgments in status and mainte-nance matters.

34. In view of the above, the simplest solution wouldhave been to inClude rules of jurisdiction coveringstatus proceedings in the 1968 Convention.However, the reasons given earlier against takingthat course are still valid. Therefore, the only wayout is to opt for one of the two alternativesoutlined above, whilst mitigating its drawbacksas far as possible. In the view of the WorkingParty, to deprive maintenance judgmentsancillary to status proceedings of the guarantee oftheir enforceability abroad, or to recognize themonly to a severely limited extent, would be thegreater evil.

35. The Working Party therefore tried first of all tofind a solution along the following lines. National

. courts dealing with status matters should haveunrestricted power to decide also on maintenanceclaims even when they cannot use theirjurisdiction in respect of the maintenance claimon any provision of the 1968 Convention;ancillary maintenance judgments should inprinciple be recognized and enforced, but thecourt addressed may, contrary to the principles ofthe 1968 Convention which would otherwiseapply, re-examine whether the court which gavejudgment on the maintenance claims hadjurisdiction under the provisions of Title II.However, the principle that the jurisdiction of thecourt of origin should not be re-examined duringthe recognition and enforcement stages was oneof the really decisive achievements of the 1968Convention. Any further restriction of thisprinciple, even if limited to one area, would bejustifiable only if all other conceivablealternatives were even more unacceptable.

36. The proposed addition to Article 5 would on thewhole have most advantages. It preventsmaintenance judgments which are ancillary to

status judgments being given on the basis of therule of exorbitant jurisdiction which generallyapplies in family law matters, namely the rulewhich declares the nationality of only one of thetwo parties as sufficient. One can accept thatmaintenance proceedings may not be combinedwith status proceedings where the competence ofthe court concerned is based solely on such


exorbitant jurisdiction. For status proceedingsjurisdiction will continue to depend on thenationality of one of the two parties. Themaintenance proceedings will have to be broughtbefore another court with jurisdiction under the1968 Convention.

(b) The signifkance of the new approach is asfollows:

37. It applies uniformly to the original and to thenew Member States alike.

38. The jurisdiction of the court of origin may not bere-examined during the recognition andenforcement stages. This still follows from thethird paragraph of Article 28 even after theaddition made to Article 5. The court of originhas a duty to examine very carefully whether ithas jurisdiction under the 1968 Conventionbecause a wrong decision on the question ofjurisdiction cannot be corrected later on.

39. Similar rules apply in respect of lis pendens.

was not necessary to amend Articles 21 and 23.As long as the maintenance claim is pendingbefore the court seised of the status proceedings itmay not validly be brought before the courts ofanother State.

40. The question whether the court seised of thestatus proceedings has indeed jurisdiction also inrespect of the maintenance proceedings , withouthaving to rely solely on the nationality of one ofthe parties to the proceedings, is to be determinedsolely by the lex fori including of course itsprivate international law and procedural law.Even where the courts of a State may not as arule combine a status matter with a maintenanceclaim , but can do so if a foreign legal systemapplicable under the provisions of their privateinternational law so provides they havejurisdiction in respect of the maintenance claimunder the provisions of Article 5 (2) of the 1968Convention as amended. This is subject to theproviso that the court concerned in fact had

jurisdiction in respect of both the statusproceedings and the maintenance claim under thecurrent provisions of its own national law.

41. The 1968 Convention prohibits the assumptionof a combined jurisdiction which may provided for under the national law to cover both

status and maintenance proceedings only wherethe court s jurisdiction would be based solely onthe nationality of one of the two parties. Thisconcerns principally the exorbitant jurisdictionswhich are referred to in the second paragraph ofArticle 3 , and provided for in Article 15 of theBelgian Civil Code (Code civil), and Articles 14and 15 of the French and Luxembourg CivilCode (Code civil), governing proceedings whichdo not relate only to status and are therefore notexcluded pursuant to point (1) of the second

paragraph of Article 1. Maintenance actionscombined with status proceedings continue to bepermitted, even if the jurisdiction of the court isbased on grounds other than those which arenormally excluded by the 1968 Convention as

being exorbitant. Jurisdiction on the basis of bothparties having the same nationality is excluded bythe 1968 Convention in respect of ordinary civiland commercial matters, (Article 3 , secondparagraph), but in respect of combined status andmaintenance proceedings , it cannot be consideredas exorbitant, and consequently should not beinadmissible. The plaintiff's domicile recognized in any case as a basis for jurisdictionin maintenance actions.

Finally, the proposed addition to Article (2)deprives courts of jurisdiction to entertainmaintenance claims in combined family lawproceedings only where their jurisdiction inrespect of the status proceedings is based solelyon the nationality of one of the two parties.Where the jurisdiction of a court depends on thefulfilment of several conditions, only one of

which is that one of the parties should possess thenationality of the country concerned, jurisdictiondoes not depend solely on the nationality of thetwo parties.

Article 606 (3) of the German Code of CivilProcedure is intended to ensure, in conjunction

with Article 606a, that in matrimonial matters aGerman court always has jurisdiction, even whenonly one of the spouses is German. The fact thatthis provision is only supplementary to otherprovisions governing jurisdiction does not changethe fact that jurisdiction may be based solely onthe nationality of one of the parties. Once Article5 (2) of the 1968 Convention comes into force inits amended form maintenance claims can nolonger be brought and decided under thatparticular jurisdiction.

42. Article 5 (2) does not apply where the defendant isnot domiciled in a Contracting State, or where

maintenance questions can be decided without the


procedural requirement of a claim or petition byone spouse against the other (see paragraph 66).

2. RIGHTS IN PROPERTY ARISING OUT OF AMATRIMONIAL RELATIONSHIP

43. The exclusion of ' rights in property arising out ofa matrimonial relationship ' from the scope of theConvention (Article 1 second paragraph, point(1)) raises a problem for the United Kingdom andIreland.

Neither of these countries has an equivalent legal

concept, although the expression 'matrimonialproperty' is used in legal literature. In principle,property rights as between spouses are governedby general law. Agreements between spousesregulating their property rights are no different inlaw from agreements with third parties.Occasionally, however, there are special statutoryprovisions affecting the rights of spouses. UnderEnglish law (Matrimonial homes Act 1967) andIrish law (Family home protection Act 1976), aspouse is entitled to certain rights of occupationof the matrimonial home. Moreover, divorcecourts in the United Kingdom have, under theMatrimonial causes Act 1973 considerablepowers , though varying in extent in the differentparts of the country, to order the payment ofcapital sums by one former spouse to the other.In England even a general redistribution ofproperty as between former spouses and theirchildren is possible.

The concept of ' rights in property arising out of amatrimonial relationship' can also give rise toproblems in the legal systems of the originalMember States. It does not cover the same legalrelations in all the systems concerned.

For a better understanding of the problemsinvolved, they are set out more fully below (a),before the solution proposed by the WorkingParty is discussed (b).

44. (a) Three observations may give an indication ofwhat is meant by ' matrimonial regimes ' (rights inproperty arising out of matrimonialrelationship) in the legal systems of the seven

continental Member States. They will deal withthe character of the concept which is confinedexclusively to relationships between spouses(paragraph 45), with the relationship with theprovisions which apply to all marriagesirrespective of the particular 'matrimonial regime

between the spouses (paragraph 46), and -finallywith the possibility of third parties becominginvolved (paragraph 47).

45. For the purpose of governing the relationsbetween spouses in respect of property, theselegal systems do not or at least notpredominantly, employ the legal concepts andinstitutions otherwise used in their civil law.Instead, they have developed exclusive legalinstitutions the application of which is limited torelations between spouses, and wh'ose mostimportant feature is a comprehensive set of rulesgoverning property. However, there is not merelyone such set of rules in each legal system. Insteadspouses have a choice between several, rangingfrom general ' community of property ' to strictseparation of property . Even the latter, whenchosen by the spouses, is a special form ofproperty regime although special featuresarising from marriage can then hardly be said toexist any longer. The choice of a ' propertyregime' must take the form of a ' marriagecontract' which is a special legal concept andshould not be confused with the conclusion of themarriage itself. If the spouses do not make achoice, one of the sets of rules governing propertyrights applies to them by law (known as thestatutory matrimonial regime

In some legal systems (France and Belgium) thematrimonial regime ' existing at the beginning ofa marriage can subsequently be chang~d only inexceptional circumstances. In others (Germany)the spouses are free to alter their ' matrimonialregIme at any tIme.

Disputes concerning 'matrimonial regimes' canarise in various forms. There may be a disputeabout the existence and interpretation of marriage contract. In certain circumstances, a

spouse may apply to the court for conversion ofone 'matrimonial regime ' into a different one.Some ' matrimonial regimes ' provide for differentrules in respect of different types of property. Adispute may then arise as to the type of propertyto which a particular object belongs. Where thematrimonial regime' in question differentiatesbetween the management of different types ofproperty, there may be disagreement as to whichspouse may manage which items of propel'ty. Themost frequent type of dispute relating tomatrimonial regimes ' concerns the winding up of

the 'matrimonial regime ' after termination of themarriage particularly after divorce. Thestatutory matrimonial regime' under German


law ('Zugewinngemeinschaft' or community acquisitions) then results in an equalization claimby the spouse whose property has not increasedin value to the same extent as that of his partner.

46. Some provIsions apply to all marriagesirrespective of the particular 'matrimonial regimeunder which spouses live, especially in Germanyand France. Significantly the German and Frenchtexts of the 1968 Convention use the term in theplural ('die Giiterstande

, '

les regimesmatrimoniaux

This can be explained as follows: the Code civilfor instance, deals with property aspects ofmarriage in two different parts of the code. Title

of the third book (on the acquisition ofproperty) refers in detail to the ' contrat demariage ' and then ' regimes matrimoniaux , whileproperty aspects of the relations between spousesare also covered by Articles 212 to 226 in Title Vof the first book. The new French divorce law of11 July 1975 (6) introduced into the new versionof Article 270 et seq. of the Code civilequalization payments normally in the form lump sum compensation (Article 274) which areindependent of the particular ' regime ' applicablebetween the spouses. German law in the fourthbook of the Biirgerliches Gesetzbuch makes asimilar distinction between the legal consequencesin respect of property rights which generallyfollow from marriage (Title V, Article 1353

seq. and those which follow from ' matrimonialproperty law

' ,

which varies according to thevarious ' matrimonial regimes . Under bothsystems (Article 1357 (2) of the BiirgerlichesGesetzbuch, Article 220 (2) of the French Codecivil) it is possible, for example, to prevent a

spouse from engaging in certain legal transactionswhich he is normally entitled to engage in hiscapacity as spouse. According to Article 285 ofthe Code civil the court can, after divorce

make orders concerning the matrimonial homeirrespective of the 'matrimonial regimepreviously applicable. Similar possibilities exist inother States.

French legal literature refers to prOVlSlonsconcerning property rights which apply to allmarriages as 'regime matrimonial primaire

' .

Other legal systems have no such specialexpression. It is within the spirit of Article 1

second paragraph point (1) of the 1968Convention to exclude those provIsIOnsconcerning property rights affecting all marriagesfrom its scope of application , in so far as they arenot covered by the term 'maintenance claims ' (seeparagraph 91 et seq.

In all legal systems of the Community it ispossible to conceive of relations affecting rights

between spouses which are governed by thegeneral law of contract, law of tort or propertylaw. Some laws contain provisions specificallyintended to govern cases where such relationsexist between spouses. For example, Article 1595of the French Code civil contains restrictions onthe admissibility of contracts of sale betweenspouses. Case law has sometimes developedspecial rules in this field which are designed totake account of the fact that such transactionscommonly occur in relations between spouses. Allthis does not alter the position that legal relationsgoverned by the general law of contract or tortremain subject to the provisions of the 1968Convention , even if they are between spouses.

47. Finally, legal provIsions comprised in the termmatrimonial regimes ' are not limited to relations

between the spouses themselves. For example , inItalian law, in connection with the liquidation ofa ' fondo patrimoniale disputes may arisebetween parents and children (Article 171 (3) ofthe Codice civile), which under Italian lawunequivocally concern relations arising out ofmatrimonial property Jaw

' ('

il regimepatrimoniale della famiglia ). German lawcontains the regime of 'continued community ofproperty

' ('

fortgesetzte Giitergemeinschaft

which forms a link between a surviving spouseand the issue of the marriage.

48. (b) These findings raise problems similar to thosewith which the Working Pary was faced inconnection with the concept ' civil andcommercial matters . It was , however, possible todefine the concept of ' matrimonial regimes ' notonly in a negative manner (paragraph 49), butalso positively, albeit rather broadly. This shouldenable implementing legislation in the UnitedKingdom and Ireland, in reliance on thesestatements, to indicate to the courts which legalrelations form part of ' matrimonial regimeswithin the meaning of the 1968 Convention(paragraph 50). Consequently no formaladjustment of the 196~ Convention becamenecessary.

49. As a negative definition, it can be said withcertainty that in no legal system do maintenanceclaims between spouses derive from rulesgoverning 'matrimonial regimes nor are


maintenance claims confined to claims forperiodic payments (see paragraph 93).

50. The mutual rights of spouses arIsIng frommatrimonial regimes' correspond largely withwhat are best described in English as ' rights inproperty arising out 'of a / matrimonialrelationship . Apart from maintenance mattersproperty relations between spouses which aregoverned by the differing legal systems of theoriginal Member States otherwise than matrimonial regimes ' only seldom give rise to

court proceedings with international aspects.

Thus the following can be said in respect of thescope of point (1) of the second paragraph ofArticle 1 as far as ' matrimonial regimes' areconcerned:

The Convention does not . apply to theassumption of jurisdiction by United Kingdomand Irish courts, nor to the recognition andenforcement of foreign judgments by thosecourts, if the subject matter of the proceedingsconcerns issues which have arisen betweenspouses, or exceptionally between a spouse and athird party, during or after dissolution of theirmarriage, and which affect rights in propertyarising out of the matrimonial relationship. Theexpression 'rights in property ' includes all rightsof administration and disposal whether by

marriage contract or by statute of property

belonging to the spouses.

3. THE REMAINING CONTENTS OF ARTICLESECOND PARAGRAPH, POINT (1) OF THE

1968 CONVENTION

51. (a) The non-applicability of the 1968Convention in respect of the status or legalcapacity of natural persons concerns in particularproceedings and judgments relating to:

the voidability and nullity of marriages, andjudicial separation

the dissolution of marriages

the death of a person

the status and legal capacity of a minor andthe legal representation of a person who ismentally ill; the status and legal capacity of aminor also includes judgments on the right tocustody after the divorce or legal separation

of the par~nts; this was the Working Partyunanimous reply to the express question putby the Irish delegation

the nat\onality or domicile (see paragraph 71et seq. of a person

the care, custody and control of children

irrespective of whether these are in issue indivorce, guardianship, or other proceedings

the adoption of children.

However the 1968 Convention is onlyinapplicable when the proceedings are concerneddirectly with legal consequences arising fromthese matters. It is not sufficient if the issues

raised are merely of a preliminary nature, even iftheir preliminary nature is, or has been, of someimportance in the main proceedings.

52. (b) The expression ' wills and succession ' coversall claims to testate or intestate succession to anestate. It includes disputes as to the validity orinterpretation of the terms of a wtlI setting up atrust, even where the trust takes effect on a datesubsequent to the death of the testator. The sameapplies to proceedings in respect of theapplication and interpretation of statutoryprovisions establishing trusts in favour of personsor institutions as a result of a person dyingintestate. The 1968 Convention does nottherefore, apply to any disputes concerning thecreation , interpretation and administration oftrusts arising under the law of successionincluding wills. qn the other hand, disputesconcerning the relations . of the trustee withpersons other than beneficiaries , in other wordsthe ' external relations ' of the trust , come withinthe scope of the 1968 Convention (see paragraph109 et seq.

BANKRUPTCY AND SIMILAR PROCEEDINGS

53. Article 1 , second paragraph, point (2), occupies aspecial position among the provisions concerningthe legal matters excluded from the 1968Convention. It was drafted with reference to a

special Convention on bankruptcy which wasbeing discussed at the same time as the 1968

Convention.


Leaving aside special bankruptcy rules for veryspecial types of business undertakings , the twoConventions were intended to dovetail almostcompletely with each other. Consequently, the

preliminary draft Convention on bankruptcy,which was first drawn up in 1970, submittedin an amended form in 1975 (8), deliberatelyadopted the principal terms ' bankruptcycompositions ' and ' analogous proceedings' (9) in

the provisons concerning its scope in the sameway eO as they were used in the 1968Convention. To avoid, as far as possible~ leaving

lacunae between the scope of the twoConventions efforts are being made in thediscussions on the proposed Convention onbankruptcy to enumerate in detail all theprincipal and secondary proceedings involved (11

and so to eliminate any problems ofinterpretation. As long as the proposedConvention on bankruptcy has not yet come intoforce, the application of Article 1 , secondparagraph, point (2) of the 1968 Conventionremains difficult. The problems, including thematters arising from the accession of the newMember States, are of two kinds. First, it necessary to define what proceedings are meantby bankruptcy, compositions or analogousproceedings as well as their constituent parts (1).

Secondly, the legal position in the UnitedKingdom poses a special problem as thebankruptcy of 'incorporated companies ' is not arecognized concept in that country (2).

1. GENERAL AND INDIVIDUAL TYPES OFPROCEEDINGS EXCLUDED FROM THESCOPE OF THE 1968 CONVENTION

54. It is relatively easy to define the basic types ofproceedings that are subject to bankruptcy lawand therefore fall outside the scope of the 1968Convention. Such proceedings are defined inalmost identical terms in both the Jenard and theNoel-Lemontey reports as those

which, depending on the system of lawinvolved, are based on the suspension ofpayments, the insolvency of the debtor or hisinability to raise credit, and which involve thejudicial authorities for the purpose either ofcompulsory and collective liquidation of theassets or simply of supervision by thoseauthorities. '

In the legal systems of the original States of the

EEC there are only a very few examples ofproceedings of this kind, ranging from two (inGermany) to four (Italy and Luxembourg). In its1975 version (8) the Protocol to the preliminary

draft Convention on bankruptcy enumerates theproceedings according to types of proceedings

and States concerned. A list is reproduced inAnnex I to this report. Naturally, the 1968Convention does not a fortiori cover globalinsolvency proceedings which do not take placebefore a court as , for example, can be the case inFrance when authorization can be withdrawnfrom an insurance undertaking for reasons ofinsolvency.

The enumeration in Article 17 of the preliminarydraft Convention on bankruptcy cannot, beforethat Convention has come into force , be used forthe interpretation of Article 1 , second paragraphpoint (2) of the 1968 Convention. Article 17mentions the kind of proceedings especiallyclosely connected with bankruptcy where thecourts of the State where the bankruptcyproceedings are opened are to ,have exclusivejurisdiction.

It is not desirable at this stage to prescribe thislist, or even an amended list, as binding. Furtheramendments may well have to be made duringthe discussions on the Convention onbankruptcy. To prescribe a binding list wouldcause confusion, even though the list to beincluded in the Protocol to the Convention on

bankruptcy will, after the latter s entry into forceprevail over the 1968 Convention pursuant toArticle 57 , since it is part of a special Convention.Moreover, the list, as already mentioned, doesnot include all bankruptcies, compositions and

analogous proceedings. For instance it has

become clear during the discussions on theConvention on bankruptcy that the list will notcover insurance undertakings which onlyundertake direct insurance (13), without therebybringing the bankruptcy of such undertakingswithin the scope of the 1968 Convention. Finallythe Working Party was not sure whether all theproceedings included in the list as it stood at thebeginning of 1976 could properly be regarded asbankruptcies, compositions or analogousproceedings, before the list formally comes intoforce. This applied particularly to the proceedingsmentioned in connection with the liquidation ofcompanies (see paragraph 57).

2. BANKRUPTCY LAW ANDDISSOLUTION OF COMPANIES

THE

55. As far as dissolution, whether or not by decisionof a court, and the capacity to be made bankruptare concerned, the legal treatment of


partnership (14 established under UnitedKingdom or Irish law is comparable in everyrespect to the treatment of companies establishedunder continental legal systems. Companies (15within the meaning of United Kingdom or Irishlaw, however, are dealt with in a fundamentallydifferent way. The Bankruptcy Acts do not applyto them (16), but instead they are subject to thewinding-up procedure of the CompaniesActs (17); even if they are not registeredcompanies. Winding-up is not a specialbankruptcy procedure, but a legal concept whichcan take different forms and serves differentpurposes. A common feature of all winding-upproceedings is a disposal of assets and thedistribution of their proceeds amongst thepersons entitled thereto with a view of bringingthe company to an end. The start of winding-upproceedings corresponds, therefore, to what understood by ' dissolution ' on the continent. Thedissolution of a company on the other hand isidentical with the final result of a liquidationunder continental legal systems.

the dissolution of a company. Legal disputesincidental to or consequent upon suchproceedings are therefore normal civil orcommercial disputes and as such are not excludedfrom the scope of the 1968 Convention. This alsoapplies in the case of a winding-up subject to thesupervision of the court. The powers of the courtin such a case are not sufficiently dearly definedfor the proceedings to be classed as judicial.

A distinction is made between winding-up by thecourt, voluntary winding-up and winding-upsubject to the supervision of the court. The

second kind of winding-up takes place basicallywithout the intervention of the court, either at theinstance of the members alone or of the memberstogether with the creditors. Only as a subsidiarymeasure and exceptionally can the court appointa liquidator. The third kind of winding-up is onlya variation on the second. The court has certainsupervisory powers. A winding-up of a companyby the court requires an application either by thecompany or by a creditor which is possible in anumber of circumstances of which insolvency only one. Other grounds for a winding-upinclude: the number of members falling below therequired minimum, failure to commence, or alengthy suspension of, business and the general

ground ' that the court is of the opinion that it isjust and equitable that the company should bewound up

A winding-up by the court cannot, of course, beautomatically excluded from the scope of the1968 Convention. For although most proceedings

of this kind serve the purpose of the liquidationof an insolvent company, this is not always thecase. The Working Party decided to exclude fromthe scope of the 1968 Convention only thoseproceedings which are or were based on Section222 (e) of the British Companies Act (18) or the

equivalent provisions in the legislation of Irelandand Northern Ireland. This would, howeverinvolve too narrow a definition of theproceedings to be excluded, as the liquidation ofan insolvent company is frequently based on oneof the other grounds referred to in Section 222 ofthe British Companies Act, notably in (a), whichstates that a special resolution of the members issufficient to set proceedings in motion. There isno alternative therefore to ascertaining thedetermining factor in the dissolution in each

particular case. The English version of Article 1second paragraph point (2), of the 1968Convention has been worded accordingly. It wasnot, however, necessary to alter the text of theConvention in the other languages. If awinding-up in the United Kingdom or Ireland isbased on a ground other than the insolvency ofthe company, the court concerned withrecognition and enforcement in anotherContracting State will have to examine whetherthe company was not in fact insolvent. Only if itis of the opinion that the company was solventwill the 1968 Convention apply.

58. Only in that event does the problem arise ofwhether exclusive jurisdiction exists for thecourts at the seat of the company pursuant toArticle 16 (2) of the 1968 Convention. In theUnited Kingdom and Ireland this is the case forproceedings which involve or have involved a

solvent company.

56. The legal position outlined has the followingconsequences for the application of Article 1

second paragraph , point (2), and Article 16 (2) ofthe 1968 Convention in the Continental (b) andother (a) Member States:

57. (a) A voluntary winding-up under UnitedKingdom or Irish law cannot be equated withcourt proceedings. The same applies to thenon-judicial proceedings under Danish law for

The term 'dissolution ' in Article 16 (2) of the1968 Convention is not to be understood in thenarrow technical sense in which it is used in legalsystems on the Continent. It also covers


proceedings concerning the liquidation of

company after ' dissolution These includedisputes about the amount to be paid out to amember; such proceedings are nothing more thanstages on the way towards terminating the legalexistence of a company.

59. (b) If a company established under a Continentallegal system is dissolved, i.e. enters the stage ofliquidation, because it has become insolventcourt proceedings relating to the ' dissolution ofthe company' are only conceivable as disputesconcerning the admissibility of, or the mode andmanner of conducting, winding-up proceedings.All this is outside the scope of the 1968Convention. On the other hand all other

proceedings intended to declare or to bring aboutthe dissolution of a company are not the concernof the law of winding-up. It is unnecessary toexamine whether the company concerned issolvent or insolvent. It also makes no differenceif bankruptcy law questions arise as a preliminaryissue. For instance, when litigation ensues as towhether a company should be dissolved , becausea person who allegedly belongs to it has gonebankrupt, the dispute is not about a matter ofbankruptcy law, but of a type which falls withinthe scope of the 1968 Convention. TheConvention also applies if, in connection with thedissolution of a company not involving thecourts, third parties contend in legal proceedingsthat, they are creditors of the company andconsequently entitled to satisfaction out of assetsof the company.

SOCIAL SECURITY

60. Matters relating to social security were expresslyexcluded from the scope of the 1968 Convention.This was intended to avoid the difficulties whichwould arise from the fact that in some MemberStates this area of law comes under public lawwhereas in others it is on the border-line betweenpublic and private law. Legal proceedings bysocial security authorities against third parties

for example against wrongdoers, in exercise ofrights of action which they have acquired bysubrogation or by operation of law, do comewithin the scope of the 1968 Convention.

ARBITRATION

61. The United Kingdom requested information onmatters regarding the effect of the exclusion ofarbitration' from the scope of the 1968

Convention, which were not dealt with in theJenard report. Two divergent basic positionswhich it was not possible to reconcile emergedfrom the discussion on the interpretation of therelevant provisions of Article 1 secondparagraph , point (4). The point of view expressedprincipally on behalf of the United Kingdom wasthat this provision covers all disputes which theparties had effectively agreed should be settled byarbitration, including any secondary disputesconnected with the agreed arbitration. The otherpoint of view, defended by the original MemberStates of the EEC, only regards proceedings

before national courts as part of ' arbitration ' ifthey refer to arbitration proceedings, whetherconcluded, in progress or to be started. It wasnevertheless agreed that no amendment should bemade to the text. The new Member States candeal with this problem of interpretation in theirimplementing legislation. The Working Party wasprepared to accept this conclusion , because all theMember States of the Community, with theexception of Luxembourg and Ireland , had in themeantime become parties to the United NationsConvention of 10 June 1958 on the recognitionand enforcement of foreign arbitral awards , andIreland is willing to give sympatheticconsideration to the question of her acceding to

it. In any event, the differing basic positions leadto a different result in practice only in oneparticular instance (see paragraph 62).

1. DECISIONS OF NATIONAL COURTS

THE SUBJECT MATTER OF DISPUTEDESPITE THE EXISTENCE OF ARB ITRA TI NAG REEMENT.

62. If a national court adjudicates on the subjectmatter of a dispute, because it overlooked

arbitration agreement or considered itinapplicable, can recognition and enforcement ofthat judgment be refused in another State of theCommunity on the ground that the arbitrationagreement was after all valid and that thereforepursuant to Article 1 , second paragraph, point

(4), the judgment falls outside the scope of the1968 Convention? Only if the first interpretation(see paragraph 61) is accepted can an affirmativeanswer be given to this question.


In support of the view that this would be thecorrect course, it is argued that since a court inthe State addressed is free, contrary to the view ofthe court in the State of origin, to regard a

dispute as affecting the status of an individual , orthe law of succession, or as falling outside thescope of civil law, and therefore as being outsidethe scope of the 1968 Convention , it must in thesame way be free to take the opposite view tothat taken by the court of origin and to reject theapplicability of the 1968 Convention becausearbitration is involved.

Against this, it is contended that the literalmeaning of the word ' arbitration' itself impliesthat it cannot extend to every dispute affected byan arbitration agreement; that 'arbitration ' refersonly to arbitration proceedings. Proceedingsbefore national courts would therefore beaffected by Article 1 , second paragraph , point (4)of the 1968 Convention only if they dealt witharbitration as a main issue and did not have to

, consider the validity of an arbitration agreementmerely as a matter incidental to an examinationof the competence of the court of origin to

assume jurisdiction. It has been contended thatthe court in the State addressed can no longerre-open the issue of classification; if the court ofthe State of origin , in assuming jurisdiction , hastaken a certain view as to the applicability of the1968 Convention, this becomes binding on thecourt in the State addressed.

2. OTHER PROCEEDINGS CONNECTED WITHARBITRA nON BEFORE NA TIONALCOURTS

63. (a) The 1968 Convention as such in no wayrestricts the freedom of the parties to submitdisputes to arbitration. This applies even toproceedings for which the 1968 Convention hasestablished exclusive jurisdiction. Nor, of coursedoes the Convention prevent national legislationfrom invalidating arbitration agreements affectingdisputes for which exclusive jurisdiction existsunder national law or pursuant to the 1968Convention.

64. (b) The 1968 Convention does not cover courtproceedings which are ancillary to arbitrationproceedings, for example the appointment ordismissal of arbitrators , the fixing of the place ofarbitration, the extension of the time limit formaking awards or the obtaining of a preliminaryruling on questions of substance as provided for

under English law in the procedure known asstatement of a special case' (Section 21 of the

Arbitration Act 1950). In the same way ajudgment determining whether an arbitrationa~reement is valid or not, or because it is invalidordering the parties not to continue thearbitration proceedings, is not covered by the1968 Convention.

65. (c) Nor does the 1968 Convention coverproceedings and decisions concerningapplications for the revocation, amendmentrecognition and enforcement of arbitrationawards. This also applies to court decisionsincorporating arbitration awards a commonmethod of recognition. under United Kingdomlaw. If an arbitration award is revoked and therevoking court or another national court itselfdecides the subject matter in dispute, the 1968

Convention is applicable.

V. JUDICIAL NATURE OF PROCEEDINGSJUDGMENTS

AND

66. As between the original Member States, and alsoas between those States and the United Kingdomand Ireland , the 1968 Convention could and canin one particular respect be based on asurprisingly uniform legal tradition. Almosteverywhere the same tasks pertaining to the fieldof private law are assigned to the courts. Theauthorities which constitute ' courts caneverywhere be recognized easily and withcertainty. This is also true in cases whereproceedings are being conducted in ' court ' whichare not the result of an action by one partyagainst' another party (see paragraphs 23 and

124 et seq.

).

The accession of Denmark raisednew problems.

Although the Working Party had no difficulty inconfirming that the Industrial Court under theDanish Industrial Court Act of 21 April 1964(Bulletin No 124) was, in spite of its unusualstructure, clearly to be considerod a court withinthe meaning of the 1968 Convention, it was moredifficult to decide how to classify proceedings inmaintenance matters, which, in Denmark, failingan amicable settlement, are almost always heldbefore administrative authorities and terminatewith a decision by the latter.

No C 59/94 Official Journal of the European Communities 5. 3.-79

1. THE LEGAL POSITION IN DENMARK

67. The legal position may be summed up as follows.Maintenance matters are determined as regardsthe obligation to pay either by agreement or by acourt judgment. The amount of the payment andthe scale of any necessary modifications arehowever, determined by an authority known asthe ' Amtmand', which under Danish law clearly not court but an administrativeauthority which in this case plays a judicial role.It is true that decisions given in such proceedingscome under The Hague Convention on therecognition and enforcement of decisions relatingto maintenance obligations, but this is onlybecause under that Convention the matter does

not specifically require a court judgment.

2. ARTICLE Va OF THE PROTOCOL AND ITSEFFECT

68. There would, however, be an imbalance in thescope of the 1968 Convention, if it excludedmaintenance proceedings of the type found inDenmark on the sole ground that they do nottake place before courts.

The amendment to the 1968 Convention thusmade necessary is contained in the proposal forthe adoption ofa new Article Va in the Protocol.

CHAPTER 4

This method appeared simpler than attempting toamend a large number of separate provisions ofthe 1968 Convention.

Wherever the 1968 Convention refers to ' court'or ' judge ' it must in the future be taken to includeDanish administrative authorities when dealingwith maintenance matters (as in Article 2, firstparagraph, Article 3 , first paragraph, Article 4

first paragraph , Article 5 (2), Article 17, Article, Articles 20 to 22 , Article 27 (4), Article 28

third paragraph and Article 52). This applies inparticular to Article 4 first paragraph, eventhough in the French, Italian and Dutch textsunlike the German version , the word' court ' doesnot appear.

Similarly, wherever the 1968 Convention refersto ' judgments , the decisions arrived at by the

Danish administrative authorities in maintenancematters will in future be included in the legaldefinition of the term ' judgment' contained inArticle 25. Its content is extended in this respectby the addition of Article Va to the Protocol , sothat it is now to be understood as reading:

For the purposes of this Conventionjudgment" means any judgment given by a

court or tribunal of a Contracting State including in matters relating to maintenancethe Danish administrative authorities whatever the judgment may be called. . .'.

JURISDICTION

GENERAL REMARKS

69. In section A of Chapter 4 of his report, Mr.Jenard sets out the main ideas underlying therules of jurisdiction of the 1968 Convention.None of this is affected by the accession of thenew Member States. The extent to which threefeatures of the law in the United Kingdom and inIreland are consistent with the application of the1968 Convention must, however, be clarified.These features are: the far-reaching jurisdiction ofthe Superior Courts (1), the concept of domicile(2) and, lastly, the discretionary powers enjoyedby the courts to determine territorial jurisdiction(3).

1. FIRST INSTANCE JURISDICTION OF THESUPERIOR COURTS

70. The Continental Member States of theCommunity have geographically definedjurisdictions where courts of first instance arecompetent to give judgments even in the mostimportant civil disputes. There are many courtsof equal status: approximately 50 ' Landgerichtein Germany, and an equal number of ' tribunauxde grande instance' in France and ' Tribunali' inItaly. Where the 1968 Convention itself laysdown both the international and local jurisdictionof the courts, as for example in Articles 5 and 6jurisdiction is given to only one of the manycourts with equal status in a State. There is littleroom for such a distinction in the judicial systems


of Ireland and the United Kingdom in so far as aSuperior Court has jurisdiction as a court of firstinstance.

In Ireland, the High Court is the only court offirst instance with unlimited jurisdiction. It canexceptionally, sit outside Dublin. Nothing in the1968 Convention precludes this. In addition tothe High Court, there is a Circuit Court and aDistrict Court. In respect of tp.ese courts too , theexpression ' the Court ' is used in the singular andthere is only one Court for the whole country,but each of its judges is permanently assigned to aspecific circuit or district. The local jurisdictionlaid down in the 1968 Convention means, in thecase of Ireland, the judge assigned to a certaincircui t' or ' district

In the United Kingdom three Superior Courtshave jurisdiction at first instance: the High Courtof Justice for England and Wales, the OuterHouse of the Court of Session for Scotland andthe High Court for Northern Ireland. Each ofthese courts qas , however, exclusive jurisdictionfor the entire territory of the relevant part of theUnited Kingdom (see paragraph 11). Thus thesame comments as those made in connection withthe territorial jurisdiction of the Irish High Courtapply also to each judicial area. The possibility oftransferring a case from London to a districtregistry of the High Court does not mean transferto another court. Bearing in mind that foreignjudgments have to be registered separately in

- respect of each of the judicial areas of the UnitedKingdom in order to become enforceable therein(see paragraph 208), the distinction betweeninternational and local jurisdiction becomeslargely irrelevant in the United Kingdom. Therules in the 1968 Convention governing localjurisdiction are relevant to the Superior Courts offirst instance in the United Kingdom only in sofar as a distinction has to be made between thecourts of England and Wales, Scotland andNorthern Ireland. The competence of the othercourts (County Courts , Magistrates ' Courts , andin Scotland, the Sheriff Courts) presents noparticular problems.

2. THE CONCEPT OF 'DOMICILE' AND THEAPPLICA TION OF THE CONVENTION

71. (a) The concept of domicile is of fundamentalimportance for the 1968 Convention indetermining jurisdiction (e.g. Articles 2 to 6 , 8

12 (3), 17 and 32). In the legal systems of

the original Member States of the EEC itsmeaning differs to some extent. In the FederalRepublic of Germany, it expresses a person

connection with a local community within thenational territory. In France and Luxembourg, itdenotes a person s exact address. In Belgium , for

, purposes of jurisdiction the term denotes theplace where a person is entered in the register ofpopulation as having his principal residence(Article 36 of the Code judiciaire). Thesedifferences explain why" in determining aperson s domicile, e.g. German law places greateremphasis on the stability of the connection with aspecific place than do some of the other legalsystems.

Notwithstanding these differences the basicconcept of ' domicile' is the same in all the legalsystems of the original Member States of theEEC, namely the connection of a person with asmaller local unit within the State. This made itpossible in Article 52 of the 1968 Convention toleave a more precise definition of the term to thelaw of the State in which the ' domicile' of aperson had to be ascertained. It did not lead to anuneven application of the provisions of the 1968Convention. Clearly, for the purposes of applyingthem in the original Member States of th~Community it is irrelevant whether the concept ofdomicile refers to a specific address or to a localcommunity.

72. (b) The concept of domicile under the law inIreland and the United Kingdom differsconsiderably in several respects from theContinental con~ept.

First, this concept does not refer to a personconnection with a particular place and even lesswith a particular residence within a place, but tohis having his roots within a territory covered bya particular legal system (see paragraph 11). Aperson domicile only indicates whether hecomes under the legal system of England andWales, Scotland, Northern Ireland, or possibly

under a foreign legal system. A person s legal

connection with a particular place is denoted bythe word ' residence , not ' domicile

According to United Kingdom law, a person

always has one 'domicile' and can never havemore than ' one. At birth a legitimate childacquires the domicile of its father, an illegitimatechild that of its mother. child retains itsdomicile of its parents throughout its minority.


After it reaches its majority, it may acquireanother domicile but for this there are very strictrequirements: the usual place of residence musthave been transferred to another country withthe intention of keeping it there permanently orat least for an unlimited period.

73. (c) Article 52 of the 1968 Convention does notexpressly provide for the linking of the concept ofdomicile with a particular place or a particularresidence, nor does it expressly prohibit it frombeing connected with a particular nationalterritory. The United Kingdom and Irelandwould, consequently, be free to retain theirtraditional concept of domicile when thejurisdiction of their courts is invoked. The

Working Party came to the conclusion that thiswould lead to a certain imbalance in theapplication of the 1968 Convention. In certaincases, the courts of the United Kingdom orIreland could assume jurisdiction on the basis oftheir rules on the retention of domicile , althoughby the law of all the other Member States of theCommunity, such a person would be domiciled athis actual place of residence within their territory.

The Working Party therefore requested theUnited Kingdom a!1d Ireland to provide in theirlegislation implementing the 1968 Convention(see paragraph 256), at any rate for the purposesof that Convention, for a concept of domicile

which would depart from their traditional rulesand would tend to reflect more the concept ofdomicile ' as understood in the original States of

the EEc.

In Article 69 (5) of the Convention for theEuropean patent for the common market whichwas drawn up concurrently with the WorkingParty s discussions, the concept of 'Wohnsitz' is

translated as ' residence' and for the meaning ofthe expression reference is made to Articles 52and 53 of the 1968 Convention. To preventconfusion, the proposed new Article V c of theProtocol makes it clear that the concept of

residence ' within the meaning of the CommunityPatent Convention should be ascertained in thesame way as the concept of ' domicile ' in the 1968Convention.

74. (d) It should be noted that the application of thethird paragraph of Article 52 raises the problemof different concepts of domicile, whenconsidering which system of law determineswhether a person s domicile depends on that of

another person. The relevant factor, in such a

case, may be where the dependent person domiciled. Under United Kingdom privateinternational law, the question whether a personhas a dependent domicile is not determined by

that person s nationality, but by his domicile inthe traditional sense of that concept. There-definition of ' domicile ' in connection with thefirst paragraph of Article 52 in no way affectsthis.

If a foreigner under age who has settled inEngland is sued in an English court, that courtmust take account of the different concepts ofdomicile. As a first step it must establish wherethe defendant had his ' domicile ' before settling inEngland. This is decided in accordance with thetraditional meaning of that concept. The law thusfound to be applicable will then determinewhether the minor was in a position to acquire adomicile ' in England within the meaning of the1968 Convention. The English court must thenascertain whether the requirements for domicile' in the area covered by the English

court concerned are satisfied.

75. (e) There is no equivalent in the law of theUnited Kingdom to the concept of the ' seat ' of acompany in Continental law. In order to achIevethe results which under private international laware linked on the continent with the ' seat' of acompany, the United Kingdom looks to the legalsystem where the company was incorporatedlaw of incorporation , Section 406 of the

Companies Act, 1948). The 'domicile' of acompany in the traditional sense of the term (seeparagraph 72) is taken to be the judicial area inwhich it was incorporated. The new MemberStates of the Community are not obliged tointroduce a legal concept which corresponds tothat of a company s ' seat' within the meaning ofthe continental legal systems, just as in general

they are not obliged to adapt their concept ofdomicile. However, should the United Kingdomand Ireland not change their law on this point,the result would again be an imbalance in theapplication of the 1968 Convention. It wouldtherefore , be desirable for the United Kingdom tointroduce for the purposes of the Convention anappropriate concept in its national legislationsuch as 'domicile of a company , which wouldcorrespond more closely to the Continentalconcept of the ' se~t' of a company than thepresent United Kingdom concept of ' law ofincorporation

' .

Such a provision would not preclude a companyfrom having a ' domicile' in the United Kingdom


in accordance with legislation in the UnitedKingdom and a ' seat' in a Continental State inaccordance with the legislation of that State. As aresult of the second sentence of Article 53 , acompany is enabled under the laws of several ofthe original States of the EEC to have a ' seat' inmore than one State. The problems which mightarise from such a situation can be overcome bythe provisions in the 1968 Convention on lispendens and related actions (see paragraph 162).

3. DISCRETIONARY POWERS REGARDINGJURISDICTION AND TRANSFER OFPROCEEDINGS

76. The idea that a national court has discretion inthe exercise of its jurisdiction either territoriallyor as regards the subject matter of a dispute doesnot generally exist in Continental legal systems.Even where, in the rules relating to jurisdiction

tests of an exceptionally flexible nature are laiddown, no room is left for the exercise of anydiscretionary latitude. It is true that Continentallegal systems recognize the power of a court totransfer proceedings from one court to another.Even then the court has no discretion indetermining whether or not this power should beexercised. In contrast, the law in the United

Kingdom and in Ireland has evolved judicialdiscretionary powers in certain fields. In somecases, these correspond in practice to legalprovisions regarding jurisdiction which are moredetailed in the Continental States , while in othersthey have no counterpart on the Continent. It istherefore difficult to evaluate such powers withinthe context of the 1968 Convention. A distinctionhas to be made between the international andnational application of this legal concept.

77. (a) In relationships with the courts of other Statesand also, within the United Kingdom , as betweenthe courts of different judicial areas (seeparagraph 11) the doctrine of forum conveniens

in Scotland forum non conveniens is ofrelevance.

The courts are allowed, although only in very

rare and exceptional cases, to disregard the fact

that proceedings may already be pending beforeforeign courts, or courts of another judicial area.

Exceptionally, the courts may refuse to hear ordecide a case, if they believe it would be better forthe case to be heard before a court having

equivalent jurisdiction in another State (oranother judicial area) because this would increasethe likelihood of an efficient and impartialhearing of the particular case.

There are several special reasons why in practicesuch discretionary powers are exercised: the strictrequirements traditionally imposed by the laws ofthe United Kingdom and Ireland regardingchanges of domicile (see paragraph 72); the rulesallowing establishment of jurisdiction by merelyserving a writ or originating summons in theterritory of the State concerned (see paragraphs85 and 86); the principles developed particularlystrongly in the procedural law of these Statesrequiring directness in the taking of evidence withthe consequent restrictions on making use ofevidence taken abroad or merely in anotherjudicial area; and finally, the considerabledifficulties arising in the application of foreignlaw by United Kingdom or Irish courts.

78. According to the views of the delegations fromthe Continental Member States of theCommunity such possibilities are not open to thecourts of those States when, under the 1968Convention , they have jurisdiction and are askedto adjudicate.

Article 21 expressly prohibits a court fromdisregarding the fact that proceedings are alreadypending ab~oad. For the rest the view wasexpressed that under the 1968 Convention theContracting States are not only entitled toexercise jurisdiction in accordance with theprovisions laid down in Title 2; they are alsoobliged to do so. A plaintiff must be sure whichcourt has jurisdiction. He should not have towaste his time and money risking that the courtconcerned may consider itself less competent thananother. In particular, in accordance with thegeneral spirit of the 1968 Convention, the fact

that foreign law has to be applied eithergenerally or in a particular case, should not

constitute a sufficient reason for court to

decline jurisdiction. Where the courts of severalStates have jurisdiction the plaintiff hasdeliberately been given a right of choice, whichshould not be weakened by application of thedoctrine of forum conveniens. The plaintiff mayhave chosen another apparently ' inappropriatecourt from among the competent courts in orderto obtain a judgment in the State in which he alsowishes to enforce it. Furthermore, the risk of anegative conflict of jurisdiction should not bedisregarded: despite the United Kingdom courtdecision, the judge on the Continent couldlikewise decline jurisdiction. The practical


reasons in favour of the doctrine of forumconveniens will lose considerably in significance

as soon as the 1968 Convention becomesapplicable in the United Kingdom and Ireland.The implementing legislation will necessitate notinconsiderable changes in the laws of thoseStates, both in respect of the definition of theconcept of domicile (see paragraph 73) and onaccount of the abolition of jurisdictionalcompetence based merely on service of a writ

within the area of the court (see paragraph 86).To correct rules of jurisdiction in a particularcase by means of the concept of forumconveniens will then be largely unnecessary. Afterconsidering these arguments the United Kingdomand Irish delegations did not press for a formaladjustment of the 1968 Convention on this point.

79. (b) A concept similar to the doctrine of forumconveniens is also applied within the territory ofthe State, though the term itself is not used in thatcontext. This may be due to the fact that thesame result can be achieved by the device oftransferring the case to another court havingalternative jurisdiction within the same State orthe same legal area (see paragraph 11). TheWorking Party had to examine to what extent the1968 Convention restricted such powers oftransfer. In this connection certain commentsmade earlier may be repeated: the powers of theSuperior Courts in Ireland or in a judicial area ofthe United Kingdom (see paragraph 70) to decideas a court of first instance remain unchanged. Forthe rest, the following applies:

80. (aa) The previous legal position in Ireland andthe United Kingdom remains essentially the same.Each court can transfer proceedings to anothercourt, if that court has equivalent jurisdiction andcan better deal with the matter. For example, if

an action is brought before the High Court, thevalue of which is unlikely to exceed the amountwhich limits the jurisdiction of the lower courtthe High Court has power to transfer theproceedings to such a court, but it is not obligedto do so. A Circuit Court in Ireland, a CountyCourt or Magistrates' Court in England and a

Sheriff Court in Scotland but not an IrishDistrict Court (see paragraph 70) - may transferproceedings to another court of the samecategory or exceptionally to a court of another

category, if the location of the evidence or the

circumstances for a fair hearing should makesuch a course desirable in the interest of the

parties.

Some Continental legal systems also provide forthe possibility, albeit on a much smaller scale , ofa judge having discretion to confer jurisdiction ona court which would not otherwise have it. Thisis the case under, for instance, Article 36 of theGerman Code of Civil Procedure, if properproceedings are not possible before the court

which originally had jurisdiction. Under Section356 of the new French Code of CivilProcedure (19) proceedings may be transferred toanother court of the same type, if a risk of lack ofimpartiality exists.

81. (bb) The 1968 Convention in no way affects thecompetence as regards subject matter of thecourts of a State. The national legal systems arethus free to provide for the possibility of transferof cases between courts of different categories.

For the most part, the 1968 Convention does notaffect the territorial jurisdiction of the courtswithin a State, but only their internationaljurisdiction. This is clearly reflected by the basicrule on jurisdiction contained in Article 2. Unlessthe jurisdiction of a court where proceedings areinstituted against a person domiciled in theUnited Kingdom or Ireland is derived from aprovision of the 1968 Convention which at thesame time determines local jurisdiction, as for

example Article 5 , the 1968 Convention does notprevent a transfer of the proceedings to anothercourt in the same State. Even in respect ofexclusive jurisdiction, Article 16 only lays downthe international jurisdiction of the courts of aState, and does not prevent a transfer within thatState.

Finally, the 1968 Convention does not of courseprev~nt a transfer to the court which actually haslocal ' jurisdiction under the Convention. Thiswould occur where both parties agree to thetransfer and the requirements for jurisdiction byconsent pursuant to Article 17 are satisfied.

The only type of case which remains problematicis where an action is brought before a court incircumstances where the 1968 Convention givesthe plaintiff a choice of jurisdiction. An action intort or a liability insurance claim is brought at theplace where the harmful event occurred or a


maintenance claim at the domicile of themaintenance creditor. It appears obvious that inspecial exceptional cases a transfer to another

court of the same State must be permitted, whenproper proceedings are not possible before the

court which would otherwise have jurisdiction. ,However, the Working Party did not feel justifiedin incorporating these matters expressly in the

1968 Conventation. They could be covered by arule of interpretation to the effect that the courthaving local jurisdiction may, in exceptionalcases, include the court which is designated ashaving local jurisdiction by the decision ofanother court. The courts for the place 'where theharmful event occurred' could thus be aneighbouring court designated by another courtif the courts for the place of the harmful event;should be unable to hear the proceedings.

In so far as a court's discretionary powers toconfer jurisdiction on other courts and inparticular to transfer proceedings to anothercourt are not defined in detail such discretionarypowers should, of course, only be used in the

spirit of the 1968 Convention, if the latter hasdetermined, not only international but also localjurisdiction. A transfer merely on account of thecost of the proceedings or in order to facilitatethe taking of evidence would be possible onlywith the consent of the plaintiff, who had thechoice of jurisdiction.

COMMENTS ON THE SECTIONS OF TITLE II

Section 1

General provisions

82. The proposed adjustments to Articles 2 to 4

are confined to inserting certain exorbitantjurisdictions in the legal systems of the newMember States into the second paragraph ofArticle 3. The occasion has been taken to adjustthe text of that Article to take account also of anamendment to the law which has been introducedin Belgium. Detailed comments on the proposedalterations (I) precede two more general remarkson the relevance of this provision to the wholestructure of the 1968 Convention (II).

I. Detailed comments

83. 1. Belgium

In Belgium , Articles 52 , 52 bis and 53 of the lawof 25 March 1876 had already been supersededbefore the coming into force of the 1968Convention by Articles 635 , 637 and 638 of theJudicial Code. Nevertheless only Article 638 ofthe Judicial Code is mentioned in the secondparagraph of Article 3 in its revised version. Itcorresponds to Article 53 of the law of 25 March1876 and provides that where Belgian courts donot possess jurisdiction based on otherprovisions , a plaintiff resident in Belgium may sueany person before the court of his place ofresidence. The version of Article 3 , valid hithertoerroneously classed the jurisdiction based onArticles 52 and 52 bis of the abovementioned lawas exorbitant.

84. 2. Denmark

The provIsIOns of Danish law included in thesecond paragraph of Article 3 state that aforeigner may be sued before any Danish court inwhose district he is resident or has property whenthe document instituting the proceedings isserved. On this last point the provisioncorresponds to similar German provisionsincluded in the list of exorbitant jurisdictions. Onthe first point reference may be made to whatfollows concerning Ireland (see paragraph 85).There is a separate Code of, Civil Procedure forGreenland (see paragraph 253); special referencehad therefore to be made to the correspondingprovisions affecting that country.

85. 3. Ireland

According to the principles of common lawwhich are unwritten and apply equally in theUnited Kingdom and Ireland, a court hasjurisdiction in principle if the plaintiff has beenproperly served with the court process. Thejurisdiction of Irish (and United Kingdom) courtsis indirectly restricted to the extent of the limitsimposed on the service of a writ of summons.Service is available without special leave onlywithin the territory of Ireland (or the UnitedKingdom). However every service validlyeffected there is sufficient to establishjurisdiction; even a short stay by the defendant in


the territory concerned will suffice. Serviceabroad will be authorized only where certainspecified conditions are satisfied. As regards legalrelations within the, EEC especially because ofthe possibility of free movement of judgmentsresulting from the 1968 Convention there isno longer any justification for founding thejurisdiction of a court on the mere temporarypresence of a person in the State of the court

concerned. This common law jurisdiction, for

which of course no statutory enactment can becited, had therefore to be classed as exorbitant.

86. 4. United Kingdom

As regards the United Kingdom it will suffice forpoint (a) of Article 3, second paragraph, of the

1968 Convention as amended, to refer to whathas been said above in the case of Ireland. Points(b) and (c) deal with some characteristic featuresof Scottish law. To establish jurisdiction merelyby service of a writ of summons during thetemporary presence of the defendant is a rarethough not totally unknown , practice in Scotland.Scottish courts usually base their jurisdiction inrespect of a defendant not permanently residentthere on other factors, namely that he has been inScotland for at least 40 days, or that he ownsimmovable property in Scotland or that he ownsmovable property which has been impounded inScotland. In such cases service on the defendant isalso required, but this may be effected by post orexceptionally, by posting it on the court notice

board. In the case of Germany, the 1968Convention has already classed jurisdiction basedsolely on the existence of property in Germany asexorbitant. Any jurisdiction based solely on theseizure of property within a country must be

treated in the same way.

II. The relevance of the second paragraph of Article to the whole structure of the 1968 Convention

87. 1. The special significance of the secondparagraph of Article

The rejection as exorbitant of jurisdictional baseshitherto considered to be important in the new

Member States should not, any more than theoriginal version of the second paragraph ofArticle 3, mislead anyone into thinking that thescope of the first paragraph of Article 3 wouldthereby be more closely circumscribed. Onlyparticularly extravagant claims to internationaljurisdiction by the courts of a Member State areexpressly underlined. Other rules foundingjurisdiction in the national laws of the newMember States are compatible with the 1968Convention also only to the extent that they donot offend against Article 2 and Articles 4 to 18.Thus, for example, the jurisdiction of Englishcourts in respect of persons domiciled in theCommunity can no longer be based on theground that the claim concerns a contract whichwas concluded in England or is governed byEnglish law. On the other hand, the rules on thejurisdiction of English courts in connection withbreaches of contract in England or claimsconnected with the commission or omission of anact in England largely correspond to theprovisions in Article 5 (1) to (3).

2. Impossibility of founding jurisdictionon the location of property

88. With regard to Germany, Denmark and theUnited Kingdom the list in the second paragraphof Article 3 contains provisions rejectingjurisdiction derived solely from the existence ofproperty in the territory of the State in which thecourt is situated. Such jurisdiction cannot beasserted even if the proceedings concern a disputeover rights of ownership, or possession, or the

capacity to dispose of the specific property inquestion. Persons domiciled on the Continent Europe may not be sued in Scotland, even if theaim of the action is to recover movable propertysituated or seized there or to determine itsownership. Interpleader actions (England andWales) and multiple poinding (Scotland) are nolonger permissible in the United Kingdom inrespect of persons domiciled in another MemberState of the Community, in so far as theinternational jurisdiction of the English orScottish courts does not result from otherprovisions of the 1968 ConventIOn. This appliesfor example, to actions brought by an auctioneerto establish whether ownership of an article sentto him for disposal belongs to his customer or athird party claiming the article.


There is, however, no reason why UnitedKingdom legislation should not introduceappropriate measures pursuant to Article 24 , to

provide protection to persons (such auctioneers) faced with conflicting legal claims.This might, for instance, take the form of a courtorder authorizing an article to be temporarilywithdrawn from auction.

As regards persons who are domiciled outside theCommunity, the provisions which hithe'rtogoverned the jurisdiction of courts in the newMember States remains unaffected. Even the rulesof jurisdiction mentioned in the second paragraphof Article 3 may continue to apply to suchpersons. Judgments delivered by courts whichthus have jurisdiction must also be rec0gnizedand enforced in other States of the Community -unless one of the exceptions in the new paragraph5 of Article 27 or in Article 59 as amendedapplies.

This latter provision is the only one concerningwhich the list in Article 3 , second paragraph isnot only of illustrative significance but has directand restrictive importance. (see paragraph 249).

Section 2

Special jurisdictions (21

89. In the sphere of special non-exclusivejurisdictions the problems of adjustment wereconfined to judicial competence as regardsmaintenance claims (I), questions raised by trustsin United Kingdom and Irish law (II) andproblems in connection with jurisdiction inmaritime cases (III). In addition, the WorkingParty dealt with a few less important individualquestions (IV).

Reference should be made here to the Judgmentsof the Court of Justice of the EuropeanCommunities of 6 October 1976 (12/76; 14/76)and of 30 November 1976 (21/76) which weredelivered shortly before or after the end of thenegotiations (22

I. Maintenance claims

90. The need for an adjustment of Article 5 (2) arosebecause the laws of the new Member States

was also by then the case with the laws of manyof the original States of the EEC allow statusproceedings to be combined with proceedingsconcerning maintenance claims (see paragraphs32 to 42). As far as other problems wereconcerned no formal adjustment was ,required.However certain special features of UnitedKingdom and Irish law give rise to questions ofinterpretation; the views of the Working Party asto their solutions should be recorded. Theyconcern a more precise definition of the termmaintenance (1) and how maintenanceentitlements are to be adjusted to changedcircumstances in accordance with the system

jurisdiction and ft'cognition established by the1968 Convention (2).

1. The term 'maintenance

91. (a) The 1968 Convention refers simply tomaintenance ' in Article 5 (2), the only Article

which uses the expression. Several legal conceptsused within one and the same national legalsystem can be covered by this term. For example,Italian law speaks of ' alimenti' (Article 433 seq. of the codice civile) to indicate paymentsamongst relations and spouses, but paymentsafter divorce are ' assegni' (23). The new Frenchdivorce law (24 ), too, does not speak of 'alimentsbut of\.kvoir de secours . In addition French legal,terminology uses the expressions ' devoir

entretien ' and ' contribution aux charges dumenage . All those are ' maintenance' within themeaning of Article 5 (2) of the 1968 Convention.

92. (b) The Article says nothing, however, about thelegal basis from which maintenance claims canemanate. The wording differs markedly from thatof the Hague Convention of 2 October 1973 onthe recognition and enforcement of decisionsrelating to maintenance obligations. Article 1 ofthat Convention excludes from its scopemaintenance claims arising from tort, contractand the law of succession. However, there is nosignificant difference regarding the concept ofmaintenance as used in the two Conventions. The1968 Convention is in any case not applicable tomaintenance claims under the law of succession(second paragraph, point (1) of Article 1).Maintenance ' claims as the legal consequence of

tortious act are, in legal theory, claims fordamages, even if the amount of compensationdepends on the needs of the injured party.Contracts creating a 'maintenance' obligation


which previously did not exist are, according tothe form employed, gifts, contracts of sale or

other contracts for a consideration. Obligations

arising therefrom, even where they consist in thepayment of 'maintenance , are to be treated like

other contractual obligations. In such casesArticle 5 (1) rather than 5 (2) of the 1968Convention applies as far as jurisdiction isconcerned; the outcome hardly differs from anapplication of Article 5 (2). 'Maintenanceobligations created by contract are generally to befulfilled at the domicile or habitual residence ofthe maintenance creditor. Thus actions may alsobe brought there. Article 5 (2) is applicablehowever, where a maintenance contract merelycrystallizes an existing maintenance obligationwhich originated from a family relationship.

Judicial proceedings concerning ' maintenanceclaims are still civil and commercial matters evenwhere Article 5 (2) is not applicable because theclaim arises from a tortious act or a contract.

93. (c) The concept of maintenance does not stipulatethat the claim must be for periodic payments.Under Article 1613 (2) of the German Civil Codefor example, the maintenance creditor may inaddition to regular payments, claim payment of alump sum on the ground of exceptional need.Under Article 1615 (e) of the Code a father mayagree with his illegitimate child on the paymentof a lump sum settlement. Article 5 (4), third

sentence of the Italian, divorce law 1 December 1970 allows divorced spouses toagree on the payment of maintenance in the formof a lump sum settlement. Finally, under Article285 of the French Civil Code, as amended by thedivorce law of 11 July 1975, the French courts

can order maintenance in the form of a singlecapital payment even without the agreement ofthe spouses. The mere fact that the courts in theUnited Kingdom have power to order not onlyperiodic payments by one spouse to the otherafter a divorce, but also the payment of a singlelump sum of money, does not therefore preventthe proceedings or a judgment from being treatedas a maintenance matter. Even the creation ofcharges on property and the transfer of propertyas provided on the Continent, for example inArticle 8 of the Italian divorce law, can be in thenature of maintenance.

94. (d) It is difficult to distinguish between claims formaintenance on the one hand and claims fordamages and the division of property on theother.

95. (aa) In Continental Europe a motivating factor inassessing the amount of maintenance due to adivorced spouse by his former partner is tocompensate an innocent spouse for his loss ofmatrimonial status. A typical example contained in Article 301 of the Civil Code in itsoriginal form , which still applies in Luxembourg.In its two paragraphs a sharp distinction is drawnin respect of post-matrimonial relations betweena claim for maintenance and compensation formaterial and non-material damages. Yet materialdamages generally consist in the loss of theprovision of maintenance which the divorcedparty would have enjoyed as a spouse. Thus theclaims deriving from the two paragraphs ofArticle 301 of the Civil Code overlap in practiceespecially since they can both take the form of apension or a single capital payment. It remains tobe seen whether the new French divorce law of11 July 1975 , which makes a clearer distinctionbetween 'prestatiops compensatoires ' and ' devoirde secours , will change this situation.

Under Section 23 (1) (c) and (f) and Section 27(6) (c) of the English Matrimonial causes Act1973 , an English divorce court, too, may order alump sum to be paid by one divorced spouse tothe other or to a child. However, English lawwhich is characterized by judicial discretionarypowers and which does not favour inflexiblesystematic rules, does not make a distinction as towhether the payments ordered by the Court areintended as damages or as maintenance.

96. (bb) The 1968 Convention is not applicable atall where the payments claimed or ordered aregoverned by matrimonial property law (seeparagraph 45 et seq). Where claims for damagesare involved Article 5 (2) is not relevant.Whether or not that provision applies depends, inthe case of a lump sum payment, solely onwhether a payment under family law is in thenature of maintenance.

The maintenance nature of the payment is likelyto predominate in relation to children. As


between 'spouses, a division of property ordamages may well be the underlying factor.Where both spouses are earning well, payment ofa lump sum can only serve the purpose of adivision of property or compensation fornon-material damage. In that case the obligationto pay is not in the nature of maintenance. Ifpayment is in pursuance of a division of property,the 1968 Convention does not apply at all. If it isto compensate for non-material damage, there isno scope for the application of Article 5 (2).A divorce court may not adjudicate in the matterin either case, unless it has jurisdiction underArticle 2 or Article 5 (1).

97. (e) All legal systems have to deal with theproblems of how the needs of a person requiringfinancial support are to be met when themaintenance debtor defaults. Others also liable toprovide maintenance if necessary a publicauthority, may have to step in temporarily. They,in turn, should be able to obtain a refund of theiroutlay from the (principal) maintenance debtor.Legal systems have therefore evolved variousmethods to overcome this problem. Some of themprovide for the maintenance claim to betransferred to the payer, thereby giving it a newcreditor, but not otherwise changing its nature.Others confer on the payer an independent rightto compensation. United Kingdom law makesparticular use of the latter method in cases wherethe Supplementary Benefits Commission has paidmaintenance. As already mentioned in the Jenardreport (25) claims of this type are covered by the1968 Convention even where claims forcompensation are based on a payment made by

public authority in accordance withadministrative law or under provisions of socialsecurity legislation. It is not, however, thepurpose of the special rules of jurisdiction inArticle 5 (2) to confer jurisdiction in respect ofcompensation claims on the courts of thedomicile of the maintenance creditor or even

those of the seat of the public authority whichever of the two abovementioned methods alegal system may have opted for.

2. Adjustment of maintenance orders

98. Economic circumstances in general and theparticular economic position of those obliged topay and those entitled to receive maintenance areconstantly changing. The need for periodicaladjustments of maintenance orders arisesparticularly in times of creeping inflation.

Jurisdiction to order adjustments depends on thegeneral provisions of the 1968 Convention. Sincethis is a problem of great practical importance itmay be appropriate to preface its discussion indetail with a brief comparative legal survey.

99. (a) Continental legal systems differ according towhether the emphasis of the relevant legalprovisions is placed on the concept of aninfringement of the principle of finality of amaintenance judgment or more on the concept ofan adjustment of the question of the claim (aa).In this respect, as in many others , the provisionsof United Kingdom (bb) and Irish (cc) law do notfit into this scheme.

100. (aa) The prOVISIOns of German law relating toadjustments of maintenance orders are based onthe concept of a special procedural remedy inthe nature of a review of the proceedings(Wiederaufnahmeklage) .

Since there are no special provisions governingjurisdiction, the general provisions governingjurisdiction in maintenance claims are consideredapplicable. This means that the original courtmaking the maintenance order may have lost itscompetence to adjust it. Enforcement authorities,even when they are courts , have no power, eitherin general or in maintenance cases, to adjust ajudgment to changed circumstances. Provisionsgiving protection against enforcement of ajudgment for social reasons apply irrespective ofwhether or not the amount ordered to be paid in

, the judgment is subject to variation. This is alsotrue regarding the subsidiary provision of Article765 (a) of the Zivilprozessordnung (Code of CivilProcedure) (26), which is of general applicationand states that enforcement measures may berescinded or disallowed in very specialcircumstances if they constitute an unduehardship for the debtor.

Accordingly legal theory and case law accept thata foreign maintenance order may be adjusted by aGerman court, if the latter has jurisdiction (27

In the legal systems in the other original MemberStates of the EEC the problem has always beenregarded as one of substantive law and not as a


remedy providing protection against enforcementof judicial decisions. Accordingly jurisdictiondepends on the general principles applying tomaintenance cases (28

).

Indirect adjustments

cannot be obtained by invoking, as a defenceagainst measures of enforcement, a change in thecircumstances which were taken into account

determining the amount of the maintenance.

In general, the 1968 Convention is based on asimilar legal position obtaining in all the originalMember States: in the case of proceedings foradjustment of maintenance order thejurisdiction of the court concerned has to beexamined afresh.

101. (bb) In the United Kingdom , the most importantlegal basis for amendment of maintenance ordersis Section 53 of the Magistrates ' Courts Act of1952 in conjunction with Sections 8 to 10 of theMatrimonial proceedings (Magistrates' Courts)Act 1960 which will be suspended in 1979 by theDomestic proceedings and Magistrates' CourtsAct 1978. According to these Acts, the Courtmay revoke or vary maintenance orders , or revivethem after they have been revoked or varied. Inaddition, the court in whose district the applicantis now resident also has jurisdiction in suchmatters (29). In principle, the court s discretion isunfettered in such cases, but an application for

variation may not be based on facts or evidencewhich could have been relied on when theoriginal order was made (30). The same appliesunder Section 31 of the Matrimonial causes Act1973. A divorce court can vary or discharge anorder it has made with regard to maintenanceirrespective of whether the original basis for itsjurisdiction still exists or not.

102. To these possibilities must be added anothercharacteristic aspect of the British judicial system.Enforcement of judgments is linked much moreclosely than on the Continent to the jurisdictionof the particular court which gave the judgment(see paragraph 208). Before a judgment can beenforced by the executive organs of another

court, it must be registered with that other court.After registration , it is regarded as a judgment ofthat court. A further consequence is that, after

, such registration, the court with which it registered is empowered to amend it. Hithertothe United Kingdom has also applied this systemin cases where foreign maintenance judgments

have been registered with a British court to beenforced in the United Kingdom (31

103. (cc) In Ireland the District Court has jurisdictionto make maintenance orders in respect of spousesand children of a marriage and also in respect ofillegitimate children. The Court also has power tovary or revoke its maintenance orders. Thejurisdiction of the Court is exercised by the judgefor the district where either of the parties to theproceedings is ordinarily resident or carries onany profession or occupation or, in the case ofillegitimate children, the judge for the district inwhich the mother of the child resides. A judgewho makes a maintenance order loses jurisdictionto vary it if these requirements as to residence, etc.,are no longer fulfilled. Apart from the possibilityof having a maintenance order varied there is aright of appeal to the Circuit Court from suchorders made by the District Court. The CircuitCourt also has jurisdiction to make maintenanceorders in proceedings relating to the guardianshipof infants. It may also vary or revoke itsmaintenance orders. Its jurisdiction is exercisedby the judge for the circuit in which thedefendant is ordinarily resident at the date ofapplication for maintenance or at the date of

application for a variation of a maintenanceorder, as the case may be. An appeal lies to theHigh Court.

The High Court may order maintenance to bepaid including alimony pending suit andpermanent alimony following the granting ofdivorce a mensa et thoro. It has jurisdiction to

vary its own maintenance orders and appealsagainst its orders lie to the Supreme Court.

104. (b) Although it nowhere states this expressly, the1968 Convention is based on the principle thatall judgments given in a Member State can becontested in that State by all the legal remediesavailable under the law of that State, even whenthe basis on which the competence of the courtsof that State was founded no longer exists. InFrance, a French judgment may be contested byan appeal, appeal in cassation and an applicationto set aside a conviction , even if the defendanthas long since ceased to be domiciled in France. Itfollows from the obligation of recognition that noContracting State can claim jurisdiction withregard to appeals against judgments given inanother Contracting State. This also coversproceedings similar to an appeal, such as an


action of reduction in Scotland or Wiederaufnahmeklage ' in Germany. Conversely,every claim to jurisdiction which is not based onproceedings to pursue a remedy by way of appealmust satisfy the provisions of the 1968Convention. This has three importantconsequences (see paragraphs 105 to 107) fordecisions concerning jurisdiction for theadjustment of maintenance orders. A fourthconcerns recognition and enforcement and ismentioned now as a connected matter. (Seeparagraph 108).

105. On no account may the court of the State

. ,

addressed examine whether the amount awardedis still appropriate , without having regard to thejurisdiction provisions of the 1968 Convention. Ifthe proceedings are an appeal , the courts of theState of origin will remain competent.Alternatively the new action may be quite distinctfrom the original proceedings, in which case thejurisdiction provisions of the 1978 Conventionmust be observed.

106. (bb)Under the legal systems of all six originalEECStates , the adjustment of maintenance orders, atany rate ~s far as jurisdiction is concerned, is notregarded as a remedy by way of appeal (seeparagraph 100). Accordingly the courts of theState of origin lose their competence to adjustmaintenance orders within the original scope ofthe 1968 Convention, if the conditions on 'whichtheir jurisdiction was based no longer exist. The1968 Convention could not, however, be appliedconsistently, if the courts in the United Kingdomwere to claim jurisdiction to adjust decisions

irrespective of the continued existence of the factson which jurisdiction was originally based.

107. Applications for the adjustment of maintenanceclaims can only be made in courts withjurisdiction under Article 2 or Article (2), as

amended , of the 1968 Convention. For exampleif the maintenance creditor claims adjustment dueto increases in the cost of living, he may choosebetween the international jurisdiction of thedomicile of the maintenance debtor and the localjurisdiction of the place where he himself isdomiciled or habitually resident. However, if themaintenance debtor seeks adjustment because ofa deterioration in his financial circumstances , hecan only apply under the internationaljurisdiction referred to in Article 2, i.e. thejurisdiction of the domicile of the maintenancecreditor, even where the original judgment

(pursuant to Article 2 where it is applicable) wasgiven in the State of his own domicile and theparties have retained their places of residence.

108. If a maintenance debtor wishes effect to be givenin another State to an adjusted order, account

must be taken of the reversed roles of the parties.Adjustment at the instance of the maintenancedebtor can only be aimed at a remission orreduction of the amount of maintenance.Reliance on such a decision in anotherContracting State does not therefore involveenforcement' within the meaning of Sections 2and 3 of Title III, but rather recognition asreferred to in Section 1 of that Title. It is true thatthe second paragraph of Article 26 makesprovision for a special application to obtain

recognition of a judgment, and the provisions ofSections 2 and 3 of Title III concerningenforcement are applicable to such application. If in these circumstancesrecognition is to be granted to a judgment whichhas been amended on the application of themaintenance debtor, the position is as follows:the applicant within the meaning of Articles 34and 36 is not the creditor but the debtor, andtherefore, according to Article 34 , the creditor isthe party who is not entitled to make anysubmissions. The right of appeal of the party

against whom enforcement is sought, providedfor in Article 36 , lies with the creditor in thiscase. As applicant, the maintenance debtor hasthe right laid down in the second paragraph ofArticle 42, read together with the secondparagraph of Article 26 , to request recognition ofpart only of an adjusting order. For theapplication of Article 44 it has to be determinedwhether, as plaintiff, he was granted legal aid inthe original proceedings.

II. Trusts

1. Problems which the Convention in itspresent form would create withregard to trusts

109. A distinguishing feature of United Kingdom and,Irish law is the trust. In these two States itprovides the solution to many problems whichContinental legal systems overcome in an


altogether different way. The basic structure of atrust may be described as the relationship whicharises when a person or persons (the trustees)hold rights of any kind for the benefit of one ormore persons (the beneficiaries) or for someobject permitted by law, in such a way that thereal benefit of the property accrues, not to the

trustees, but to the beneficiaries (who may,however, include one or more of the trustees) orother object of the trust. Basically two kinds legal relationships can be distinguished in a trust;they may be defined as the internal relationshipsand the external relationships.

110. (a) In his external relationships, i.e. in legaldealings with persons who are not beneficiaries ofthe trust, the trustee acts like any other owner ofproperty. He can dispose of and acquire rights,enter into commitments binding on the trust andacquire rights for its benefit. As far as these actsare concerned no adjustments to the 1968Convention are necessary. Its provisions onjurisdiction are applicable, as in legal dealings

between persons who are not acting as trustees. Ifa Belgian lessee of property situated in Belgiumbut belonging to an English trust, sues to beallowed into occupation Article 16 (1) applicable irrespective of the fact that theproperty belongs to a trust.

111. (b) Problems arise in connection with theinternal relationships of a trust, i.e. as betweenthe trustees themselves , between persons claimingthe status of trustees and, above all, betweentrustees on the one hand and the beneficiaries ofa trust on the other. Disputes may occur among anumber of persons as to who has been properlyappointed as a trustee; among a number oftrustees doubts may arise as to the extent of theirrespective rights to one another; there may bedisputes between the trustees and thebeneficiaries as to the rights of the latter to or in

connection with the trust property, as to whetherfor example, the trustee is obliged to hand overassets to a child beneficiary of the trust after thechild has attained a certain age. Disputes mayalso arise between the settlor and other partiesinvolved in the trust.

112. The internal relationships of a trust are notnecessarily covered by the 1968 Convention.They are excluded from its scope when the trustdeals with one of the matters referred to in thesecond paragraph of Article 1. Thus as a legal

institution the trust plays a significant role inconnection with the law of succession. If a trust

has been established by a will, disputes arisingfrom the internal relationships are outside thescope of the 1968 Convention (see paragraph52). The same applies when a trustee is appointedin bankruptcy proceedings; he would correspondto liquidator ('KonkursverwalterContinental legal systems.

113. Where the 1968 Convention is applicable to theinternal relationships of a trust, its provisions onjurisdiction were in their original form not alwayswell adapted to this legal institution. To basejurisdiction on the domicile of the defendanttrustee would not be appropriate in trust matters.

trust has no legal personality as such. Ifhowever, an action is brought against a defendantin his capacity as trustee , his domicile would notnecessarily be a suitable basis for determiningjurisdiction. If a person leaves the UnitedKingdom to go to Corsica, it is right and properthat, in the absence of any special jurisdictionclaims directed against him personally should bebrought only before Corsican courts. If, howeverhe is a sole or joint trustee or co-trustee of trust

property situated in the United Kingdom andhitherto administered there, the beneficiaries andthe other trustees cannot be expected to seekredress in a Corsican court.

Moreover the legal relationships betweentrustees inter se and between the trustees and thebeneficiaries, are not of a contractual nature; inmost cases , the trustees are not even authorizedto conclude agreements conferring jurisdiction byconsent. Jurisdiction for actions arising from theinternal relationships of a trust can be basedtherefore, neither on Article 5 (1) nor as a rule

on agreements conferring jurisdiction byconsent pursuant to Article 17. To overcome thisdifficulty simply by amending the 1968Convention so as to allow a settlor to stipulate

which courts are to have jurisdiction would onlypartly solve the problem. Such an amendmentwould not include already existing trusts, and themost suitable jurisdiction for possible disputescannot always be foreseen when creating a trust.

2. The solution proposed

114. (a)The solution proposed in the new paragraph(6)of Article 5 is based on the argument that trusts


even though they have no legal personality, maybe said to have a geographical centre ofoperation. This would fulfil functions similar tothose fulfilled by the 'seat' of businessassociations without legal personality. It is truethat United Kingdom and Irish law have so farprovided only a tentative definition of such a

central point of a trust. However, the concept ofthe domicile of a trust is not, at presentunknown in legal practice and theory (32). In hismanual on Private International Law the ScottishProfessor Anton gives the followingdefinition (33

The domicile of a trust is thought to bebasically a matter depending upon the wishesof a truster and his expressed intentions willusually be conclusive. In their absence thetruster s intentions will be inferred from suchcircumstances as the administrative centre ofthe trust, the place of residence of thetrustees, the situs of the assets of the trust, thenature of the trust purposes and the placewhere these are to be fulfilled.

No doubt these notions about the domicile of atrust were developed mainly for the purpose ofdetermining the legal system to be appliedusually either English or Scottish law. Theprincipal characteristics of ' domicile' so definedand some of the factors on which it is basedwould also justify making it the basis forfounding jurisdiction. The proposed newprovision does not, strictly speaking, create aspecial jurisdiction. It covers only a very limited

number of cases and is, therefore, added toArticle 5 rather than to Article 2. For thenon-exclusive character of the new provision seeparagraph 118.

115. (b) The following are some detailed commentson the Working Party s proposal (see paragraph181).

116. The concepts ' trust'

, '

trustee ' and ' domicile ' havenot been translated into the other Communitylanguages, since they relate to a distinctive featureof United Kingdom and Irish law. However, theMember States can give a more detaileddefinition of the concept of a trust in theirnational language in their legislationimplementing the Accession Convention.

117. The phrase ' created by the operation of a statuteor by a written instrument, or created orally andevidenced in writing is intended to indicateclearly that the new rules on jurisdiction applyonly to cases in which under United Kingdom orIrish law a trust has been expressly constitutedor for which provision is made by Statute. This isimportant, because these legal systems solvemany problems with which Continental systemshave to deal in a completely different way, bymeans of so-called ' constructive' or ' implied'trusts. Where the latter are involved, the newArticle 5 (6) is not applicable, as for instancewhere, after conclusion of a contract of sale, butprior to the transfer of title, the vendor is treatedas holding the property on trust for the purchaser(see paragraph 172). Trusts resulting from theoperation of a statutory provision are unlikely tofall within the scope of the 1968 Convention.Since in the United Kingdom, for example,children cannot own real property, a trust in theirfavour arises by operation of statute, if thecircumstances are such that adult persons wouldhave acquired ownership.

118. It should be noted that the new provision is notexclusive. It merely establishes an additionaljurisdiction. The trustee who has gone to Corsica(see paragraph 113) can also be sued in the courtsthere. However, a settlor would be free tostipulate an exclusive jurisdiction (see paragraph174).

119. If proceedings are brought in a Contracting Staterelating to a trust which is subject to a foreignlegal system, the question arises as to which lawdetermines the domicile of that trust. The newversion of Article 53 proposes the same criterionas that adopted in the 1968 Convention forascertaining the ' seat' of a company. As far as thelegal systems of England and Wales, ScotlandNorthern Ireland and Ireland are concernedapplication of this provision should present no

, serious difficulty. There are at present no rules ofprivate international law in the legal systems ofthe Continental Member States of theCommunity for determining the domicile of atrust. The courts of those States will have toevolve such rules to enable them to apply thetrust provisions of the 1968 Convention. Twopossibilities exist. It could be contended that thedomicile of a trust should be determined by the


legal system to which the trust is subject. Onecould, however, also contend that the courtconcerned should decide the issue in accordancewith its own lex fori which would have to evolveits own appropriate criteria.

recognized maritime claim it would unreasonable to expect the creditor to seek adecision on his claim before the courts of the

shipowner domicile. For this reason theWorking Party gave lengthy consideration to thepossible inclusion of special section onadmiralty jurisdiction in Title II. Article 36 of theAccession Convention is derived from an earlierdraft prepared for that purpose (see paragraph131). Parallel negotiations on Article 57 of the1968 Convention did, however lead to agenerally acceptable interpretation which willenable States party to a Convention on maritimelaw to assume jurisdiction on any particularmatter dealt with in that Convention, even in

respect of persons domiciled in a CommunityState which is not a party to that Convention (seeparagraph 236 et seq.

).

Furthermore alldelegations are in support of a Joint Declarationurging the Community States to accede to themost important of all the Conventions onmaritime law, namely the Brussels Convention of10 May 1952 (see paragraph 238). The WorkingParty, confident that this Joint Declaration willbe adopted and implemented, finally dropped itsplans for a section dealing with admiraltyjurisdiction. This would also avoid interferingwith the general principles of the 1968Convention, and maintain a clear dividing linebetween its scope and that of other Conventions.

120. In principle, the exclusive jurisdictions providedfor by Article 16 take priority over the newArticle 5 (6). However, it is not easy to establishthe' precise extent of that priority.

In legal disputes arISIng from internal trustrelationships , the legal relations referred to in theprovisions in question usually play only incidental role, if any. The trustee requires courtapproval for certain acts of management. Evenwhere the management of immovable property isconcerned, any such applications to the court donot affect the proprietary rights of the trustee, butonly his fiduciary obligations under the trust.Article 16 (1) does not apply. One couldhowever, envisage a dispute arising between twopeople as to which of them was trustee of certainproperty. If one of them instituted proceedingsagainst the other in a German court claiming thecancellation of the entry in the land registershowing the defendant as the owner of theproperty and the substitution of an entry showingthe plaintiff as the true owner, there can be nodoubt that, under Article 16 (1) or (3), theGerman court would have exclusive jurisdiction.However, if a declaration is sought that particular person is a trustee of a particular trustwhich includes certain property, Article 16 (1)does not become applicable merely because thatproperty includes immovable property.

Two issues remain outstanding, however, sincethey are not fully covered by the BrusselsConventions of 1952 and 1957: jurisdiction in

the event of the arrest of salvaged cargo or freight(the new Article 5 (7)) (1) and actions forlimitation of liability in maritime matters (thenew Article 6a) (2). Moreover, until Denmark andIreland accede to the Brussels Arrest Conventionof 10 May 1952 , transitional provisions had alsoto be introduced (3). Finally, a particularityaffecting only Denmark and Ireland (4) stillremained to be settled.

III. Admiralty jurisdiction

121. The exercise of jurisdiction in maritime mattershas traditionally played a far greater role in theUnited Kingdom than in the Continental States ofthe Community. The scope of the internationalcompetence of the courts, as it has beendeveloped in the United Kingdom , has become ofworldwide significance for admiralty jurisdiction.This factor is reflected not least in the BrusselsConventions of 1952 and 1957 (see paragraph238 et seq.

).

It would have been inappropriate tolimit the exercise of admiralty jurisdiction to thebasis of jurisdiction included in the 1968Convention in its original form. If a ship isarrested in a State because of an internationally

1. Jurisdiction in connection with thearrest of salvaged cargo or freight

122. (a) The Brussels Convention of 1952 allows aclaimant, inter alia to invoke the jurisdiction of aState in which ship has been arrested onaccount of a salvage claim (Article 7 (1) (b)).Implicit in this provision is a rule of substantivelaw. A claim to remuneration for salvage entitles


the salvage firm to a maritime lien on the ship. Asimilar lien in favour of a salvage firm can alsoexist on the cargo; this can be of some economicimportance, if it is the cargo rather than the shipwhich was salvaged, or if the salvaged ship is sobadly damaged that its value is less than the costof the salvage operation. The value of the cargoof a modern supertanker c,!n amount to aconsiderable sum. Finally, prior rights can alsoarise in regard to freight. If freight is payablesolely in the event of the safe arrival of the cargoat the place of destination, it is appropriate thatthe salvage firm should have a prior right to besatisfied out of the claim to freight which waspreserved due to the salvage of the cargo.

Accordingly United Kingdom law provides that asalvage firm may apply for the arrest of thesalvaged cargo of' the freight claim preserved dueto its intervention and may also apply to thecourt concerned for a final decision on its claimsto remuneration for salvage. Jurisdiction of thiskind is similar in scope to the provisions ofArticle 7 of the Brussels Convention of 1952. As

there is no other Convention on the arrest ofsalvaged cargo and freight which would remainapplicable under Article 57, the United Kingdomwould, on acceding to the 1968 Convention , havesuffered an unacceptable loss of jurisdiction if aspecial provision had not been introduced.

123. (b) The proposed solution applies the underlyingprinciple of Article 7 of the Brussels Conventionof 1952 to jurisdiction after the arrest of salvagedcargo or freight claims.

Under Article 24 of the 1968 Convention, there isno limitation on national laws wIth regard to thegranting of provisional legal safeguards includingarrest. However, they could not provide thatarrest, whether authorized or effected, shouldsuffice to found jurisdiction as to the substance ofthe matter. The exception introduced in Article 5(7) (a) is confined to arrest to safeguard a salvageclaim.

Article 5 (7) (b) introduces an extension ofjurisdiction not expressly modelled on theBrussels Convention of 1952. It is a result of

practical experience. After salvage operations whether involving a ship, cargo or freight arrest is sometimes ordered, but not actuallycarried into effect, because bailor other securityhas been provided. This must be sufficient toconfer jurisdiction on the arresting court todecide also on the substance of the matter.

The object . of the prOVlSlOn is to conferjurisdiction only with regard to those claimswhich are secured by a maritime lien. If theowner of a ship in difficulties has concluded acontract for its salvage, as his contract with thecargo owner frequently obliges him to do, any

disputes arising from the former contract will notbe governed by this provision.

2. Jurisdiction to order a limitation ofliability

124. It is not easy to say precisely how the app~icationof Article 57 of the 1968 Convention links upwith that of the International Convention of 10

October 1957 relating to the limitation of theliability of owners of seagoing ships (34) (see endof paragraph 128) and with relevant national

laws. The latter Convention contains no expressprovisions directly affecting internationaljurisdiction or the enforcement of judgments. TheWorking Party did not consider that it was itstask to deal systematically with the issues raisedby that Convention and to devise proposals forsolving them. It would, however, be particularlyunfortunate in certain respects if the jurisdictionallacunae of the 1957 Convention on the limitationof liability were carried over into the 1968Convention and were supplemented accordance with the general provisions onjurisdiction of that Convention.

A distinction needs to be drawn between threediffering aspects arising in connection with thelimitation of liability in matters of maritime law.First, a procedure exists for setting up andallocating the liability fund. Secondly, theentitlement to damages against the shipownermust be judicially determined. Finally, anddistinct from both, there is the assessment of

limitation of liability regarding a given claim.


The procedural details giving effect to these threeaspects vary in the different legal systems of theCommunity.

125. Under one system, which is followed in particularin the United Kingdom, limitation of liabilitynecessitates an action against one of the claimants

either by way of originating proceedings or, ifan action has already been brought against theshipowner, as a counterclaim. The liability fundis set up at the court dealing with the limitationof liability issue, and other claimants must alsolodge their claims with the same court.

126. Under the system obtaining in Germany, forexample proceedings for the limitation ofliability are started not by means of an actionbrought against a claimant, but by a simpleapplication which is not directed 'against' anyperson, and which leads to the setting up of thefund.

If the application is successful, all claimants mustlodge their claims with that court. If any disputesarise about the validity of any of the claimslodged, they have to be dealt with by specialproceedings taking the form of an action by the

claimant against the fund administrator, creditoror shipowner contesting the claim. Under thissystem an independent action by the shipowner

against the claimant in connection with limitationof liability is also possible. Such an action leadsnot to the setting up of a liability fund or to animmediately effective limitation of liability, butmerely establishes whether liability is subject topotential limitation , in case of future proceedingsto assess the extent of such liability.

127. The new Article 6a does not apply to an actionby a claimant against the shipowner, fundadministrator or other competing claimants , norto the collective proceedings tor creating andallocating the liability fund, but only to theindependent action brought by shipowneragainst a claimant (a). Otherwise the presentprovisions of the 1968 Convention which arerelevant to limitation of maritime liability apply(b ).

128. (a) The actual or potential limitation of theliability of a shipowner can , however, in all legalsystems of the Community be used otherwisethan as a defence. If a shipowner anticipates aliability claim, it may be in his interest to take theinitiative by asking for a declaration that he hasonly limited or potentially limited liability for theclaim. In that case he can choose from one of thejurisdictions which are competent by virtue of

, Articles 2 to 6. According to these provisions, hecannot bring an action in the courts of hisdomicile. Since, powever, he could be sued in

those courts , it would be desirable also to allowhim to have recourse to this jurisdiction. It is thepurpose of Article 6a to provide for this.Moreover, apart from the Brussels Convention of1952, this is the only jurisdiction where theshipowner could reasonably concentrate allactions affecting limitation of his liability. Theresult for English law (see paragraph 125) is thatthe fund can be set up and allocated by that samecourt. In addition, Article 6a makes it clear thatproceedings for limitation of liability can also bebrought by the shipowner in any other courtwhich has jurisdiction over the claim. It alsoenables national legislations to give jurisdiction toa court within their territory other than the courtwhich would normally have jurisdiction.

129. (b) For proceedings concerning the validity assuch of a claim against a shipowner, Articles 2 to6 are exclusively applicable.

In addition , Article 22 is always applicable. Ifproceedings to limit liability have been brought inone State, a court in another State which hasbefore it an application to establish or to limit

liability may stay the proceedings or even declinejurisdiction.

130. (c) A clear distinction must be drawn between thequestion of jurisdiction and the question whichsubstantive law on limitation of liability is to beapplied. This need not be the law of the Statewhose courts have jurisdiction for assessing thelimitation of liability. The law applicable for thelimitation of liability also defines more preciselythe type of case in which limitation of liabilitycan be claimed at all.

131. 3. Transitional provisions


All the delegations hope that Denmark andIreland will accede to the Brussels Convention of10 May 1952 (see paragraph 121). This willhowever, naturally take some time, and it isreasonable to allow a transitional period of threeyears after the entry into force of the AccessionConvention. It would be harsh if, within thatperiod, in the two States concerned jurisdiction inmaritime matters were to be limited to what isauthorized under the terms of Articles 2 to 6a.Article 36 of the Accession Convention thereforecontains transitional provisions in favour of thoseStates. These provisions correspond , apart fromvariations in the drafting, to the provisions whichthe Working Party originally proposed torecommend for the special section on maritimelaw as general rules of jurisdiction regarding thearrest of seagoing ships. In preparing theseprovisions the Working Party drew heavily, infact almost exclusively, on the rules of the 1952Brussels Convention relating to the arrest ofseagoing ships (see paragraph 121).

Since they are temporary, the transitionalprovisions do not merit detailed comments onhow they differ from the text of that Convention.

132. 4. Disputes between a shipmaster andcrew members

The new Article Vb of the Protocol annexed tothe 1968 Convention is based on a request byDenmark founded on Danish tradition. This hasbecome part of the Danish Seamen s Law No 420of 18 June 1973 which states that disputesbetween a crew member and a shipmaster of aDanish vessel may not be brought before foreigncourts. The same principle is also embodied insome consular conventions between Denmarkand other States. Following a specific requestfrom the Irish delegation, the scope of thisprovision has also been extended to Irish ships.

IV. Other special matters

133. 1. Jurisdiction based on the place ofperformance

In the course of the negotiations it emerged thatthe French and Dutch texts of Article 5 (1) were

less specific than the German and Italian texts onthe question of the designation of the obligation.The former could be misinterpreted as includingother contractual obligations than those whichwere the subject of the legal proceedings inquestion. The revised versions of the Frenchand Dutch texts should clear up this misunder-standing (35

134. Jurisdiction in matters relating totort

Article 5 (3) deals with the special tortjurisdiction. It presupposes that the wrongful acthas already been committed and refers to theplace where the harmful event has occurred. Thelegal systems of some States provide forpreventive injunctions in matters relating to tort.This applies, for example, in cases where it desired to prevent the publication of a libel or thesale of goods which have been manufactured orput on the market in breach of the law on patentsor industrial property rights. In particular thelaws of the United Kingdom and Germanyprovide for measures of this nature. No doubtArticle 24 is applicable when courts have anapplication for provisional protective measuresbefore them, even if their decision has, inpractice, final effect. There is much to be said forthe proposition that the courts specified in Article5 (3) should also have jurisdiction in proceedingswhose main object is to prevent the imminentcommission of a tort.

135. 3. Third party proceedings and claimsfor redress

In Article 6 (2), the term ' third party proceedingsrelates to a legal institution which is common tothe legal systems of all the original MemberStates, with the exception of Germany. Howevera jurisdictional basis which rests solely on thecapacity of a third party to be joined as such in

the proceedings cannot exist by itself. It mustnecessarily be supplemented by legal criteriawhich determine which parties may in whichcapacity and for what purpose be joined in legalproceedings. Thus the provisions already existing

, or which may in future be introduced into , thelegal systems of the new Member States withreference to the joining of third parties in legal

proceedings, remain unaffected by the 1968Convention.

Section 3

Official Journal of the European CommunitiesNo C 59/112

Jurisdiction in insurance matters

136. The accession of the United Kingdom introduceda totally new dimension to the insurance businessas it had been practised hitherto within the

European Community. Lloyds of London has asubstantial share of the market in theinternational insurance of large risks (36

In . view of this situation the United Kingdomrequested a number of adjustments. Its mainargument was that the protection afforded byArticles 7 to 12 was unnecessary forpolicy-holders domiciled outside the Community(I) or of great economic importance (II). TheUnited Kingdom expressed concern that, withoutan adjustment of the 1968 Convention, insurers

within the Community might be forced todemand higher premiums than their competitorsin other States.

There were additional reasons for each particularrequest for an adjustment. As regards contracts ofinsurance with policy-holders domiciled outsidethe Community the United Kingdom sought theunrestricted admissibility of agreementsconferring jurisdiction to be vouchsafed so thatappropriate steps could be taken with regard tothe binding provisions contained in the nationallaws of many policy-holders insuring withEnglish insurers (I). Requests for adjustments alsoreferred, in conjunction with the other requestsfor adjustments, to the scope of Articles 9 and 10which seemed to require clarification (III). Finallythere were requests for a few minor adjustments(IV).

The original request of the United Kingdom respect of the first two problems , namely that theinsurance matters in question should be excludedfrom the scope of Articles 7 to 12 was toofar-reaching in view of the general objectives ofthe 1968 Convention. In particular a number offeatures of the mandatory rules of jurisdictionwhich differ for the various types of insurancehad to be retained (see paragraphs 138 , 139 and143). However, the special structure of the Britishinsurance market had to be taken into account not least so that it would not be driven to resort

systematically to arbitration. Although the 1968Convention does not restrict the possibility ofsettling disputes by arbitration (see paragraph63), national law should be careful not toencourage arbitration simply by makingproceedings before national courts toocomplicated and uncertain for the parties. TheWorking Party therefore endeavoured to extendthe possibilities of conferring jurisdiction byconsent. For the form of such agreements seeparagraph 176.

1. Insurance contracts taken out by policy-holdersdomiciled outside the Community

13 7. As already indicated earlier (see note 36),insurance contracts with policy-holders domiciledoutside the Community account for a very largepart of the British insurance business. The 1968Convention does not expressly stipulate to whatextent such contracts may provide for jurisdictionby consent. Article 4 applies only to thecomparatively rare case where the policy-holderis the defendant in subsequent proceedings. In sofar as the jurisdiction of courts outside theCommunity can be determined by agreement, thegeneral question arises as to what restrictionsshould be imposed on such agreements havingregard to the exclusive jurisdictions provided forby the 1968 Convention (see paragraphs 148162 et seq.). The main problem in this connectionwas the jurisdiction under Articles 9 and which, it was thought, could not be excluded.Howeve , this difficulty did not affect insurancecontracts only with policy-holders domiciledoutside the Community. It also affects, moregenerally, agreements on jurisdiction which areauthorized by Article 12.

In view of the great importance for the United

Kingdom of the question of agreements onjurisdiction with poli~y-holders domiciled outsidethe Community, it was necessary to incorporatethe admissibility in principle of such agreementson jurisdiction expressly in the 1968 Convention., therefore, a policy-holder domiciled outside

the Community insures a risk in Englandexclusive jurisdiction may be conferred byagreement on English courts as well as on thecourts of the policy-holder s domicile or others.


This basic rule had however to be limited again intwo ways in the new paragraph (4) of Article 12.

Fire insurance for owners of buildings whichare subject to a charge, usufructuarieswarehouse occupiers , pawnbrokers;

Goods insurance for pawnbrokers;

138. Compulsory insurance Pension funds for theatres culturalorchestras, district master chimney sweepssupplementary pension funds for the publicserVIce.Where a statutory obligation exists to take out

insurance no departure from the provisions ofArticles 8 to 11 on compulsory insurance can bepermitted, even if the policy-holder is domiciledoutside the Community. If a person domiciled inSwitzerland owns a motor car which is normallybased in Germany, then the car must, underGerman law, be insured against liability. Such aninsurance contract may not contain provisions forjurisdiction by consent concerning accidentsoccurring in Germany.

2. Lander

The possibility of invoking the jurisdiction ofGerman courts (Article 8) cannot be contractuallyexcluded. This is so even although the relevantGerman law of 5 April 1965 on compulsoryinsurance (Bundesgesetzblatt I, page 213) doesnot expressly prohibit agreements on jurisdiction.However, in practice German law prevents theconclusion of agreements on jurisdiction in thearea of compulsory insurance because approvalof conditions of insurance containing such aprovision would be withheld.

There is no uniformity as between the Landerof the Federal Republic of Germany, butthere is in particular compulsory fireinsurance for buildings , compulsory pensionfunds for agricultural workers, the liberalprofessions (doctors, chemists, architects

notaries) and (in Bavaria, for example)members of the Honourable Company ofChimney Sweeps and for example, asupplementary pension fund for workers in

the Free and Hanseatic City of Bremen. In

Bavaria there is compulsory insurance forlivestock intended for slaughter.

BELGIUM:

Motor vehicles , hunting, nuclear installationsaccidents at work, transport accidents (for payingtransport by motor vehicles).

Compulsory insurance exists in the followingMember States of the Community for thefollowing articles, installations activities andoccupations , although this list does not claim tobe complete:

DENMARK:

Motor vehiclesaccountants.

dogs nuclear installations

FRANCE:

FEDERAL REPUBLIC OF GERMANY (37

Liability insurance compulsory for owners ofmotor vehicles, airline companies, huntersowners of nuclear installations and handlingof nuclear combustible materials and otherradioactive materials road haulageaccountants and tax advisers, security firmsthose responsible for schools for nursing,infant and child care and midwifery,automobile experts, notaries professionalorganizations those responsible fordevelopment aid , exhibitors, pharamaceuticalfirms;

Life insurance for master chimney sweeps;

Operators of ships and nuclear installations , sandmotor vehicles, operators of cable-cars, chair-liftsand other such mechanical units , hunting, estateagents managers of property, syndics ofco-owners, business managers operators ofsports centres, accountants, agricultural mutualassistance schemes, legal advisers, physicaleducation establishments and pupils , operators ofdance halls, managers of pharmacists ' shops inthe form of a private limited liability company(S. 1.), blood transfusion centres, architectsmotor vehicle experts , farmers.

1. Federal

LUXEMBOURG:

Accident insurance for airline companies andusufructuaries;

Motor vehicles hunting and huntingorganizations hotel establishments nuclearinstallations, fire and theft insurance for hotelestablishments;


Insurance against the seizure' of livestock sla ugh~erhouses.

NETHERLANDS:

Motor vehicles , nuclear installations , tankers.

UNITED KINGDOM:

Third party liability in respect of motor vehicles;

Employers ' liability in respect of accidents atwork;

Insurance of nuclear installations;

Insurance of British registered ships against oilpollution;

Compulsory insurance scheme for a number ofprofessions , e. g. solicitors and insurance brokers.

139. Insurance of immovable property

The second exception referred to at the end ofparagraph 13 7 is particularly designed to ensurethat Article 9 continues to apply even when thepolicy-holder is domiciled outside theCommunity. However, this exception has furtherimplications. It prohibits jurisdiction agreementsconferring exclusive jurisdiction on the courtsmentioned in Article 9. This applies even wherethe national law of the State in which theimmovable property is situated allows agreementsconferring jurisdiction in such circumstances.

II. Insurance of large risks, in particular marine andaviation insurance

140. The United Kingdom s request for special rules

for the insurance of large risks was probably themost difficult problem for the Working Party.The request was based on the realization that theconcept of social protection underlying arestriction on the admissibility of provisionsconferring jurisdiction in insurance matters is nolonger justified where the policy-holders arepowerful undertakings. The problem was one offinding a suitable demarcation line. Discussionson the second Directive on insurance had alreadyrevealed the impossibility of taking as criteriaabstract, general factors like company capital orturnover. The only solution was to examinewhich types of, insurance contracts were in

general concluded only by policy-holders who didnot require social protection. On this basis,special treatment could not be conceded toindustrial insurance as a whole.

Accordingly, the Working Party directed itsattention to the various classes of insuranceconnected with the transport industry. In thisarea there is an additional justification for specialtreatment for agreements on jurisdiction: therisks insured are highly mobile and ,~p.surance

policies tend to change hands several times inquick succession. This leads to uncertainty as to

which courts will have jurisdiction and thedifficulties in calculating risks are thereby greatlyincreased. On the other hand, there are here, too,certain areas requiring social protection.Particular complications were caused by the factthat there is a well integrated insurance marketfor the transport industry. The various types ofrisk for different means of transport are usuallycovered under one single policy. The Britishinsurance industry in particular has developedstandard policies which only require for theircompletion a notification by the insured that themeans of transport (which can be of manydifferent types) have set off.

The result of a consideration of all these mattersis the solution which figures in the newparagraph (5) of Article 12, as supplemented byArticle 12a: agreements on jurisdiction are inprinciple to be given special treatment in marineinsurance and in some sectors of aviationinsurance. In the case of insurance of transport byland alone no exceptional rules of any kindappeared justified.

In order to avoid difficulties and differences ofinterpretation, a list had to be drawn up of thetypes of policy for which the admissibility ofagreements on jurisdiction was to be extended.The idea of referring for this purpose to the list ofclasses of insurance appearing in the Annex to theFirst Council Directive of 24 July 1973(731239/EEC) proved inadequate. Theclassification used there took account of therequirements of State administration ofinsurance , and was not directed towards a fairbalancing of private insurance interests. Therewas thus no alternative but to draw up a separatelist for the purposes of the 1968 Convention. Thefollowing comments apply to the list and theclasses of insurance not included in it.


141. 1. Article 12 a (1) (a)

This provision applies only to hull insurance andnot to liability insurance. The term ' seagoingships ' means all vessels intended to travel on thesea. This includes not only ships in the traditionalsense of the word but also hovercraft, hydrofoilsbarges and lighters used at sea. It also coversfloating apparatus which cannot move under itsown power, e.g. oil exploration and extractioninstallations which are moved about on water.Installations firmly moored or to be moored onthe seabed are in any event expressly included in

the text of the provision. The provision alsocovers ships in the course of construction, but

only in so far as the damage is the result of amaritime risk. This is damage caused by the factthat the ship is on the water and not thereforedamage which occurs in dry-dock or in theworkshops of shipyards.

142. 2. Article 12a (1) (b)

In the same way as (1) (a) covers the value of thehull of a ship or of an aeroplane, (1) (b) covers

the value of goods destroyed or lost in transit, butnot liability insurance for any loss or damagecaused by those goods. The most important singledecision taken on the provision was the additionof the words ' consists of or includes . The reasonfor this is that goods in transit are frequently notconveyed by the same means of transport right totheir final destination. There may be a sequenceof journeys by land, sea and air. There would beunwarranted complications for the insuranceindustry in drafting policies and settling claims , ifa fine distinction had always to be drawn as tothe section of transit in which loss or damage hadoccurred. Moreover it is often impossible to

ascertain this. One has only to think of containertransport to realize how easily a loss may bediscovered only at the destination. Practicalconsiderations therefore required that agreementson jurisdiction be permitted , even where goodsare carried by sea or by air for only part of theirjourney. Even if it can be proved that the lossoccurred in the course of transport on land

agreements on jurisdiction permitted by the newparagraph (5) of Article 12 remain effective. Theprovision applies even if the shipment does notcross any national border.

143. The exception in respect of injury to passengers

and loss of or damage to their baggage, which isrepeated in Article 12a (2) (a) and (b), is justifiedby the fact that such persons as a group tend tohave a weaker economic position and lessbargaining power.

144. 3. Art i cl e 12 a (2) (a)

Whether these provisions also cover all liabilityarising in connection with the constructionmodification and repair , of a ship; whethertherefore the provision includes all liability whichthe shipyard incurs towards third parties andwhich was caused by the ship; or whether theexpression 'use or operation ' has to be construedmore narrowly as applying only to liabilityarising in the course of a trial voyage all theseare questions of interpretation which still awaitan answer. The exception for compulsory aircraftinsurance is intended to leave the Member Statesfree to provide for such protection as theyconsider necessary for the policy-holder and forthe victim.

145. 4. Article 12a (2) (b)

As there is no reason to treat combinedtransport any differently for liability insurancethan for hull insurance, it is equally irrelevantduring which section of the transport thecircumstances causing the liability occurred (seeparagraphs 142 and 143).

146. 5. Article 12a (3)

The most important application of this provisionis stated in the text itself. In the absence of aprovision to the contrary in the charter party, anair crash would cause the carrier to lose hisentitlement to freight and the owner hischarter-fee from the charterer. Another examplemight be loss caused by the late arrival of a ship.For the rest the notion is the same as that used inDirective 73/239/EEc.

147. 6. Article 12a (4)

Insurance against ancillary risks is a familiarpractice, especially in United Kingdom insurance


contracts. An example would be 'shipownerdisbursements consisting of exceptionaloperational costs, e.g. harbour dues accruingwhilst a ship remains disabled. Another exampleis insurance against 'increased value , providingprotection against loss arising from the fact that adestroyed or damaged cargo had increased invalue during transit.

The provision does not require an ancillary riskto be insured under the same policy as the mainrisk to which it relates. The Working Partytherefore deliberately opted for a somewhatdifferent wording from that in Directive73/239/EEC for the ' ancillary risks ' referred to inthat Directive. The definition in that Directivecould not be used since it is concerned with a

different subject, the authorization of insurance

undertakings.

148. III. The remaining scope of Articles and 1 0

The revised text of Article 12, like the originaltext, does not expressly deal with the effect ofagreements on jurisdiction or the specialjurisdictions for insurance matters set out in

Section 3. Nevertheless, the legal position is clearfrom the systematic construction of Section 3 ofthe 1968 Convention, as amended. Agreements

on jurisdiction cover all legal proceedingsbetween insurer and policy-holder, even wherethe latter wishes, pursuant to the first paragraphof Article 10, to join the insurer in the court in

which he himself is sued by the injured party.However jurisdiction clauses in insurancecontracts cannot be binding upon third parties.The provisions of the second paragraph of Article10 concerning a direct action by the injured partyare thus not affected by such jurisdiction clauses.The same is true of the third paragraph of Article10.

IV. Other problems of adjustment and clarification ininsurance law

149. 1. Co- insurance

The substantive amendment in the first paragraphof Article 8 covers jurisdiction where severalco-insurers are parties to a contract of insurance.What usually happens is that one insurer acts asleader for the other co-insurers and each of themunderwrites a part of the risk, possibly a very

small part. In such cases , however, there is nojustification for permitting all the insurers

including the leader, to be sued in the courts ofeach State in which any one of the manyco-insurers is domiciled. The only additionalinternational jurisdiction which can be justifiedwould be one which relates to the circumstancesof the leading insurer. The Working Partyconsidered at length whether to refer to the

leading insurer s domicile, but the effect of thiswould have been that the remaining co-insurerscould be sued there even if the leader was suedelsewhere. An additional jurisdiction based on theleading insurer s circumstances is justifiable onlyif it leads to a concentration of actions arising outof an insured event. The new version of the firstparagraph of Article therefore refers to thecourt where proceedings are brought against theleading insurer. Co-insurers can thus be sued fortheir share of the insurance in that court, at thesame time as the leading insurer or subsequently.However, the provision does not impose anobligation for proceedings to be concentrated inone court; there is nothing to prevent apolicy-holder from suing the various co-insurersin different courts. If the leading insurer hassettled the claim out of court, the policy-holdermust ,bring any action against the otherco-insurers in one of the courts havingjurisdiction under points (1) or (2) of the newversion of the first paragraph of Article 8.

The remaining amendments to the first paragraphof Article 8 merely rephrase it for the sake ofgreater clarity.

150. 2. Insurance agents, the setting up ofbranches

There was discussion on the present text of thesecond paragraph of Article 8 of the 1968Convention because its wording might give rise tothe misunderstanding that jurisdiction could befounded not only on the intervention of an agentof the insurer, but also on that of an independentinsurance broker of the type common in theUnited Kingdom. The discussion revealed thatthis provision was unnecessary in view of Article5 (5). The Working Party therefore changed thepresent paragraph three into paragraph two. Theaddition of the words 'or other establishment' isintended merely to ensure consistency betweenArticle 5 (5) and the third paragraph of the newArticle 13. The latter provision is necessary inaddition to the former in order to prevent Article

4 being applicable.

Official Journal of the European Communities No C 5~/117

151. 3. Reinsurance Section 4

Reinsurance contracts cannot be equated withinsurance contracts. Accordingly, Articles 7 to 12do not apply to reinsurance contracts.

Jurisdiction over consumer contracts

153. I. Principles

The previous authentic texts o the 1968Convention use the term 'preneur d'assuranceand the equivalent in German, Italian and Dutch;the nearest English equivalent of the term provedto be ' the policy-holder . However, this shouldnot give rise to the misunderstanding that theproblems arising from a transfer of legal rightsare now any different from those existing beforethe accession of the new Member States to theConvention. The rightful possessor of the policydocument is not always the 'preneur d'assuranceIt is of course conceivable that the whole legalstatus of the other party to the contract with theinsurer might pass to another person byinheritance or some other means, in which casethe new party to the contract would become thepreneur d'assurance . However, this case mustbe clearly distinguished from the transfer ofindividual rights arising out of the contract ofinsurance, especially in the form of assignment ofthe sum assured to a beneficiary. Such anassignment may be made in advance and may becontingent, for instance, upon the occurrence of aclaim. In this event it is conceivable that the

insurance policy might be passed on to thebeneficiary at the same time as the assignment ofthe right to the sum assured so that he can claimhis entitlement from the insurer, if the case arises.The beneficiary would not thereby become thepreneur d'assurance . Hence, where a courtjurisdiction is dependent on individualcharacteristics of the ' preneur d'assurance , the

situation remains unchanged as a result of priorassignment of any claim to the sum assuredwhich might arise, even if the policy document istransferred at the same time.

Leaving aside insurance matters the 1968Convention pays heed to consumer protectionconsiderations only in one small section, that

dealing with instalment sales and loans. This wasconsistent with the law as it then stood in theoriginal Member States of the Community since itwas in fact at first only in the field of instalmentsales and loans that awareness of the need toprotect the consumer against unfairly wordedcontracts became widespread. Since that timelegislation in the Member States of theCommunity has become concerned with muchbroader-based consumer protection. In particularthere has been a general move in consumerprotection legislation to ensure appropriatejurisdictions for the consumer. Intolerabletensions would be bound to develop betweennational legislation and the 1968 Convention inthe long run if the Convention did not afford theconsumer much the same protection in the case oftransfrontier contracts as he received undernational legislation. The Working Party thereforedecided to propose that the previous Section 4 ofTitle II be extended into a section on jurisdictionover consumer contracts, establishing at the sametime for future purposes that only finalconsumers acting in a private capacity should begiven special protection and not those contractingin the course of their business to pay byinstalments for goods and services used. TheWorking Party was influenced on this last pointby the proceedings in the Court of Justice of theEuropean Communities in response to a referencefrom the French Cour de cassation concerning theinterpretation of ' instalment sales and loansproceedings which centred on the question ofwhether the existing Section 4 of Title II coveredinstalment sales contracts concluded bybusinessmen (Case 150/77: Societe Bertrand v.Paul Ott KG).

152. 4. The term ' policy- holder

For the amendment to Article 12 (3) (' at the timeof conclusion of the contract ), see paragraph 161(a).

The basic principle underlying the provisions ofthe new section is to draw upon ideas emergingfrom European Community law as it has evolvedand is currently evolving. Consequently, most ofthe existing provisions on instalment sales andloans have been incorporated in the new sectionwhich also draws on Article 50f the preliminarydraft Convention on the law applicable tocontractual and non-contractual obligations. Onpoints of drafting detail , however, improvements

152. (a) 5. Agreements on jurisdiction be-tween parties to a contract fromthe same State


were made on the wording of the preliminarydraft Convention. One substantive change wasnecessary, since to accord with the generalstructure of the 1968 Convention reference hadto be made to the place where the parties aredomiciled, rather than habitually resident. Detailsare as follows:

154. II. The scope of the new Section

Using .the device of an introductory provisiondefining the scope of the Section, the proposalfollows the practice previously adopted at thebeginning of Sections 3 and 4 of Title II.

1. Persons covered

155. The only new point of principle is a provISIOngoverning the persons covered by the sectionincluding in particular the legal definition of thesection central term, the 'consumer . Thesubstances of the definition is taken from Article5 of the preliminary draft Convention on the lawapplicable to contractual and non-contractualobligations the most recent version of which wasused by the Working Party. The amendmentsmade were only drafting improvements.

2. Subject matter covered

156. As regards the subject matter covered by the newsection, a clear distinction is drawn betweeninstalment sales, including the financing of suchsales, and other consumer contracts. Theconsequent effect on the precedence of theprovisions of Sections 3 and is as follows:

Section 3 is a more specific provision than Section4 and hence takes precedence over it. A contractof insurance is not a contract for the supply of

services within the meaning of the 1968Convention. Within Section 4 , the provisions oninstalment sales are more specific than the generalreference to consumer sales in the first paragraphof Article 13.

157. (a) As in the past, instalment sales are subject tothe special provisions without any furtherpreconditions. The sole change lies in thestipulation that the special provisions apply only

where the purchaser is a private consumer. Therules governing instalment sales also applyautomatically to the legal institution of hire

purchase, which has developed into thecommonest legal form for transacting instalment

sales in the United Kingdom and Ireland. Forreasons which are not material for jurisdictionpurposes, instalment sales in those countriesusually take the form in law of a contract of hirewith an option to purchase for the hirer. In formthe instalments represent the hire fee, whereas insubstance they form the purchase price. At theend of the prescribed 'hire ' period , once all theprescribed instalments of the ' hire fee ' have beenpaid, the 'hirer ' is entitled to purchase the articlefor a nominal price. As the term ' instalment saleunder the continental legal systems by no meansimplies that ownership of the article mustnecessarily pass to the purchaser at the same timeas physical possession, hire purchase is in practicetantamount to an instalment sale.

Contracts to finance instalment sales to private

consumers are also subject to the specialprovisions without any further preconditions.Contrary to the legal position obtaining hithertothe Working Party has made actions arising outof a loan contract to finance the purchase of

movable property subject to the special provisioneven if the loan itself is not repayable byinstalments or if the article is purchased with asingle payment (normally with the funds lent).Credit contracts are not, moreover, contracts forthe supply of services , so that, apart from point(2) of the first paragraph of Article 13 , the wholeof Section 4 does not apply to such contracts.Contracts of sale not falling under point (1) ofthe first paragraph of Article 13 do not, forinstance, come under point (2) of that paragraphalthough Section 4 may be applicable to themsubject to the further conditions contained inpoint (3) (see paragraph 158).

158. (b) On the other hand, consumer contracts otherthan those referred to in paragraph 157 aresubject to the special provisions only if there is asufficiently strong connection with the placewhere the consumer is domiciled. In this , the newprovisions once again follow the preliminarydraft Convention on the law applicable tocontractual and non-contractual obligations.Both the conditions referred to in point (3) of thefirst paragraph of Article 13-an offer oradvertising in the State of the consumerdomicile, and steps necessary for the conclusionof the contract taken by the consumer in thatState-must be satisfied. The introductory phraseshould, moreover, ensure that Articles 4 and 5 (5)


will apply to all consumer contracts, as has untilnow been the case only for instalment sales andfor loans repayable by instalments. Oneparticular consequence of this is that, subject tothe second paragraph of Article 13 , Section 4

does not apply where the defendant is notdomiciled in the EEc.

For further details of what is meant by ' a specificinvitation ' or ' advertising' in the State of theconsumer s domicile and by ' the steps necessaryfor the conclusion of the contract , see the reportcurrently being drawn up by Professor Giulianoon the Convention on the law applicable tocontractual and non-contractual obligations.

3. Only a branch agency or otherestablishment within the Community

159. The exclusion from the scope of Section 4 ofcontracts between consumers and firms domiciledoutside the EEC would not be reasonable wheresuch firms have a branch, agency or otherestablishment within the EEc. Under the nationallaws upon which jurisdiction is to be founded insuch cases pursuant to Article 4, it would oftenbe impossible for the consumer to sue in thecourts which would be guaranteed to havejurisdiction for his purposes in the case ofcontracts with parties domiciled within the EEc.Insurers with branches agencies or otherestablishments in the EEC are treated as regardsjurisdiction in like ~anner to those domiciledwithin the Community (Article 8) and for thesame reasons the other parties to contracts withconsumers must also be deemed to be domiciledwithin the EEC if they have a . branch , agency ofother establishment in the Community. , It ishowever, only logical that it should not bepossible to invoke exorbitant jurisdictions againstsuch parties simply because their head office liesoutside the EEc.

Contracts of transport

160. The last paragraph of Article 13 is again takenfrom Article 5 of the preliminary draftConvention on the law applicable to contractualand non-contractual obligations. The reason forleaving contracts of transport out of the scope ofthe special consumer protection provisions in the1968 Convention is that such contracts aresubject under international agreements to specialsets of rules with very considerable ramificationsand the inclusion of those contracts in the 1968

Convention purely for jurisdictional purposeswould merely complicate the legal position.Moreover, the total exclusion of contracts oftransport from the scope of Section 4 means thatSections 1 and 2 and hence in particular Article 5(1) remain applicable.

161. III. The substance of the provisions of Section

There are only a few points requiring a briefexplanation of the substance of the newprOVISIons.

1. Subsequent change of domicile by theconsumer

In substance, the new Article 14 closely followsthe existing Article 14, while extending it toactions arising from all consumer contracts. Therearrangement of the text is merely a rewordingdue to the availability of a convenient descriptionfor one party to the contract, the ' consumerwhich was better placed at the beginning of thetext so as to make it more easily comprehensible.The Working Party s decision means in substancethat, as in the case with the existing Article 14the consumer may sue in the courts of his newState of domicile if he moves to anotherCommunity State after concluding the contractout of which an action subsequently arises. Thisonly becomes practical, however, in the case ofthe instalment sales and credit contracts referredto in points (1) and (2) of the first paragraph ofArticle 13. For actions arising out' of otherconsumer contracts the new Section 4 will invirtually all cases cease to be applicable if theconsumer transfers his domicile to another Stateafter conclusion of the contract. This is becausethe steps necessary for the conclusion of the

contract will almost always not have been takenin the new State of domicile. The cross-frontieradvertising requirement also ensures that thespecial provisions will in practice not applicable to contracts between two personsneither of whom is acting in a professional ortrading capacity.

2. Agreements on jurisdiction

161a. The new version of Article 15, too is in

substance based on the existing version relatingto instalment sales and loans. The only additionis intended to make it clear that it is at the time ofconclusion of the contract, and not whenproceedings are subsequently instituted, that the

parties must be domiciled in the same State. It


was then necessary to align and clarify Article 12(3) in the same way.

Although Article 13 is not expressed to be subjectto Article 17 the Working Party wasunanimously of the opinion that agreements onjurisdiction must, in so far as they are permittedat all, comply with the formal requirements ofArticle 17. Since the form of such agreements isnot governed by Section 4, it must be governed

by Article 17.

Section 5

Exclusive jurisdiction

162. The only amendment proposed by the WorkingParty to the cases of exclusive jurisdictionprovided for in Article 16 is a technicalamendment in Article V d of the Protocol annexedto the 1968 Convention, to clarify Article 16 (4).The Working Party did, however, spend sometime discussing paragraphs (1) and (f) of thatArticle. Details of the information supplied to thenew Member States regarding exclusivejurisdiction in actions relating to the validity ofthe constitution of companies or to theirdissolution have already been given elsewhere(see paragraph 56 et seq.

).

It is only necessary toadd that a company may have more than oneseat. Where under a legal system it is possible fora company to have two seats, and it is thatsystem which, pursuant to Article 53 of the 1968Convention, is to determine the seat of thecompany, the existence of two seats has to beaccepted. It is then open to the plaintiff to choosewhich of the two seats he will use to base thejurisdiction of the court for his action. Finally, itshould be pointed out that Article 16 (2) alsoapplies to partnerships established under UnitedKingdom and Irish law (see paragraph 55).

Thus essentially the only exclusive jurisdictionleft to be dealt with more fully here is that inrespect of actions relating to rights in rem , ortenancies of, immovable property. There werefive problems with regard to which the newMember States had requested explanations.

163. There was no difficulty in clarifying that actionsfor damages based on infringement of rights rem or in damage to property in which rights rem exist do not fall within the scope of Article16 (1). In that context the existence and contentof such rights in rem usually rights of ownership,are only of marginal significance.

164. The Working Party was unable to agree whetheractions concerned only with rent, i.e. dealingsimply with the recovery of a debt, are excludedfrom the scope of Article 16 (1) as, accordingto the Jenard report, was the opinion ofthe Committee which drafted the 1968Convention (38). However the underlyingprinciple of the provision quite clearly does notrequire its application to short-term agreementsfor use and occupation such as, for exampleholiday accommodation.

165. Two of the three remaining problems which theWorking Party examined relate to the differencesbetween the law of immovable property on thecontinent and the corresponding law in theUnitea Kingdom and Ireland; they requiretherefore somewhat more detailed comments.There is, first, the question what are rights in rem(1) within the meaning of Article 16 (1), andsecondly, the problem of disputes arising inconnection with the transfer of immovableproperty (2). Certain other problems emerged asa result of developments which have taken placein the meantime in international patent law (3).

1. Rights ' in rem in immovableproperty in the Member States of theCommunity

166. (a) The concept of a right in rem as distinctfrom a right in personam is common to thelegal systems of the original Member States of theEEC, even though the distinction does not appeareverywhere with the same clarity.

A right in personam can only be claimed againsta particular person; thus only the purchaser isobliged to pay the purchase price and only thelessor of an article is obliged to permit its use.

A right in rem on the other hand, is available

against the whole world. The most importantlegal consequence flowing from the nature of a

right in rem is that its owner is entitled to


demand that the thing in which it exists be givenup by anyone not enjoying a prior right.

In the legal systems of all the original MemberStates of the EEC without exception, there are

only a restricted number of rights in rem eventhough they do not rigidly apply the principle.Some rights in rem are defined only in outlinewith freedom for the parties to agree the details.The typical rights in rem are listed under easilyidentifiable heads of the civil law, which in all sixcountries is codified (39). In addition , a few rightsin rem are included in some special laws, themost important of which are those on theco-ownership of real property. Apart fromownership as the most comprehensive right

rem a distinction can be made between certainrights of enjoyment and certain priority rights tosecure liabilities. All the legal systems know theconcept of usufruct, which confers extensiverights to enjoyment of a property. More restrictedrights of enjoyment can also exist in these legalsystems in various ways.

167. (b) At first glance there appears to be in UnitedKingdom and Irish law too a small , strictly

circumscribed group of statutory rightscorresponding to the Continental rights in rem.

However, the position is more complicatedbecause these legal systems distinguish betweenlaw and equity.

In this connection it has always to be borne inmind that equity also constitutes law and notsomething merely akin to fairness lying outside

the concept of law. As a consequence of thesespecial concepts of law and equity in the UnitedKingdom and in Ireland, equitable interests canexist in immovable property in addition to thelegal rights.

In the United Kingdom the system of legal rightshas its origin in the idea that all land belongs tothe Crown and that the citizen can only havelimited rights in immovable property. This is thereason why the term ' ownership ' does not appearin the law of immovable property. However , theestate in fee simple absolute in possession isequivalent to full ownership under theContinental legal systems. In addition the Law ofproperty Act 1925 provides for full ownership fora limited period of time (' term of years absoluteThe same Act limits restricted rights inimmovable property (' interests or charges in orover land' ) to five. All the others are equitable

interests, whose number and content are notlimited by the Act. Equitable interests are nothowever, merely the equivalent of personal rightson the Continent. Some can be registered andthen , like legal rights , have universal effect, evenagainst purchasers in good faith. Even if notregistered t~ey operate in principle against all theworld; only purchasers in good faith who had noknowledge of them are protected in such acase (40). If the owner of an estate in fee simpleabsolute in possession grants another person aright of way over his property for the period ofthat person s life, this cannot amount to a legalright. It can only be an equitable interest, thoughcapable of registration (41). Equitable interestscan thus fulfil the same functions as rights in remunder the Continental legal systems, in whichcase they must be treated as such under Article 16(1). There is no limit to the number of suchinterests. The granting of equitable interests is onthe contrary the method used for achieving anynumber of subdivisions of proprietary rights (42

168. (c) If an action relating to immovable property isbrought in a particular State and the questionwhether the action is concerned with a right rem within the meaning of Article 16 (1) arisesthe answer can hardly be derived from any lawother than that of the situs.

2. Actions obligations toproperty

connection wi thtransfer immovable

169. The legal systems of the original and the newMember States of the Community also differ asregards the manner in which ownership ofimmovable property is transferred on sale.Admittedly the legal position even within theoriginal Member States differs in this respect.

170. (a) German law distinguishes most clearlybetween the transfer itself and the contract of sale(or other contract designed to bring about

transfer). The legal position in the case ofimmovable property is no different from thatobtaining in the case of movable property. Thetransfer is a special type of legal transactionwhich in the case of immovable property is calledAuflassung (conveyance) and which evenbetween the parties becomes effective only onentry in the land register. Where a purchaser ofGerman immovable property brings proceedingson the basis of, a contract for sale of immovableproperty which is governed by German law, the


subject matter of such proceedings is never a rightin rem in the property. The only matter in issue isthe defendant s personal obligation to carry out

all acts necessary to transfer and hand over theproperty. If one of the parties fails to fulfil itsobligations under a contract for sale ofimmovable property, the remedy in German lawis not a court order for rescission , but a claim fordamages and the right to rescind the contract.

Admittedly it is possible with the vendor

consent to protect the contractual claim for a

transfer of ownership by means of a caution inthe land register. In that case the claim has, asagainst third parties , effects which normally oalyattach to a right in rem. The consequence forGerman domestic law is that nowadays rightssecured by such a caution may be claimed againstthird parties in the jurisdiction competent to dealwith the property concerned (43). However, anyproceedings for a transfer of ownership againstthe vendor himself would remain an action basedon a personal obligation.

171. (b) Under French, Belgian and Luxembourg lawwhich is largely followed by Italian law, theownership, at any rate as between the partiespasses to the purchaser as soon as the contract ofsale is concluded, just as it does in the case ofmovable property, unless the parties have agreeda later date (see e.g. Article 711 and 1583 of theFrench Civil Code and Article 1376 of the ItalianCivil Code). The purchaser need only enter thetransfer of ownership in the land register

transcription ) to acquire a legal title which isalso effective against third parties. For thepurchaser to bring proceedings for performanceof the contract is therefore normally equivalent toa claim that the property be handed over him.Admittedly this claim is based not only on theobligation which the vendor undertook by thecontract of sale, but also on ownership which atthat point has already passed to the purchaser.

This means that the claim for handing over theproperty has as its basis both personalobligation and a right in rem. The system ofremedies which is available in the event of oneparty to a contract not complying with itsobligations is fully in accordance with this.Accordingly, French domestic law has treatedsuch actions as a 'matiere mixte' and given theplaintiff the right to choose between thejurisdiction applicable to the right in rem and thejurisdiction applicable to the personal obligationarising from the contract, i.e. the law of thedefendant's domicile or of the place ofperformance of the contract (44

The 1968 Convention does not deal with thisproblem. It would seem that the personal aspect

of such claims predominates and Article 16 (1) isinapplicable.

172. (c) In the United Kingdom ownership passes onthe conclusion of a contract of sale only in the

case of movable property. In the case of a sale ofimmovable property the transfer of ownershipfollows the conclusion of the contract of sale andis effected by means of a separate document, theconveyance. If necessary, the purchaser has bring an action for all necessary acts to beperformed by the vendor. However, except inScotlan , in contrast with German law, thepurchaser rights prior to the transfer ofownership are not limited to a personal claim

against the vendor. In fact the purchaser has anequitable interest (see paragraph 167) in theproperty which provided the contract protected by a notice on the Land Register, is alsoeffective against third parties. Admittedly the newparagraph (6) of Article. 5 does not apply (seeparagraph 114 et seq.

),

because a contract of saledoes not create a trust within the meaning ofArticle 5 (6), even if it is in writing. It is only inone respect that a purchaser s equitable interestdoes not place him i~ ' as strong a position as theFrench owner of immovable property prior totranscription ' (see paragraph 171): the vendor

cooperation, is still required to make the newowner s legal title fully effective.

This legal position would justify application ofthe exclusive jurisdiction referred to in Article 16(1) even less than the corresponding positionunder French law. The common law hasdeveloped the conc~pt of equitable interests so asto confer on parties to an agreement whichoriginally gave them nothing more than merelypersonal rights a certain protection as against

third parties not acting in good faith. As againstthe other party to the contract the claim remainspurely a personal one, as does a claim, under

German law, to transfer of ownership (seeparagraph 170) secured by a caution in the LandRegister. In Scotland contracts in favour of athird party are enforceable by that party (jusquaesitum tertii).

Actions based on contracts for the transfer of

ownership or other rights in rem affectingimmovable property do not therefore have astheir object rights ' rem. Accordingly they mayalso be brought before courts outside the UnitedKingdom. Admittedly, care will have to exercised in that case to ensure that the plaintiffclearly specifies the acts to be done by thedefendant so that the transfer of ownership(governed by United Kingdom law) does indeedbecome effective.

173. 3. J urisdiciion patent disputes

connection with


Since the 1968 Convention entered into force , twoConventions on patents have been signed whichare of the greatest international importance. TheMunich Convention on the grant of Europeanpatents was signed on 5 October 1973 and theLuxembourg Convention for the European patentfor the common market was signed on December 1975. The purpose of the MunichConvention is to introduce a common patentapplication procedure for the Contracting States,though the patent subsequently granted isnational in scale. It is valid for one or more

States , its substance in each case being basicallythat of a corresponding patent granted nationally.The aim of the Luxembourg Convention is toinstitute in addition a patent granted ab initio forall States of the Community in a standard mannerand with the same substance based onCommunity law; such a patent necessarilyremains valid or expires uniformly throughoutthe EEc.

Both instruments contain specific provisions onjurisdiction which take precedence over the 1968Convention. However, the special jurisdictionprovisions relate only to specific matters, such asapplications for the revocation of patentspursuant to the Luxembourg Convention. Article16 (4) of the 1968 Convention remains relevantfor actions for which no specific provision ismade. In the case of European patents under theMunich Convention it is conceivable that thisprovision might be construed as meaning thatactions must be brought in the State in which thepatent was applied for and not in the State for

which it is valid and in which it is challenged.The new Arti~le V d of the Protocol annexed tothe 1968 Convention is designed to prevent thisinterpretation and ensure that only the courts ofthe State in which the patent is valid havejurisdiction , unless the Munich Convention itselflays down special provisions.

Clearly, such a prOViSIOn cannot cover aCommunity patent. under the LuxembourgConvention, since the governing principle is thatthe patent is granted, not for a given State, butfor all the Member States of the EEc. Hence theexception at the end of the new provision.However, even in the area covered by theLuxembourg Convention patents valid for one ormore, but not all, States of the Community arepossible. Article 86 of that Convention allowsthis for a transitional period to which no termhas yet been set. Where the applicant for a patent

takes up the option available to him under thisprovision and applies for a patent for one more, but not all , States of the EEC, the patent isnot a Community patent even though it comesunder some of the provisions of the LuxembourgConvention but merely a patent granted for oneor more States. Accordingly, the courts of thatState have exclusive jurisdiction under ArticleVd of the Protocol annexed to the 1968Convention. The same is true for any case inwhich a national patent is granted in response toan international application ' e.g. under thePatent cooperation Treaty opened for signature atWashington on 19 June 1970.

It only remains to be made clear that Article 16(4) of the 1968 Convention and the new ArticleV d of the Protocol annexed to the Convention

also cover actions which national legislationallows to be brought at the patent application

stage, so as to reduce the risk of a patent beinggranted, and the correctness of the grant beingsubsequently challenged.

Section 6

Jurisdiction by consent (45

174. Article 17, applying as it does only if thetransaction in question is international incharacter (see paragraph 21), which the mere factof choosing a court in a particular State is by nomeans sufficient to establish, presented theWorking Party with four problems. First, accounthad to be taken of the practice of courts in theUnited Kingdom (excluding Scotland) and Irelandof deducing from the choice of law to govern themain issue an agreement as to the courts havingjurisdiction. Secondly, there was the problempreviously ignored by the 1968 Convention, of

agreements conferring jurisdiction upon a courtoutside the Community or agreements' conferringjurisdiction upon courts \yithin the Communityby two parties both domiciled outside theCommunity. Thirdly, special rules had to made for provisions in trusts. And finally, theWorking Party had to consider whether it wasreasonable to let Article 17 stand in view of theinterpretation which had been placed upon it bythe Court of Justice of the EuropeanCommunites. It should be repeated (seeparagraph 22) that the existence of an agreementconferring jurisdiction on a court other than thecourt seised of the proceedings is one of thepoints to be taken into account by the court of itsown motion.


1. Choice-of- Iaw clausenational jurisdiction

and In ter-

175. Nowhere in the 1968 Convention is thererecognition of a connection be~ween the lawapplicable to particular issue and theinternational jurisdiction of the courts over thatissue. However, persons who, relying on thepractice of United Kingdom or Irish courts , haveagreed on choice-of-Iaw clauses before the entryinto force of the Accession Convention, are

entitled to expect protection. This explains thetransitional provision contained in Article 35of the proposed Accession Convention. Theterm ' entry into force ' within the meaning of thisprovision refers to the date on which theAccession Convention comes into effect in theState in question. For the various systems of lawapplying in the United Kingdom, see paragraph11.

2. Agreements conferring jurisdictionon courts outside the Communit'v

176. (a) In cases where parties agree to bring theirdisputes before the courts of a State which is nota party to the 1968 Convention there is obviouslynothing in the 1968 Convention to prevent suchcourts from declaring themselves competent, iftheir law recognizes the validity of such anagreement. The only question is whether and, ifso, in what form such agreements are capable ofdepriving Community courts of jurisdictionwhich is stated by the 1968 Convention to beexclusive or concurrent. There is nothing in the

1968 Convention to support the conclusion thatsuch agreements must be inadmissible inprinciple (46). However, the 1968 Conventiondoes not contain any rules as to their validityeither. If a court within the Community is appliedto despite such an agreement, its decision on thevalidity of the agreement depriving it ofjurisdiction must be taken in accordance with itsown lex fori. In so far as the local rules of conflict

of laws support the authority of provisions of

foreign law, the latter will apply. If, when thesetests are applied, the agreement is found to beinvalid, then the jurisdictional provisions of the1968 Convention become applicable.

177. (b) On the other hand, proceedings can bebrought before a court within the Community byparties who, although both domiciled outside theCommunity, have agreed that that court should

have jurisdiction. There is no reason for theConvention to include rules on the conditions

under which the court stipulated by such partiesmust accept jurisdiction. It is however importantfor the Community to ensure, by means of moredetailed conditons, that the effect of such anagreement on jurisdiction is recognizedthroughout the EEc. The new third sentence ofthe first paragraph of Article 17 is designed tocater for this. It covers the situation wheredespite the fact that both parties are domiciledoutside the Community, a court in a CommunityState (' ) would , were it not for a jurisdictionagreement, have jurisdiction, e.g. on the groundthat the place of performance lies within thatState. If in such a case the parties agree that thecourts of another Community State are to haveexclusive jurisdiction, that agreement must beobserved by the courts of State X, provided theagreement meets the formal requirements ofArticle 17. Strictly speaking, it is true, this is not

necessary adjustment. Such situations werepossible before, in relations between the originalMember States of the Community. Howeverowing to the frequency with which jurisdiction isconferred upon United Kingdom courts ininternational trade, the problem takes onconsiderably greater importance with the UnitedKingdom accession to the Convention thanhitherto.

3. Jurisdiction clauses in trusts

178. A trust (see paragraph 111) need not beestablished by contract. A unilateral , legal

instrument is sufficient. As the previous versionof Article 17 dealt only with ' agreements' onjurisdiction, it needed to be expanded.

4. The form of agreements jurisdiction in international trade

179. Some of the first judgments given by the Court ofJustice of the European Communities since it wasempowered to interpret the 1968 Conventionwere concerned with the form of jurisdictionclauses incorporated in standardized generalconditions of trade (47). The Court of Justiceinterpretation of Article 17 of the 1968Convention does protect the other party to acontract with anyone using such generalconditions of trade from the danger ofinadvertently finding himself bound by standardforms of agreement containing jurisdictionclauses without realizing it. However, the Court's


interpretation of that Article . which manynational courts have also shown a tendency tofollow (45), does not cater adequately for thecustoms and requirements of international trade.In particular, the requirement that the other partyto a contract with anyone employing generalconditions of trade has to give writtenconfirmation of their inclusion in the contract

before any jurisdiction clause in those conditionscan be effective is unacceptable in internationaltrade. International trade is heavily dependent onstandard conditions which incorporatejurisdiction clauses. Nor are those conditions inmany cases unilaterally dictated by one set interests in the market; they have frequently beennegotiated by representatives of the variousinterests. Owing to the need for calculationsbased on constantly fluctuating market prices, ithas to be possible to conclude contracts swiftlyby means of confirmation of orderincorporating sets of conditions. These are thefactors behind the relaxation of the formalprovisions for international trade in the amendedversion of Article 17. This is however, as shouldbe clearly emphasized, only a relaxation of theformal requirements. It must be proved that aconsensus existed on the inclusion in the contractof the general conditions of trade and theparticular provisions, though this is not the placeto pass comment on whether questions ofconsensus other than the matter of form shouldbe decided according to the national lawsapplicable or to unified EEC principles. Dealingwith the form of jurisdiction agreements in aseparate second sentence in the first paragraph ofArticle 17, rather than in passing in the firstsentence as hitherto, is designed merely to obviaterather cumbersome wording.

Section 7

Examination of own motion

Adjustments and further clarification were notnecessary.

Section 8

Lis pendens' and related actions (48

180. As regards lis pendens there are two structuraldifferences between the laws of the UnitedKingdom and Ireland, on the one hand, and the

Continental legal systems on the other. Howeverneither of them necessitated a technicalamendment of the 1968 Convention.

1. Discretion of the court

181. The rules governing lis pendens in England andWales , and to some extent in Scotland, are moreflexible than those on the Continent. Basically, itis a question for the court's discretion whether astay should be granted. The doctrine of lis

pendens is therefore less fully developed there, than in the Continental States. The practice is in a

sense an application of the doctrine of forumconveniens (see paragraph 77 et seq.

).

Generally a

court will in fact grant an application for a stayof proceedings, where the matter in dispute isalready pending before another court. Whereproceedings are pending abroad, the courts in

England and Wales exercise great caution, and ifthey grant a stay of proceedings at all, they willdo so only if the plaintiff in England or Wales isalso the plaintiff in the proceedings abroad.Scottish courts take into account to aconsiderable extent any conflicting proceedingswhich a Scottish defendant may have institutedabroad, or which are pending against himabroad.

After the United Kingdom has acceded to the1968 Convention, it will no longer be possible forthis practice to be maintained in relation to theother Member States of the Community. UnitedKingdom courts will have to acknowledge theexistence of proceedings instituted in the otherMember States, and even to take notice of themof their own motion (see paragraph 22).

2. Moment at which proceedings becomepending

182. The fact that the moment at which proceedingsbecome pending is determined differently in theUnited Kingdom and Ireland from the way it isdetermined on the Continent is due peculiarities of procedural law in those States. Inthe original Member States of the Community aclaim becomes pending when the documentinstituting the proceedings is served (49). Filingwith the court is sometimes sufficient. In theUnited Kingdom, except Scotland, and in Irelandproceedings become pending as soon as theoriginating document has been issued. InScotland, however, proceedings become pendingonly when service of the summons has beeneffected on the defender. The moment at whichproceedings become pending under the national


procedural law concerned is the deciding factorfor the application of Article 21 of the 1968Convention. The addition to the text of Article20 does not concern this point. It is justified bythe fact that in the United Kingdom and inIreland foreigners who are abroad do not receivethe original writ but only notification of the orderof the court authorizing service.

Section 9

Provisional measures

183. .No particular adjustments had to be made to theprovisions of the 1968 Convention concerningprovisional measures. The change in emphasis

CHAPTER 5

which the accession of further Member Statesintroduced into the 1968 Convention consists inthis field entirely in the wide variety ofprovisional measures available in the law ofIreland and of the United Kingdom. This willinvolve certain difficulties where provisionaljudgments given in these States have to be giveneffect by the enforcement procedures of theoriginal Member States of the Community.However, this problem does not affect onlyprovisional measures. The integration ofjudgments on the main issue into the respective

national enforcement procedures also involves

difficulties in the relationship between Irelandand the United Kingdom on the one hand and theoriginal Member States of the Community on theother (see paragmph 221 et seq.

RECOGNITION AND ENFORCEMENT

GENERAL REMARKS INTERLOCUTOR YCOURT DECISIONS

184. Article 25 emphasizes in terms which couldhardly be clearer that every type of judgmentgiven by a court in a Contracting State must be

recognized and enforced throughout the rest the Community. The provision is not limited to ajudgment terminating the proceedings before thecourt, but also applies to provisional courtorders. Nor does the wording of the provisionit!~jcate that interlocutory court decisions shouldbe exclm:led from its scope where they do not

provisionally regulate the legal relationshipsbetween the parties, but . are for instanceconcerned only with the taking of evidence. Whatis more, the legal systems of the original MemberStates of the Community describe suchinterlocutory decisions in way whichcorresponds to the terms given, by way example, in Article 25. Thus, in France courtdecisions which order the taking of evidence arealso called ' jugements (d' avant dire droit)' . InGermany they are termed ' (Beweis) beschli.isse ' ofthe court. Nevertheless, the provisions of the1968 Convention governing recognition andenforcement ~re in general designed to cover onlycourt judgments which either determine orregulate the legal relationships of the parties. Ananswer to the question whether, and if so whichinterlocutory decisions intended to be procedural assistance fall within the scope of the

1968 Convention cannot be given without furtherconsideration.

1. RELATIONSHIP OF THE CONTINENTALSTATES WITH EACH OTHER

185. This matter is of no great significance as betweenthe original Member States of the EEC, or as

between the latter and Denmark. All seven Statesare parties to the 1954 Hague Coiwentionrelating to civil procedure. The latter governs thequestion of judicial assistance, particularly in thecase of evidence to be taken abroad, and itsprovisions take precedence over the 1968Convention by virtue of Article 57. In any case, itis always advisable in practice to make use of themachinery of the Hague Convention, which particularly suited to the processes required forobtaining judicial assistance. See paragraph 238and note 59 (7) on the Hague Convention of 15November 1965 on the service abroad of judicialand extrajudicial documents in civil orcommercial matters and on the HagueConvention of 18 March 1970 on the taking ofevidence abroad in civil or commercial matters.

2. RELATIONSHIP OF THE UNITED KINGDOMAND IRELAND WITH THE OTHER MEMBERSTATES

186. It is only with the accession of the UnitedKingdom and Ireland to the 1968 Conventionthat the problem assumes any degree of


importance. Ireland has concluded noconvention judicial assistance of any kind withthe other States of the European Community.Agreements on judicial assistance do , howeverexist between the United Kingdom and thefollowing States: the Federal Republic ofGermany (Agreement of 20 March 1928), theNetherlands (Agreement of 17 November 1967).The United Kingdom is also party to the HagueConventions of 1965 and 1970 referred to inparagraph 185. It has concluded no otheragreements with Member States of theCommunity.

3. PRECISE SCOPE OF TITLE III OF THE 1968CONVENTION

187. If it were desired that interlocutory decisions bycourts on the further conduct of the proceedings,

and particularly on the taking of evidence , shouldbe covered by Article 25 of the 1968 Conventionthis would also affect decisions with which theparties would be , totally unable to comply

, without the court s cooperation and theenforcement of which would concern thirdparties , particularly witnesses. It would thereforebe impossible to 'enforce' such decisions underthe 1968 Convention. It can only be concludedfrom the foregoing that interlocutory decisionswhich are not intended to govern the legalrelationships of the parties, but to arrange the

further conduct of the proceedings, should beexcluded from the scope of Title III of the 1968Convention.

COMMENTS ON THE INDIVIDUAL SECTIONS

Section 1

Recognition

188. With two exceptions (4), no formal amendmentswere required to Articles 26 to 30. The WorkingParty did,. however, answer some questions raisedby the new Member States regarding theinterpretation of these provisions. Basically, these

concerned problems arising in connection withthe application of the public policy reservation in

Article 27 (1) (2), the right to a hearing Article 27 (2) (3), and the nature of the obliga-tion to confer recognition, as distict from en-

enforceability (1). The fact that Article 28 makesno reference to the provisions of Section 6 Title II on jurisdiction agreements is intentionaland deserves mention. When considering suchagreements it must be borne in mind that thecourt seised of the proceedings in the State oforigin must of its own motion take note of anyagreement to the contrary (see paragraphs 22and 174).

1. Article 26

189. Article 26 , second paragraph, introduces a specialsimplified procedure for seeking recognitionmodelled on the provisions governing the issue oforders for enforcement. However, this is not theonly way in which recognition may be sought.Every court and public authority must takeaccount of judgments which qualify forrecognition, and must decide whether theconditions for recognition exist in a particular

case, unless this question has already beendetermined under Article 26 , second paragraph.In particular, every court must itself decide

whether there is an obligation to grantrecognition, if the principal issue in a foreignjudgment concerns a question which in the freshproceedings emerges as a preliminary issue. Eachof these two recognition procedures involves aproblem which the Working Party discussed.

190. (a) If proceedings are conducted in accordancewith Article 26 , second paragraph , the court mayof its own motion take into account grounds forrefusing recognition if they appear from thejudgment or are known to the court. It may nothowever, make enquiries to establish whethersuch grounds exist, as this would not becompatible with the summary nature of theproceedings. Only if further proceedings are

instituted by way of an appeal lodged pursuant toArticle 36 can the court examine whether therequirements for recognition have been satisfied.

191. (b) The effects of a court decision are notaltogether uniform under the legal systemsobtaining in the Member States of theCommunity. A judgment delivered in one State asa decision on a procedural issue may, in anotherState, be treated as a decision on an issue ofsubstance. The same type of judgment may be ofvarying scope and effect in different countries. InFrance, a judgment against the principal debtor isalso effective against the surety, whereas in theNetherlands and Germany it is not (50


The Working Party did not consider it to be itstask to find a general solution to the problems

. arising from these differences in the national legalsystems. However, one fact seemed obvious.

Judgments dismissing an action as unfoundedmust be recognized. If a German court declaresthat it has no jurisdiction, an English courtcannot ' disclaim its own jurisdiction on theground that the German court was in factcompetent. Clearly, however German decisionson procedural matters are not binding, as to thesubstance, in England. An English court may atany time allow (or, for substantive reasonsdisallow) an action, if proceedings are started inEngland after such a decision has been given by aGenTIan court.

2. Article 27 (1) public policy

192. (a) The 1968 Convention does not state in termswhether recognition may be refused pursuant toArticle 27 (1) on the ground that the judgmenthas been obtained by fraud. Not even in the legalsystems of the original Contracting States to the1968 Convention is it expressly stated that fraudin obtaining a judgment constitutes a ground forrefusing recognition. Such conduct is , howevergenerally considered as an instance for applying

the doctrine of public policy (51). The legalsituation in the United Kingdom and Ireland isdifferent inasmuch as fraud constitutes a specialground for refusing recognition in addition to theprinciple of public policy. In the conventionson enforcement which the United Kingdomconcluded with Community, States, a middlecourse was adopted by expressly referring tofraudulent conduct, but treating it as a special

case of public policy (52

As a result there is no doubt that to obtain ajudgment by fraud can in principle constitute anoffence against the public policy of the Stateaddressed. However, the legal systems of allMember States provide special means of redressby which it can be contended, even after theexpiry of the normal period for an appeal, thatthe judgment was the result of a fraud (seeparagraph 197 et seq.

).

court in the Stateaddressed must always, therefore, ask itselfwhether a breach of its public policy still exists inview of the fact that proceedings for redress canbe, or could have been, lodged in the courts ofthe State of origin against the judgment allegedlyobtained by fraud.

193. (b) Article 41 (3) of the Irish Constitutionprohibits divorce and also provides, as regards

, marriages dissolved abroad:

No person whose marriage has beendissolved under the civil law of any other

State but is a subsisting valid marriage underthe law for the time being in force within the

jurisdiction of the Government andParliament established by this Constitutionshall be capable of contracting a validmarriage within that jurisdiction during thelifetime of the other party to the marriage sodissolved.'

In so far as the jursidiction of the 1968Convention is concerned, this Article of the

Constitution is of importance for maintenance

orders made upon a divorce. The Irish , courtshave not yet settled whether the recognition ofsuch maintenance orders would, in view of theconstitutional provisions cited, be contrary toIrish public policy.

3. The right to a hearing (Article 27 (2))

194. Article 27 (2) is amended for the same reason asArticle 20 (see paragraph 182). The object of theaddition to Article 20 was to specify the momentwhen proc~edings became pending before theIrish or British courts; in Article 27 (2) it intended to indicate which documents must havebeen served for the right to a hearing to respected.

Ordinary and extraordinary appeals

195. The 1968 Convention makes a distinction inArticles 30 and 38 between ordinary andextraordinary appeals. No equivalent for thiscould be found in the Irish and United Kingdomlegal systems. Before discussing the reason for

this and explaining the implications of thesolutions proposed by the Working Party (b),something should be said about the distinctionbetween ordinary and extraordinary appeals inthe Continental Member States of the EEC , sincejudges in the United Kingdom and Ireland willhave to come to terms with these concepts whichto them are unfamiliar (a).


196. (a) A clearly defined distinction between ordinaryand extraordinary appeals is nowhere to befound.

Legal literature and case law (53) have pointedout two criteria. In the first place neither anappeal ('Berufung ) nor an objection to a default

judgment ('Einspruch' ) has to be based onspecific grounds; a party may challenge ajudgment by alleging any kind of defect. Secondlyexecution is postponed during the period allowedfor an 'appeal or objection, or after an appeal orobjection has been lodged, unless the courtotherwise directs or unless exceptionally,different legal provisions apply.

Some legal systems contain a list of ordinaryappeal procedures.

197. Part 1 , Book 4 of the French Code de procedurecivile of 1806 , which still applies in Luxembourg,referred to extraordinary forms of appeal bywhich a judgment could be contested. It did notsay, however, what was meant by ordinaryappeals. Book 3 referred merely to ' courts ofappeal' . However, in legal literature and case lawappeals ('appel') and objections to defaultjudgments ('opposition ) have consistently beenclassified as ordinary appeals. The new FrenchCode de procedure civile of 1975 now expresslyclarifies the position. In future only objections(Article 76) and appeals (Article 85) are to classified as ordinary appeals.

198. The Belgian Code judiciaire of 1967 has retainedthe French system which previously applied inBelgium. Only appeals and objections areconsidered as ordinary appeals (Article 21).

199. There is no distinction in Netherlands lawbetween ordinary and extraordinary appeals.Academic writers classify the forms of appeal asfollows: objections ('Verzet where a judgmentis given in default), appeals ('Hoger beroepappeals in cassation '('Beroep in cassatie ) and

appeals on a point of law (' Revisie ) are classed asordinary appeals. ' Revisie' is a special form ofappeal which lies only against certain judgments

. of the Hoge Raad sitting as a court of firstinstance.

200. The Italian text of Articles 30 and 38 refers toimpugnazione' without distinguishing betweenordinary and extraordinary appeals. HoweverItalian legal literature distinguishes very clearly

between ordinary and extraordinary appeals.Article 324 of theCodice di procedura civile statesthat a judgment does not become binding as

between the parties until tl~e periods withinwhich the following forms of appeal' may belodged have expired: appeals on grounds ofjurisdiction ('regolamento di competenzaappeals ('appello ), appeals in cassation (' ricorsoper cassazione ), or petitions for review

revocazione ), where these are based on one ofthe grounds provided for in Article 395 (4)and (5). These forms of appeal are classified asordinary.

201. In Denmark, too the distinction' betweenordinary and extraordinary appeals is recognizedonly in legal literature. The deciding factormentioned there is whether a form of appeal maybe lodged within a given period without having

to be based on particular grounds, or whether itsadmissibility depends on special, consent by court or ministry. Accordingly, appeals (' Ankeand objections to default judgmentsGenoptagelse af sager, i hvilke der er afsagt

udebl~velsesdom are classified as ordinaryappeals.

202. Book 3 of the German Code of Civil ProcedureZivilprozeRordnung is headed ' Rechtsmittel'means of redress ) and. it governs ' Berufung

(appeals) 'Beschwerde (complaints) andRevision ' (appeals on a point of law). These are

frequently said to have in common the fact thatthe decision appealed against does not becomebinding (' rechtskriiftig ) until the period withinwhich these means of redress may be lodged hasexpired. However Article 705 of the Code definesRechtskraft' as the stage when these means ofredress are no longer available. The materialdifference between the means of redress and otherforms of appeal is that the former need not bebased on particular grounds of appeal, that theyare addressed to a higher court and that, as longas the decision has not become binding,enforcement is also postponed pursuant to Article704 unless the court, as is almost invariably thecase, allows provisional enforcement. If theexpression ' ordinary appeal' is used at all, areference to ' Rechtsmittel' (means of redress) isintended.

German legal writers, in accordance with thephraseology used by the law, do not classifyobjections to default judgments as a means ofredress (' Rechtsmittel' ) (54). It does not involvethe competence of a higher court. However, it hasthe effect of suspending execution and is not tiedto specific grounds of appeal just like an


objection in the other original Member States ofthe Community. It must, therefore, be includedunder 'ordinary appeals ' within the meaning ofArticles 30 and 38 of the 1968 Convention.

203. In its judgment of 22 November 1977 (55) the

European Court held that the concept of an

ordinary appeal' was to be uniformly determinedin the original Member States according towhether there was a specific period of time forappealing, which started to run 'by virtue of' thejudgment.

204. (b) In Ireland and the United Kingdom nothingwhich would enable a distinction to be drawnbetween ordinary and extraordinary appeals canbe found in either statutes, cases or systematictreaties on procedural law. The basic method ofredress is the appeal. Not only is this term usedwhere review of a judgment can be sought withina certain period, without being subject to specialgrounds for appeal; it is also the name given toother means of redress. Some have special namessuch as; for default judgments

, '

reponing' (in

Scotland) or ' application to set the judgmentaside ' (in England , Wales and Ireland); or againmotion (in Scotland) or ' application (in

England, Wales and Ireland) ' for a new trial'which correspond roughly to a petition for, reviewin Continental legal systems. They are the onlyforms of redress against a verdict by a jury. Afurther distinctive feature of the appeal system inthese States is the fact that the enforceability of a

judgment is not automatically .affected by theappeal period or even by the lodging of anappeal. However, the appellate court will usuallygrant a temporary stay of execution, if security isgiven. Fjnally there do exist in the UnitedKingdom legal procedures whose functioncorresponds to the ordinary legal procedures ofContinental legal systems, but which are notsubject to time limits. The judge exercises hisdiscretion in deciding on the admissibility of eachparticular case. This is the case, for example, withdefault judgments. The case law of the EuropeanCourt could therefore not be applied to the newMember States.

The Working Party therefore made prolongedefforts to work out an equivalent for the UnitedKingdom and Ireland of the Continentaldistinction between ordinary and extraordinary

appeals, but reached no satisfactory result. Thisfailure was due in particular to the fact that theterm ' appeal' is so many-sided and cannot beregarded, like similar terms in Continental law, asa basis for ' ordinary appeals . The Working Partytherefore noted that the legal consequencesresulting from the distinction drawn in Articles30 and 38 between ordinary and extraordinaryappeals do not have to be applied rigidly, butmerely confer a discretion on the court.Accordingly, in the interests of practicality andclarity, a broad definition of appeal seemedjustified in connection with judgments of Irishand United Kingdom courts. Continental courtswill have to use their discretion in such a waythat an equal balance in the application ofArticles 30 and 38 in all Contracting States willbe preserved. To this effect they will have tomake only cautious use of their discretionarypower to stay proceedings, if the appeal is onewhich is available in Ireland or the United

Kingdom only against special defects in ajudgment or which may still be lodged after along period. A further argument in favour of thispragmatic solution was that, in accordance withArticle 38, a judgment is in any event no longerenforceable if it was subject to appeal in the Stateof origin and the appellate court suspendedexecution or granted a ter:nporary stay execution.

5. Conflicts with judgments given innon-con~racting States which qualifyfor recognition

205. In one respect the provIsIOns of the 1968Convention governing recognition requiredformal amendment. A certain lack of clarity insome of these provisions can be accepted sincethe European Court of Justice has jurisdiction tointerpret them. However, Member States cannotbe expected to accept lack of clarity where thismight give rise to diplomatic complications withnon-contracting States. The new Article 27 (5) isdesigned to avoid such complications.

This may be explained by way of an example. Adecision dismissing an action against a persondomiciled in the Community is given innon-contracting State A. A Community State, Bis obliged to recognize the judgment under a

bilateral convention. The plaintiff brings freshproceedings in another Community State, Cwhich is not obliged to recognize the judgment


given in the non-contracting State. If he successful the existing text of the 1968Convention leaves it open to doubt whether thejudgment has to be recognized in State B.

In future, it is certain that this is not the case. Inorder to avoid unnecessary discrepancies , the textof the new provision is based on Article 5 of theHague Convention of 1 February 1971 on therecognition and enforcement of foreignjudgments in civil and commercial matters. Itswording is slightly wider in scope than wouldhave been required to avoid diplomaticcomplications. A judgment given in non-contracting State takes priority even where ithas to be recognized, not by virtue \ of international convention butmerely undernational law. For obligations under conventionsnot to recognize certain judgments , see paragraph249 et seq.

Section 2

Enforcemen t

Preliminary remarks

206. The Working Party s efforts were almost entirelyconfined to deciding which courts in the newMember States should have jurisdiction inenforcement proceedings, and what appealprocedures should be provided in this context. Inthis connection four peculiarities of UnitedKingdom and, to a certain extent, Irish law hadto be considered.

The Working Party took no decision onamendments to deal with the costs of theenforcement procedure. On this point, howeverreference should be made to the judgment of theCourt of Justice of the European Communites of30 November 1976 (Case 42/76). According tothat decision, Article 31 prohibits a successfulplaintiff from bringing fresh proceedings in theState in which enforcement is sought. But the

Contracting States are obliged to adopt rules oncosts which take into account the desire tosimplify the enforcement procedure.

207. The Working Party also abandoned attempts todraft provisions in the Convention on seizure forinternational claims, although it was clear thatproblems would occur to a certain extent ifdebtors and third party debtors were domiciled indifferent States. If, in one State, the court of thedebtor s domicile has jurisdiction over seizure forsuch claims, then the State of domicile of thethird party debtor may regard the making of theorder for seizure applicable to the latter as aviolation of its sovereignty, and refuse to enforceit. In such a situation the creditor can seekassistance by obtaining a declaration that thejudgment is enforceable in the State of domicileof the third party debtor, and enforcing thedebtor s claim against the third party in that

State provided that this State assumesinternational jurisdiction over such a measure.

208. (a) United Kingdom and Irish law does not havethe exequatur system for foreign judgments. Inthese countries an action on the basis of theforeign judgment is necessary unless, as in theUnited Kingdom , a system of registration appliesto the judgments of certain States (including thesix original Member States with the exception ofLuxembourg) (see paragraph 6). In that case theforeign judgments , if they are to be enforced, mustbe registered with a court in the United Kingdom.They then have the same force as judgments ofthe registering court itself. The application has tobe lodged by the creditor in person or by solicitor on his behalf. Personal appearance isessential; lodging by post will not suffice. If theapplication is granted , an order to that effect willbe entered in the register kept at the court.

Except in Scotland, however the UnitedKingdom has no independent enforcement officerlike the French 'huissier or the GermanGerichtsvollzieher ' (see paragraph 221). Only thecourt which gave the judgment or where thejudgment was registered can direct enforcementmeasures. Since this system of registration affordsthe same protection to a foreign judgmentcreditor as does the exequatur system on theContinent the United Kingdom registrationsystem could also be accepted for applying theprovisions of the 1968 Convention.


209. (b) A special feature of the constitution of theUnited Kingdom has already been mentioned inthe introductory remarks (see paragraph 11):England and Wales, Scotland and NorthernIreland are independent judicial areas. A newparagraph had to be added to Article 31 to coverthis. Similarly the appeal possibilities providedfor in Articles 37 and 40 apply separately to eachregistration. If a judgment has been validlyregistered with the High Court in Londonanother appeal is again possible against asubsequent registration with the Court of Sessionin Edinburgh.

210. (c) As far as the enforcement of foreignjudgments is concerned the United Kingdomtraditionally concedes special treatment tomaintenance orders (see paragraph 7). Until nowthey have been enforced only in respect of a fewCommonwealth countries and Ireland, and theirenforcement is entrusted to courts different fromthose responsible for enforcing other judgments.

Since the 1968 Convention contains noprovIsIOns precluding different recognitionprocedures for different types of judgment, thereis no reason why maintenance orders cannot becovered by a special arrangement within thescope of the 1968 Convention. This will permitthe creation of a uniform system for therecognition of maintenance orders from theCommunity and the Commonwealth and, in viewof the type of court having jurisdiction, the

setting up of central agency to receiveapplications for enforcement (see paragraph 218).For agreements concerning maintenance seeparagraph 226.

211. (d) Finally there were still problems in connectionwith judgments ordering performance other thanthe payment of money. Judgments directing a

person to do a particular act are not generallyenforceable under United Kingdom and Irish lawbut only in pursuance of special legal provisions.These provisions cover judgments ordering thedelivery of movable property or the transfer ofownership or possession of immovable property,and injunctions by which the court may in itsdiscretion order an individual to do or refrainfrom doing a certain act. Enforcement is possibleeither by the sheriff' s officer using direct compul-sion or indirectly by means of fines or imprison-ment for contempt of court. In Scotland, in addi-tion to judgments for the transfer of possession orownership of immovable property and preventa-

tive injunctions, there are also ' decrees ad factumprestandum by means of which the defendant canbe ordered to perfmm certain acts , particularly tohand back movable property.

212. (aa) If an application is made in the FederalRepublic of Germany for the enforcement of such

judgment given in Ireland or the UnitedKingdom , the court must apply the same meansof compulsion as would be applicable in the caseof a corresponding German judgment, i. e. a fineor imprisonment. In the reverse situation, theUnited Kingdom and Irish courts may have toimpose penalties for contempt of court in thesame way as when their own orders aredisregarded.

213. (bb) The system for enforcing orders reqUIrIngthe performance of a specific act is fundamentallydifferent in other States of the Community, e.g.Belgium, France and Luxembourg. The defendantis ordered to perform the act and at the sametime to pay a sum of money to the plaintiff tocover a possible non-compliance with the order. InFrance he is initially only threatened with a fine

astreinte ). In case of non-compliance, aseparate judgment is , required and is hardly everas high as the fine originally threatened. InBelgium the amount of the fine is already fixed inthe judgment ordering the act to performed (56). With a view to overcoming thedifficulties which this could cause for theinter-State enforcement of judgments orderingspecific acts. Article 43 provides that, if thesanction takes the form of a fine (' astreinte ), theoriginal court should itself fix the amount.Enforcement abroad is then limited to theastreinte . French ' Belgian Dutch and

Luxembourg judgments can be enforced withoutdifficulty in Germany, the United Kingdom andItaly if the original court has proceeded on thatbasis.

However, the 1968 Convention leaves open thequestion whether such a fine for disregarding acourt order can also be enforced when it accruesnot to the judgment creditor but to the State.Since this is not a new problem arising out of theaccession of the new Member States , the WorkingParty did not express a view on the matter.


2. Formal adjustments as regards courtshaving jurisdiction and authorizedappeals

214. Apart from the inclusion of a term equivalent in

the Irish and United Kingdom legal systems toordinary appeal (see paragraph 195), and apartfrom Article 44 which deals with legal aid (seeparagraph 223), the formal adjustments toArticles 32 to 45 relate exclusively to the courtshaving jurisdiction and the possible types ofappeal again~t their decisions. (See paragraph 108for adjustments relating to maintenance.

215. (a) For applications for declaration ofenforceability (see paragraph 208) of judgmentsother than maintenance orders only one court hasbeen given jurisdiction in each of IrelandEngland and Wales, Scotland and NorthernIreland. This is due to the peculiarities of thecourt systems in these countries (see paragraphs

, 208 and 209).

216. If the judgment debtor wishes to argue againstthe authorization of enforcement, he must lodgehis application to set the registration aside notwith a higher court, as in Germany, France andItaly, but, as in Belgium and the Netherlandswith the court which registered the judgment.The proceedings will take the form of an ordinarycontentious civil action.

corresponding position applies regarding the

appeal which the applicant may lodge if hisapplication is refused , although in such a case it isa higher court which has jurisdiction in all sevenContinental Member States of the Community.

217. The adjustment of the second paragraph ofArticle 37 and of Article 41 gave rise todifficulties with regard to the solution adoptedfor Articles 32 and 40.

In the original Member States of the Communityan appeal against judgments of courts on whichjurisdiction is conferred by Articles 37 and 40could only be lodged on a point of law and withthe highest court in the State. It was thereforesufficient to make the same provision apply to theappeals provided for in the 1968 Convention andin the case of Belgium , simply to bypass the Cour

appel. The purpose of this arrangement is tolimit the number of appeals, in the interests of

rapid enforcement, to a single appeal which mayinvolve a full review of the facts and a second onelimited to points of law. It would therefore nothave been enough to stipulate for the newMember States that only one further appealwould be permitted against the judgment of thecourt which had ruled on an appeal made byeither the debtor or the creditor. Instead, thesecond appeal had to be limited to points of law.

Ireland and the United Kingdom will have toadapt their appeal system to the requirements of

the 1968 Convention. In the case of Irelandwhich has only a two-tier superior court systemthe Supreme Court is the only possibility.Implementing legislation in the United Kingdomwill have to determine whether the furtherappeals should go direct to the House of Lords

, depending on the judicial area concerned (seeparagraph 11), to the Court of Appeal in Englandand Wales, to the court of. ~he same name inNorthern Ireland or to the Inner House of theCourt of Session in Scotland. The concept ofappeal on a point of law is the nearestequivalent as far as United Kingdom law isconcerned to the 'Rechtsbeschwerde ' of Germanlaw and the appeal in cassation in the legalsystems of the other original Member States ofthe Community, the common feature of which is

restriction of the grounds of appeal to anincorrect application of the law (as opposed to anincorrect assessment of the facts). Even in relationto appeals in cassation and 'Rechtsbeschwerdethe distinction between points of law and mattersof fact is not identical; for the United Kingdomand Ireland, too, this will remain a matter for itsown legislation and case law to clarify.

Traditionally the leave of the Minister for Justiceis required for an appeal to the highest Danishcourt at third instance. The Wor~ing Party wasinitially doubtful whether it should accept this inthe context of the 1968 Convention. It emergedhowever, that the Convention does not guaranteea third instance in all circumstances. In' order torelieve the burden on their highest courtsMember States may limit the admissibility of theappeals provided for in Article 41. The Danishsolution is only one manifestation of this idea.There was also no need in the case of Denmark tostipulate that the appeal to the highest courtshould be limited to a point of law. Whengranting leave the Ministry of Justice can ensurethat the appeal concerns only questions of law

requiring further elucidation. Denmark has given


an assurance that leave will always be granted , ifthe court of second instance has not made use ofits discretion to refer a matter to the EuropeanCourt of Justice or if enforcement of a foreignjudgment has been refused on legal grounds.

218. (b) In Ireland the proposed arrangement alsoapplies to maintenance orders. In the United

Kingdom, however maintenance orders aresubject to a special arrangement (see paragraph210). In England and Wales and in NorthernIreland registration is a matter for theMagistrates' Courts, and in Scotland for theSheriff Courts. These courts also have jurisdictionin respect of other maintenance matters includingthe enforcement of foreign maintenance orders.Foreign maintenance creditors cannot, howeverhave recourse to any of the above courts directly,but must apply to the Secretary of State (57 ), whowill transmit the order to the appropriate court.

This arrangement was made in the interest of theforeign maintenance creditors becauseMagistrates' Courts and Sheriff Courts have layjustices and no administrative machinery.

As regards jurisdiction in respect of appealswhich may be brought by either the creditor orthe debtor under the 1968 Convention , the usualsystem will continue to apply, i.e. the appeal isdecided by the court which registered the order orrefused such registration. It is impossible for amaintenance order to be amended duringregistration proceedings, even if it is claimed thatthe circumstances have changed (see paragraph104 et seq.

The special situation regarding maintenanceorders in the United Kingdom offers a series ofadvantages to the maintenance creditor. After

forwarding the order to the Secretary of State , hehas virtually no further need to concern himselfwith the progress of the proceedings or with theirenforcement. The rest will be done free of charge.The Secretary of State transmits the order to theappropriate court and, unless the maintenancecreditor otherwise requests, the clerk of that

court will be regarded as the representative

litem within the meaning of Article 33 , second

paragraph, second sentence. In England andWales and in Northern Ireland the clerk inquestion will also be responsible for taking the

necessary enforcement measures and for ensuringth~t the creditor receives the proceeds obtained.Only in Scotland need the creditor under theorder seek the services of solicitor when

applying for enforcement following registrationof an order. The Law Society of Scotlandundertakes to provide solicitors whose fees are, ifnecessary, paid in accordance with the principlesof legal aid. Should the maintenance debtor moveto another judicial area in the United Kingdom(see paragraph 11), a maintenance order willunlike other judgments, be automaticallyregistered with the court which then hasjurisdiction. For agreements concernmgmaintenance, see paragraph 226.

Other adjustment problems

219. (a) The United Kingdom asked whether Article34 excludes the possibility of notifying the debtorthat an application for registration of a foreign

judgment has been lodged. One of the aims ofArticle 34 is to secure the element of surprisewhich is essential if measures of enforcement areto be effective. Therefore, although this 'provisiondoes not expressly forbid notifying the debtor inthe proceedings of the application for the grant ofan enforcement order, such notification should beconfined to very exceptional cases. An examplemight be an application for registration made along time after the original judgment was given.In any case, the court may not considersubmissions from the debtor, whether or not hewas notified in advance.

220. (b) The appeal provided for in Article 36 can bebased inter alia on the grounds that thejudgment does not come within the scope of the1968 Convention, that it is not yet enforceableor that the obligation imposed by the judgment

has already been complied with. However, thesubstance of the judgment to be enforced or theprocedure by which it came into existence can bereviewed only within the limits of Articles 27 and28. For the adjustment of maintenance orders , seeparagraph 108.

221. (c) The Working Party discussed Article 39 length. The provision in question is modelled onthe French legal system and legal systems relatedto it, to which the institution of 'huissier' isfamiliar. Under these systems measures ofenforcement in respect of movable property orcontractual claims belonging to the debtor can betaken , without involving the court, by instructinga 'huissier ' to deal with their execution. It is forthe creditor to choose between the av9ilable


methods of enforcement. The enforcing agency

has no discretion whatsoever in the matter. Thelegal postion obtaining in the United Kingdom(especially in England and Wales and also inScotland) and Ireland is quite different. In theUnited Kingdom it is the court which has given orregistered the judgment which has jurisdictionover measures of enforcement. In Ireland it is thecourt which has given or enforced the judgment.

The court also has some discretion as to whichenforcement measures it will sanction. Protectivemeasures confined to securing enforcement of aclaim do not yet exist.

This position will have to be altered by theimplementing legislation of these / States, which

will have to introduce protective measures , in sofar as this consequence does not arise as anautomatic result of the entry into force of the1968 Convention for one of these States (seeparagraph 256).

The 1968 Convention does not guarantee specificmeasures of enforcement to the creditor. Neitheris it in any way incompatible with the 1968Convention to leave the measures of enforcemententirely to the court. The 1968 Conventioncontains no express provision obliging theMember States to employ an institution similar tothe French 'huissier . Even within its originalscope, creditors have to apply directly to thecourt in the case of certain measures ofenforcement; in Germany, for example, theywould be required to do so in the case ofenforcement against immovable property. It certain however that in the German text thephrase ' in das Vermogen des Schuldners

' ('

againstthe property of the party against whomenforcement is sought') does not mean thatmeasures of enforcement are permissible asagainst third parties. The words quoted abovecould be omitted without changing the meaningof the provision. The question under whatconditions measures of enforcement are possibleagainst persons other than the judgment debtor isto be answered solely on the basis of nationallaw. But the qualifications contained in Article 39must also be observed.

The court enforcing the judgment need not be theone which grants the order of enforcement or

registers the foreign judgment. Therefore, for thepurposes of enforcement under the 1968Convention, Denmark can retain its presentsystem, by which execution is entrusted to a

special enforcement judge.

222. (d) For the problems presented by the system ofastreintes which applies in some MemberStates, see paragraph 213.

223. (e) In its present form, Article 44 does notprovide for the case of a party who had beengranted only partial legal aid in the State in whichthe judgment was given. Although this did notinvolve an adjustment problem specifically due tothe accession of the new Member States, theWorking Party decided to propose anamendment. The Working Party discussionsrevealed that if the text were to remain in force inits present form it could result in someundesirable complications. The Working Partyproposal was largely based on the formulation ofArticle 15 of the Hague Convention of 2 October1973 on the recognition and enforcement ofdecisions relating to maintenance obligationswhich has now come into force. This provisionopts for a generous solution: even if only partiallegal aid was granted in the State of origin, fullaid is to be granted in the enforcementproceedings.

This has a number of further advantages:

As the main application of Article 44 as amendedrelates to maintenance claims, the amendedversion contributes to the harmonization ofprovisions in international conventions.

Moreover, it leads to a general simplification ofapplications.

Since the rules concerning the granting of partiallegal aid are not the same in all the ContractingStates, the amended version also ensures auniform application of the legal aid provisions.

Lastly, it secures the suprise effect of enforcementmeasures abroad, by avoiding procedural delayscaused by difficult calculations concerning theapplicant s share in the costs.

The first paragraph of Article 44 does nothowever, oblige States which do not at presenthave a system of legal aid in civil matters tointroduce such a system.

224. (f) The reason for the new second paragraph ofArticle 44 relates to the jurisdiction of the Danish

- administrative authorities (see paragraph 67)whose services are free. No question of legal aidtherefore arises. The new provision is designed toensure that the enforcement of Danishmaintenance orders is not, for this reason, at adisadvantage in the other EEC countries bycomparison with maintenance orders from EECco\mtries other than Denmark.


Section 3 certainly admissible in appellate proceedings

where the debtor appeals against registration oragainst a declaration of enforceability, or thecreditor against a refusal to register. However, allthe other means of giving evidence which arenormally admissible must also be available inthose proceedings.

Common provisions

225. The discussion of Articles 46 to 49 centred onwhether the new Member States, in accordancewith their legal tradition, could require anaffidavit, in particular to the effect that none ofthe grounds for refusing recognition , specified inArticles 27 and 28 , obtain. Affidavit evidence

The addition to Article 46 (2) is proposed for thereasons given in paragraphs 182 and 194.

CHAPTER 6

AUTHENTIC INSTRUMENTS AND COURT SETTLEMENTS

226. In England and Ireland there is no equivalent of enforceable instruments. In Scotlandinstruments establishing a clearly defined obligation to perform a contract can entered in a public register. An extract from the public register can then serve as abasis for enforcement in the same way as a court judgment. Su~h extracts are coveredby Article 50.

In the United Kingdom, the courts having jurisdiction for recognition and enforce-ment of maintenance orders are different from those concerned with other kinds ofjudgment (see paragraphs 210 and 218). It is for the internal Jaw of the United King-dom to determine whether foreign court settlements concerning maintenance shouldbe treated as maintenance orders or as other judgments.

CHAPTER 7

GENERAL PROVISION~

227. The outcome of the discussion of Articles 52 and 53 has already been recorded else-where (see paragraphs 73 et seq. and 119).

CHAPTER 8

TRANSITIONAL PROVISIONS

228. Article 54 continues to apply to the relationshipsbetween the original Member States. For theirrelationships with the new Member States , andthe relationships of the new Member States with

each other, an appropriate transitional provisionis included in Article 34 of the proposedAccession Convention. It is closely modelled onArticle 54 of the 1968 Convention, but takes into


account the fact that the latter has already beenin force in its present form between the originalMember States since 1 February 1973 , and alsothe fact that some amendments are to be made toit. Finally, the Interpretation Protocol of 3 June1971 also had to be taken into account in thetransitional rules. The detailed provisions are asfollows (58

I. JURISDICTION

229. 1. The provlSlons on jurisdiction in the 1968Convention apply in the new Member States onlyin their amended version and only to proceedingsinstituted after the Accession Convention hascome into force, and hence after the 1968Convention has come into force, in the State in

question (Article 34 (1)).

230. 2. The amended version also applies toproceedings instituted in the Qriginal MemberStates after that date. Jurisdiction in respect of

proceedings instituted in the original MemberStates before that date but after 1 February 1973will continue to be determined in accordancewith the original text of the 1968 Convention(Article 34 (1)). It is to be noted, as regards therelationships of the old Member States with eachother, that under Article 39 of the AccessionConvention the amended version can only comeinto force simultaneously for all six of them.

II. RECOGNITION AND ENFORCEMENT

1. END OF THE TRANSITIONAL PERIOD

231. The recognition and enforcement of judgmentsare in all respects governed by the Convention asamended, provided the transitional period hadalready ended at the time of institution of theproceedings. For this purpose, the Accession

Convention must have come into force by thattime both in the State of origin and in the Statesubsequently addressed (Article 34 (1)). It is notsufficient for the Accession Convention to be inforce in the former State only, since rules ofexorbitant jurisdiction may still be invoked underArticle 4 of the 1968 Convention againstdomiciliaries of the State subsequently addressedif that State was not also a party to the AccessionConvention at the time of institution of the

proceedings. This would render an obligation torecognize and enforce a judgment in that State

, without any preliminary review unacceptable.

If we assume that the Accession Conventioncomes into force for the original Member Statesof the Community and Denmark on 1 January1981 and an action is brought in Germanyagainst a person domiciled in Denmark on 3January 1981 , then a judgment on 1 July 1981finding in favour of the plaintiff would beenforceable irrespective of transitional provisionseven if, say, the United Kingdom did not becomea party to the Convention until 1 December1981. However, if in this example the action wasbrought and judgment given against a person

domiciled in the United Kingdom, Article 34 (1)

would not govern recognition and enforcement inthe United Kingdom. That would be a truetransitional case.

Paragraphs (2) and (3) of Article 34 deal withjudgments during the transitional period, i.judgments given after the Accession Conventionhas come into force in the State addressed, but inproceedings which were instituted at a timewhen , either in the State of origin or in the Stateaddressed, the Accession Convention was not yetin force. In Article 34 (2) and (3) a distinction isdrawn between cases involving only the originalMember States of the Community and thoseinvolving new Member States as well.

2. Among the original Member States ofthe Community

232. Article 34 (2) makes the recognition andenforcement of judgments among the originalMember States of the Community subjectwithout any restriction to the 1968 Conventionas amended, even if the actions were startedbefore the entry into force of the Accession

Convention which will necessarily besimultaneous in those States (see the end ofparagraph 230). This amounts indirectly to statement that the situation as regards therecognition and enforcement of judgments amongthose States remains that in Article 54 of the1968 Convention in the case of judgments givenbefore the entry into force of the Accession

Convention. The most important implication ofArticle 34 (2) is that in proceedings for therecognition of judgments among the originalMember States of the Community there is to beno consideration of whether the court giving the


judgment whose recognition is sought wouldhave had jurisdiction after the entry into force ofthe Accession Convention. If the action wasstarted after 1 February 1973 then thejurisdiction of the court giving the judgmentwhose recognition is sought may no longer beexamined. The point is of note since that courtjurisdiction could still have been founded onexorbitant jurisdictional rules where domiciliariesof the new Member States are concerned.

To illustrate the point with an example, if aFrenchman were in 1978 to bring an action in theFrench courts pursuant to Article 14 of the CivilCode against a person domiciled in Irelandwhich would be possible under Article 4 of the1968 Convention, and judgment was given infavour of the plaintiff in 1982; then, assumingthe Accession Convention came into force for theoriginal Member States of the Community andIreland in 1981 , the judgment would have to berecognized and enforced in Germany, but not inIreland.

3. Where newinvolved

Member areStates

233. The arrangements obtaining under Article 34 (3)for the recognition and enforcement of judgmentsbetween the original Member States and the newMember States, or as between the new MemberStates, differ somewhat from those applyingamong the original Member States. Article 34 (3)is concerned with the possibility of recognitionand enforcement being sought in one of the newContracting States of a judgment from an originalContracting State or from another newContracting State. Apart from the cases referredto in paragraph 231 , this is possible after the endof the transitional ,period subject to threerequirements being met.

234. (a) The judgment must have been given after theAccession Convention came into force in bothStates.

235. (b) In addition , the proceedings must have beeninstituted, in the words of the Conventionbefore 'the date of entry into force of thisConvention, between the State of origin andthe State addressed' . The purport of this isthat, at the time when the proceedings wereinstituted, the Accession Convention mayhave come into force either in the State of thecourt giving the judgment for which

recognition is sought, or in the State in whichrecognition and enforcement are subsequentlysought, but not in both of these States.

236. (c) Finally, the jurisdiction of the court giving thejudgment for which recognition is soughtmust satisfy certain criteria which the court inthe State addressed must check. These criteriaexactly match what Article 54 of the 1968Convention laid down regarding transitionalcases which were pending when thatConvention came into force between the sixoriginal Member States. In proceedings forrecognition, the jurisdiction of the courtwhich gave judgment is to be accepted as

having been valid, provided one of tworequirements is met:

(aa) The judgment must be recognized wherethe court in the State of origin wouldhave had jurisdiction if the AccessionConvention had already been in force asbetween the two States at the time whenthe proceedings were instituted.

(bb) The judgment must also be recognizedwhere the court jusrisdiction wascovered at the time when theproceedings were instituted by another?nternational convention which was inforce between the two States.

Reverting to the example in paragraph 232 , the

position would be as follows: the Frenchjudgment would indeed have been given after theAccession Convention had come into force inIreland and France. The proceedings would havebeen instituted at a time when the AccessionConvention was not yet in force in France (or inIreland). Had this Convention already been inforce as between France and Ireland at that time,the French courts would no longer have been ableto found their jurisdiction on Article 14 of theCivil Code and hence, it must further be assumedwould have been unable to assume jurisdiction.Lastly, there is no bilateral convention betweenFrance and Ireland concerning the direct orindirect jurisdiction of the courts. Consequently,the judgment would not have had to recognized in Ireland.

If one changes the example so that it nowconcerns France and the United Kingdom, one

has to take into consideration the Conventionbetween those two States of 18 January 1934providing for the reciprocal enforcement ofjudgments. However, jurisdiction deriving from


Article 14 of the Civil Code is not admitted underthat Convention; thus the judgment would nothave to be recognized in the United Kingdomeither.

If the example concerned Germany and theUnited Kingdom, and the defendant resident inthe United Kingdom had agreed orally before thecommencement of the proceedings that theGerman courts should have jurisdiction, then

under the 1968 Convention the judgment wouldhaye to be recognized and enforced in the UnitedKingdom. Under Article IV (1) (a) of theConvention between the United Kingdom andGermany of 14 July 1960, oral agreement '

sufficient to give grounds for jurisdiction for thepurposes of recognition (' indirect' jurisdiction).However, the German court would have had tobe a 'Landgericht' , since 'Amtsgericht' judgmentsare not required to be recognized under thatConvention (Article I (2)). In the event of awritten agreement on jurisdiction, even thejudgment of an 'Amtsgericht' would have to berecognized, under Article 34 (3) of the AccessionConvention, as the ' Amtsgericht ' would in thatcase have assumed jurisdiction undercircumstances in which jurisdiction would alsohave had to be assumed if the AccessionConvention had been in force between Germanyand the United Kingdom.

CHAPTER 9

RELATIONSHIP TO OTHER CONVENTIONS

I. ARTICLES 55 AND 56

237. The Working Party included in Article 55 thebilateral conventIons between the UnitedKingdom and other Member States of theCommunity. No such conventions have beenconcluded by Ireland and Denmark.

II. ARTICLE 57 (59

1. THE BASIC STRUCTURE OF THE PROPOSEDPROVISION

238. Great difficulties arose when an attempt wasmade to explain to the new Member States theexact scope of Article 57 , the main reason beingthe statement that the Convention 'shall not

affect ' any conventions in relation to particularmatters, without stating how the provisions insuch conventions could be reconciled with thoseof the 1968 Convention where they covered onlypart of the matters governed by the latter, whichis usually the case. Special conventions can bedivided into three groups. Many of them containonly provisions on direct jurisdiction, as in the

case with the Warsaw Convention of 12 October1929 for the unification of certain rules relatingto international carriage by air and the

Additional Protocols thereto (* ), and the BrusselsConvention relating to the C\frest of seagoingships which is of great importance for maritimelaw (Article 7) (see paragraph 121). Mostconventions govern only the recognition and

enforcement of judgments, and merely referindirectly to jurisdiction in so far as it constitutesa precondition for recognition. This is the case

with the Hague Convention of 15 April 1958 onthe recognition and enforcement of decisionsrelating to maintenance obligations towardschildren. Finally, there are also Conventionswhich contain provisions directly regulatingjurisdiction as well as recognition andenforcement as for example the BerneConvention on carriage by rail and theMannheim Convention for the navigation of theRhine. It is irrelevant for present purposeswhether the conventions contain additionalprovisions on the applicable law or rules ofsubstantive law.

239. (a) It is clear beyond argument that where aspecial convention contains no provisions directlygoverning jurisdiction , the jurisdiction provisionsof the 1968 Convention apply. It is equally clearthat where all the Contracting States are partiesto a special convention containing provisions on

( ,:-

) Not to be confused with the Brussels Convention of the

same date for the unification of certain rules relating topenal jurisdiction in matt~rs of collision.

No C 59lt40 Official Journal of the European Communities

jw:isdidiQlt, those provisions prevail. But for'Situations between these two extremes the~rioo provided by Article 57 is a great deal lessdJeu~ Tm.'s lS paniadady the case for a number of

which arise where only the State oforigin .and the Sttat:eaddressed are parties to the

~ciU coo:venuOl1l.. The problems become acuteOllJr one of these two States is a party.

both States ,are parties to a special conventionwhiCh governs only direct jurisdiction, will the;prcwtisrhoins of the 1968 Convention regarding.e~cioI:1 of jurisdiction by the court of its!(j)'fNn mGtiaI\ (Article 20~, lis pendens (Article 21)amd t'mltoooem.en.t apply? Do the provisions of the1968 Convention on the procedure forfe'CGg)lli.ri()J1 and enforcement apply, if a special.aomventi())n on the recognition and enforcementofjuc\~ments ,does not deal with procedure? Cana person ,domiciloo ilia Contracting State whichis nota party to a special convention be sued inthe courts of another Contracting State on thebasis of jurisdiction provisions in the specialconventions, or can the State of domicile which isnot a party to the special convention claim thatthe jurisdiction Tules of the 1968 Convention

must be observed? Must a judgment given in acourt which has jurisdiction only under a specialconvention be recognized and enforced even in aContractirtg State which is not a party to thatpartiicuJla:r special convention? And, finally, what15 the poSition where the special convention doesnot claim to beexdusive?

240. '(Ib)1(Cf!lItatt1ve _and 'CooHicring views were-a:~d widlii'.lll 'the Working Party as to howt'heS'e pTo'b!lems ~e ro be solved in interpretingArtide 57 In its oo~nai form. It become dear1ihat it ~uM not be practicable to provide ap-rocise ,~l'lll1ion ro an of them, particularly sinceit is 1~sible to pl'edict the form of futureconvent-rems.. It was oowev'ef 'appropriatt; in theimerests 'crl darifyi1'1g the obligations about to bea'Ssumed by :the new Member States, to ind ude inthe AiCCessiol'l CGnvennon an authenticinterpretanon which 'concerns some problemswhich a're of especial importance. Theopportunity was taken to. make a draftingimprovement to the present Article 57 of the

968 'Convention the new paragraph 1 of thisArticle whim win speak of recognition orenforcement. By reason of the purely draftingnature of the amendment to. the text, thep.wvi'sian laying down the authenticinterpretation of the new Article 57 (1) also

;~

t'G 'the pmesemt vet'Sion.

Tibe saiJutioo ::wriwed at .is based on the followingl'if.i~. 'I'he 1 '968 Convention contains the

rules generally applicable in all Member States;provisions in special conventions are special ruleswhich every State may make prevail over the1968 Convention by becoming a party to such aconvention. In so far as a special convention doesnot contain rules covering a particular matter the1968 Convention applies. This is also the casewhere the special convention includes rules ofjurisdiction which do not altogether fit theinter-connecting provisions of the various parts ofthe 1968 Convention, especially those governingthe relationship between jurisdiction andenforcement. The overriding considerations aresimplicity and clarity of the legal position.

The most important consequence of this is thatprovisions on jurisdiction contained in specialconventions are to be regarded as if they wereprovisions of the 1968 Convention itself, even ifonly one Member State is a Contracting Party tosuch a special convention. Even Member Stateswhich are not Contracting Parties to the specialconvention must therefore recognize and enforcedecisions given by courts which have jurisdictiononly under the special convention. Furthermorein the context of two States which are parties to aspecial convention, a person who wishes toobtain the recognition or enforcement of ajudgment may rely upon the proceduralprovisions of the 1968 Convention onrecognition and enforcement.

At the same time, the Working Party did not wishto reach a final conclusion on the questionwhether the general principle outlined above

could be consistently applied in all itsramifications. To take a critical example, it wasleft open whether exclusive jurisdiction under theprovisions of special convention mustinvariably be applied. The same applies to thequestion whether a case of lis pendens arisingfrom a special convention is covered by Article 21of the 1968 Convention. The Working Partytherefore preferred to provide expressly for theapplication or Article 20 and to leave the solutionof the outstanding problems to legal literatureand case law. For the implications of an authenticinterpretation of Article 57 for maritimejurisdiction, see paragraph 121.

2. EXAMPLES

241. A river boatman domiciled in the Netherlands isliable for damages arising from an accident whichoccurred on the upper Rhine. It is however no


longer possible to determine whether the harmfulevent occurred on German or French territory orfrom where the damage emanated.

242. It is not possible in such a case for either Germanor French courts to assume jurisdiction underArticle 5 (3) or any other provision of the 1968Convention. According to Article 34 (2) (c) andArticle 35a of the revised Rhine navigationConvention of 17 October 1868 in the version ofthe Protocol of 25 October 1972 (60), jurisdictionin such cases belongs to the court of the Statewhich was the first or only one seised of thematter. That court must, however, take intoaccount Article 20 of the 1968 Convention , eventhough no equivalent of this Article exists in theRhine navigation Convention. For example, if thedefendant fails to enter an appearance, the courtmust of its own motion (see paragraph 22)ascertain whether all means have been exhaustedof determining exactly where the accidentoccurred, for only if this cannot be determineddoes the court have jurisdiction under theabovementioned provisions of the Rhinenavigation Convention.

243. If the court first seised of the matter was Frenchthen any judgment of that court must berecognized in Germany. The Rhine navigationConvention is even stricter than the 1968Convention in forbidding any re-examination ofthe original judgment in the State addressed.According to the correct interpretation of Article57 of the 1968 Convention the judgment creditorhas the choice of availing himself of theenforcement procedure provided by the Rhine

navigation Convention or by the 1968 Conven~tion. However, if he proceeds under the 1968Convention the court may not refuse recognitionon any of the grounds given in Article 27 or Arti-cle 28 of the 1968 Convention. Unlike the en-forcement procedure itself, the conditions forrecognition and enforcement are exclusivelygoverned by the special conventions in this

example, the Rhine navigation Convention.

244. If, however, a judgment has been given in thecourt with jurisdiction at the place of destinationpursflant to Article 28 (1) of the WarsawConvention of 12 October 1929 for theunification of certain rules relating tointernational carriage by air the 1968Convention applies fully to both recognition andenforcement, because the Warsaw Conventioncontains no provisions at all on these matters.The same applies where in maritime law the

jurisdiction of the court of origin was based onthe provisions governing arrest contained in the1952 Brussels Convention (see paragraph 121).

245. If the boatman in the above example on Rhinenavigation had been domiciled in Luxembourg,which is not a party to the Rhine navigationConvention, the position would be as follows~any jurisdiction assumed in France or Germanypursuant to the Rhine navigation Convention canno longer be regarded in Luxembourg as aninfringement of the 1968 Convention. Under theprovisions and procedure of the 1968Convention, Luxembourg is obliged to recognizeand enforce a judgment given by the German orFrench Rhine navigation courts. If, conversely,the boatman is sued in the court of hisLuxembourg domicile, which is also permissibleunder the 1968 Convention , Germany and Francewould have to accept this, even though they areparties to the Rhine navigation Convention whichdoes not recognize jurisdiction based on domicile.

3. UNDERTAKINGS IN CONVENTIONSBETWEEN STATES NOT TO RECOGNIZEJUDGMENTS

246. Whether Article 57 also covers conventions underwhich one Member State of the Communityundertakes not to recognize judgments given in

another Member State remains an open question.It could be argued that the admissible scope ofsuch conventions was governed exclusively byArticle 59.

International obligations of this sort can resultfrom a special convention which provides for theexclusive jurisdiction of the courts of one of theContracting Parties. Such an obligation canhowever also result indirectly from the fact thatthe exercise of jurisdiction under the specialconvention is linked to a special regime ofliability. For example, the Paris Convention of1960 on third party liability in the field ofnuclear energy, apart from laying down rules ofjurisdiction, recognition and enforcement:

1. places the sole liability for damage on theoperator of a nuclear installation;

2. makes his liability an absolute one;

3. sets maximum limits to his liability;


4. requires him to insure against his liability;

5. allows a Contracting State to provideadditional compensation from public funds.

The recognition and enforcement of a judgmentwhich is given in a State not party to such aspecial convention and which is based on legalprinciples quite different from those outlinedabove could seriously undermine the operation ofthat special convention.

The 1968 Convention should always beinterpreted in such a way that no limitations liability contained in international conventionsare infringed. The question however remainsopen whether this result is to be achieved byapplying the public policy provision of Article 27(1), by analogy with the new paragraph (5) ofArticle 27 , or by a broad interpretation of Article57.

For conventions limiting liability in maritime lawsee paragraph 124 et seq.

4. PRECEDENCE OF SECONDAR COMMUNITYLAW

247. Within the 'Working Party opinion was divided asto whether secondary Community law, or

national laws adopted pursuant to secondaryCommunity law, prevail over internationalagreements concluded between the MemberStates, in particular in the case of a conventionprovided for in Article 220 of the Treaty ofRome. There was, however, agreement thatnational and Community law referred to aboveshould prevail over the 1968 Convention. Thisdecision is embodied in Article 57; the provisionis based on Article 25 of the preliminary draftConvention on the law applicable to contractualand non-contractual obligations.

5. CONSULTATIONS BEFORE THE FUTUREACCESSION BY MEMBER STATES OF THECOMMUNITY TO FURTHER AGREEMENTS

248. By their accession to the Convention, the newMember States are also bound by the JointDeclaration made by the Contracting States at the

time of the signing of the 1968 Convention. Inthe Declaration the States declare that they willarrange for regular periodic contacts between

their representatives. The Working Party wasunanimously of the opinion that consultationsshould also take place when a Member Stateintended to accede to a convention which wouldprevail over the 1968 Convention by virtue ofArticle 57.

III. ARTICLE 59

249. This prOVlSlon refers only to judgments givenagainst persons domiciled or habitually residentoutside the Community. Such persons may alsobe sued on the basis of jurisdictional provisionswhich could not be invoked in the case of personsdomiciled within the Community, and which areclassed as exorbitant and disallowed pursuant tothe second paragraph of Article 3. Neverthelessany judgment which may have been given is to berecognized and enforced in accordance with the

1968 Convention. As the Jenard, report explainsit is intended that the Contracting States shouldremain free to conclude conventions with thirdStates excluding the recognition and enforcementof judgments based on exorbitant jurisdictions even though the 1968 Convention permits this inexceptional cases. The aim of the proposedamendment to Article 59 is further to limit thepossibility of recognition and enforcement.

250. The way this will work may be illustrated by anexample. If a creditor has a claim to be satisfiedin France against a debtor domiciled in thatcountry, then Danish courts have no jurisdictionunder any circumstances to decide this issue, evenif the debtor has property in Denmark and even ifthe claim is secured on immovable property there.Supposing the debtor is domiciled in Norway,then if Danish national law so allows Danishcourts may very well claim jurisdiction, e.g. on

the basis of the presence in Denmark of propertyowned by the debtor. Normally, the judgmentgiven in such a case would also be enforceable inthe United Kingdom. The United Kingdom couldhowever undertake in a convention with Norwayan obligation to refuse recognition andenforcement of such a judgment. This kind of

treaty obligation may not however extend to acase where the jurisdiction of the Danish courts isbased on the ground that immovable property in,Denmark constitutes security for the debt. In such \circumstances the judgment would enforceable even in the United Kingdom.


CHAPTER 10

FINAL PROVISIONS

1. IRELAND

251. Ireland has no territorial possessions outside theintegral parts of its territory.

2. UNITED KINGDOM

252. The term 'United Kingdom ' does not include theChannel Islands , the Isle of Man , Gibraltar or theSovereign Base Areas in Cyprus. There is no

obligation on the United Kingdom to extend thescope of the 1968 Convention to include theseterritories , even though it is responsible for theirexternal relations. It might, however, be useful ifthe United Kingdom were to extend the 1968Convention and it should be authorized to do so.It would have to undertake the necessaryadjustments' itself, and there was no need toprovide for them in the Accession Convention.The following adjustments would be required:indication of any exorbitant jurisdictions in thesecond paragraph of Article 3; a declaration as towhether in the newly included territories everyappeal should be regarded as an ordinary appeal

for the purposes of Articles 30 and 38; adeclaration as to whether registration in any suchterritory in accordance with the secondparagraph of Article 31 is effective only within itsarea; establishing which courts are competentunder Articles 32 , 37 and 40 , the form in whichthe application should be made, and whether theadjustments in respect of the United Kingdomcontained in the second paragraph of Article 37as amended and in Article 41 as amended shouldalso apply in the newly included territories. If anyinternational conventions should apply to anyone of the territories in question, appropriate

adjustments would also have to be made toArticle 55.

CHAPTER 11

The penultimate paragraph of the proposedaddition to Article 60 relates to the fact thatjudgments of courts in these territories which donot belong to the United Kingdom can bechallenged in the last instance before the JudicialCommittee of the Privy Council. It would beillogical to bring Privy Council decisions withinthe scope of the 1968 Convention if they relatedto disputes arising in territories to which the1968 Convention does not apply.

3. DENMARK

253. For the purposes of EEC law, Greenland isincluded in the European territory of Denmark.The special constitutional positions of the FaroeIslands led to a solution corresponding closely tothat proposed for the territories for whose foreignrelations the United Kingdom is responsible. Thishad to allow for the fact that both appellate andfirst instance proceedings which relate to theF aroes and are therefore conducted under theCode of Civil Procedure specially enacted forthese islands can be brought in Copenhagen.

4. CHANGES IN A STATE'S TERRITORY

254. The Working Party was unanimous that anyterritory which becomes independent of themother country thereby ceases to be a member ofthe European Community and , consequently, canno longer be a party to the 1968 Convention. Itwas unnecessary to provide for this expresslyand, in any case, to have drafted such a provisionwould have gone beyond the Working Partyterms of reference.

ADJUSTMENTS TO THE PROTOCOL OF 3 JUNE 1971 ON THE INTERPRETATIONBY THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES OF THE 1968

CONVENTION

1. FORMAL ADJUSTMENTS

255. Formal adjustments to the Interpretation Protocolwere few and fairly obvious. It became necessary

to make only one short addition to itsprovisions: the courts in the new Member Stateswhich, in accordance with Article 2 (1) andArticle 3 , are required to request the Court of


Justice to give preliminary rulings on questions ofinterpretation, had to be designated (61). In the

United Kingdom , unlike the other Member States,not only the highest court within the country hasbeen included, as it is more difficult to refer amatter to the House of Lords than it is to haverecourse to the highest courts on the continent.Therefore, at least the appellate proceedingsprovided for in the second paragraph of Article37 and in Article 41 of the 1968 Conventionshould in the United Kingdom also terminate in acourt which is obliged to request a preliminaryruling from the Court of Justice. The expressionappellate capacity ' in Article 2 (2) should not be

construed in a narrow technical sense, but in thesense of any challenge before a higherjurisdiction, so that it might be taken also toinclude the French 'contredit'.

The remaining formal adjustments concernedmerely the scope (Article 1) and territorialapplication of the Protocol. Article 6 , which dealswith the latter point, is wholly based on Article60 of the 1968 Convention (see paragraphs 251to 254). Which authorities are to be designated ascompetent within the meaning of the thirdparagraph of Article 4 is a question to be decidedentirely by the new Member States.

2. THE SPECIAL NATURE OF IMPLEMENTINGLEGISLATION IN THE UNITED KINGDOMAND IRELAND

256. The extension of the Interpretation Protocol tothe United Kingdom and Ireland will, however, inall probability also present a procedural problem.

long-standing legal tradition in these States

does not allow provisions of international treatiesto become directly applicable as national law. Inthe United Kingdom legislation has to be passed transforming such provisions into national law.In many cases the legislative enactment does notfollow precisely the wording of the treaty. Theusual form of legislation in this State often callsfor a more detailed phraseology than that used in

treaty. The treaty and the correspondingnational law are, therefore, to be carefullydistinguished.

If the implementing legislation in the UnitedKingdom follows the usual pattern , courts in thatcountry would only rarely be concerned with theinterpretation of the 1968 Convention, butmostly with interpretation of the nationalimplementing legislation. Only when the latter isnot clear would it be open to a court, under theexisting rules of construction in that country, torefer to the treaty on which the legislation isbased, and only when the court is then facedwith a problem of interpretation of the treaty

may it turn to the European Court of Justice. Ifthe provisions of implementing legislation are

clear in themselves, the courts in the United

Kingdom may as a rule refer neither to the text ofthe treaty nor to any decision by an internationalcourt on its interpretation.

This would undoubtedly lead to a certaindisparity in the application of the InterpretationProtocol of 3 June 1971. The Working Party wasof the opinion that this disparity could best beredressed if the United Kingdom could in someway ensure in its implementing legislation thatthe 1968 Convention will there too be endowedwith the status of a source of law, or may at anyrate be referred to directly when applying thenational implementing legislation.

In the event of a judgment of the European Courtof Justice being inconsistent with a provision ofthe United Kingdom implementing legislation , thelatter would have to be amended.

It is also the case in Ireland that internationalagreements to which that State is a party are notdirectly applicable as national law. Lately,however, a number of Acts putting internationalagreements into force in national law have takenthe form of an incorporation of the text of theagreement into national law. If the Act puttinginto force the 1968 Convention as amended bythe Accession Convention were to take this formthe problems described above in relation to theUnited Kingdom would not arise in the case ofIreland.


ANNEX I

Extract from the Protocol to the preliminary draft Bankruptcy Convention (1975) (see paragraph 54)

Certain details of this list have been amended by later documents which , however, are not themselvesfinal.

(aa) Bankruptcy proceedings:

Belgium:

faillite

- '

faillissement' ;

Denmark:

Konkurs

Federal Republic of Germany:

Konkurs

' ;

France:

liquidation des biens

Ireland:

bankruptcy

, '

winding-up in bankruptcy of partnerships

, '

winding-up by the court under Sections213 , 344 and 345 of the Companies Act 1963'

, '

creditors ' voluntary winding-up under Section256 of the Companies Act 1963'

Italy:

fallimento

Luxembourg:

faiIIite

Netherlands:

faillissement

' ;

United Kingdom:

bankruptcy ' (England , Wales and Northern Ireland), ' sequestration ' (Scotland), ' administration inbankruptcy of the estates of persons dying insolvent' (England, Wales and Northern Ireland),compulsory winding-up of companies

, '

winding-up of companies under the supervision of the

court

' .

(bb) Other proceedings:

Belgium:

concordat judiciaire

- '

gerechtelijk akkoord'sursis de paiement

- '

uitstel van betaling

Denmark:

tvangsakkord' ,likvidation af insolvente aktieselskaber eller anpartsselskaberlikvidation af banker eller sparekasser, der har standset deres betalinger

Federal Republic of Germany:

gerichtliches Vergleichsverfahren


France:

reglement judiciaire

' ,

procedure de suspension provisoire des poursuites et d' apurement collectif du passif de certainesentreprises

' ;

Ireland:

arrangements under the control of the court'

, '

arrangements, reconstructions and compositions ofcompanies whether or not in the course of liquidation where sanction of the court is required andcreditors ' rights are affected'

Italy:

concordato preventivoamministrazione controllataliquidazione coatta amministrativa in its judicial stage;

Luxembourg:

concordat preventif de la faillite

' ,

sursis de paiement

' ,

regime special de liquidation applicable aux notaires

Netherlands:

surseance van betalingregeling, vervat in de wet op de vergadering van houders van schuldbrieven aan toonder

United Kingdom:

compositions and schemes of arrangement ' (England and Wales),compositions ' (Northern Ireland),arrangements under the control of the court ' (Northern Ireland),judicial compositions ' (Scotland),arrangements , reconstructions and compositions of companies whether or not in the course ofliquidation where sanction of the court is required and creditors ' rights are involved'creditors ' voluntary winding-up of companiesdeeds of arrangement approved by the court' (Northern Ireland).


ANNEX II

) When references are given to Articles without any further mention, reference is to the 1968 versionof the Convention.

e) The Royal Decree of 13 April 1938 , reproduced in 'Bundesanzeiger' 1953 , No 105 , p. 1 and inBulow-Arnold

, '

Internationaler Rechtsverkehr , 925.

) For this concept, seethe Jenard report, Chapter II , Band C, and Chapter IV, A and B.

) Zweigert-Kotz

, '

Einfiihrung in die Rechtsvergleichung auf dem Gebiet des Privatrechts , Vol. 1

(1971), p. 78 et seq.

) Case No 29/76 (1976J ECR 1541. The formal part of the Judgment reads as follows:1. In the interpretation of the concept 'civil and commercial matters' for the purposes of the

application of the Convention of 27 September 1968 on jurisdiction and the enforcement ofjudgments in civil and commercial matters , in particular Title III thereof, reference must not bemade to the law of one of the States concerned but, first, to the objectives and scheme of theConvention and, secondly, to the general principles which stem from the corpus of the nationallegal systems;

2. A judgment given in an action between a public authority and a person governed by privatelaw, in which the public authority has acted in the exercise of its powers , is excluded from thearea of application of the Convention.

) Law No 75-617 JO 1975 7171.

(1) In the text of Law No 75-617 (note (6

)).

) Document of the Commission of the European Communities XI/449/75-

) The word ' analogous ' does not appear in Article 1 (1) simply because the proceedings in questionare listed in a Protocol.

(10) See the Report on the Convention on bankruptcy, winding-up arrangements, compositions andsimilar proceedings by NoeI-Lemontey (16.775/XIV/70) Chapter 3 , section I.

(11) See preliminary draft Bankruptcy Convention , Article 17 and Protocol thereto, Articles 1 and 2(note 8).

(12 op. cit.

(13) 1975 preliminary draft (see note (8)), Article 1 (1), subparagraph (3), and Article II of the Protocol.See Noel-Lemontey report (note (10)) for reasons for exclusion.

(14) Although it does not have its own legal personality it corresponds by and large to the ' offeneHandelsgesellschaft' in German law and the ' societe en nom collectif' in French law.

(15) In the form of a ' private company' it corresponds to the continental ' Gesellschaft mit beschrankterHaftung' (company with limited liability) and in the form of a ' public company' to the continentalAktiengesellschaft' (joint stock company).

(16) UK: Bankruptcy Act 1914 , Sections 119 and 126. See Tridmann-Hicks-Johnson

, '

Bankruptcy Lawand Practice ' (1970), page 272.

(17) In respect of Great Britain Companies Act 1948; in respect of Northern Ireland CompaniesActs 1960 and Companies (Amendment) Act 1963; in respect of Ireland Company Act 1963Section 213.

(18

) '

if... the company is unable to pay its debts

(19) Decree No 75-1123 of 5 December 1975, 00) 1975 , 1251.

) The adjustment proposed for Article 57 admittedly has certain repercussions on the scope of Article20 (see paragraph 240).

) The following cases may be mentioned with regard to difficulties of interpretation which havearisen hitherto in judicial practice in 'connection with the application of Articles 5 and 6: CorteCassazione Italiana of 4 June 1974

, '

Giur. it.' 1974 , 18 (with regard to the concept of place of

performance); Corte Cassazione Italiana No 3397 of 20 October 1975 (place of performance in thecase of deliveries via a forwarding agent who has an obligation to instal); Tribunal de GrandeInstance Paris D 1975 , 638 with commentary by Droz (place where the harmful event occurred incases of illegal publication in the press); Court of Justice of the European Communities, 6 October1976, Case No 12/76 (1976J ECR 1473.


(22) In the judgments referred to the formal parts of the judgments read as follows:

The 'place of performance of the obligation in question ' within the meaning of Article 5 (1) of theConvention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil andcommercial matters is to be determined in accordance with the law which governs the obligation inquestion according to the rules of conflict of laws of the court before which the matter is brought(Case No 12/76).

In disputes in which the grantee of an exclusive sales concession is charging the grantor with havinginfringed the exclusive concession, the word 'obligation' contained in Article 5 (1) of theConvention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil andcommercial matters refers to the contractual obligation forming the basis of the legal proceedingsnamely the obligation of the grantor which corresponds to the contractual right relied upon by thegrantee in support of the application (Case No 14/76 (1976) ECR 1497).

In disputes concerning the consequences of the infringement by the grantor of a contract conferringan exclusive concession, such as the payment of damages or the dissolution of the contract, theobligation to which reference must be made for the purposes of applying Article 5 (1) of theConvention is that which the contract imposes on the grantor and the non-performance of which isrelied upon by the grantee in support of the application for damages or for the dissolution of thecontract (Case No 14176).

In the case of actions for payment of compensation by way of damages , it is for the national courtto ascertain whether, under the law applicable to the contract, an independent contractualobligation or an obligation replacing the unperformed contractual obligation is involved (Case No14176).

When the grantee of an exclusive sales concession is not subject either to the control or to thedirection of the grantor, he cannot be regarded as being at the head of a branch, agency or otherestablishment of the grantor within the meaning of Article 5 (5) of the Convention of 27 September1968 (Case No 14176).

Where the place of the happening of the event which may give rise to liability in tort, delict orquasi-delict and the place where that event results in damage are not identical , the expression 'placewhere the harmful event occurred' in Article 5 (3) of the Convention of 27 September 1968 onjurisdiction and the enforcement of judgments in civil and commercial matters must be understoodas being intended to cover hoth the place where the damage occurred and the place of the eventgiving rise to it (Case No 21/76 (1976) ECR 1735).

The result is that the defendant may be sued , at the option of the plaintiff, either in the courts forthe place where the damage occurred or in the courts for the place of the event which gives rise toand is at the origin of that damage (Case No 21176).

(23) Divorce law of 1 December 1970, No 898 , Article 5.

(24) Law of 11 July 1975 , new Article 281 of the 'Code civil.

(25) Chapter III, end of Section IV.

(26) Stein-Jonas (Miinzberg) (note (27)), paragraph 765 a II 3 with reference to case law in note (28

)).

(27) Stein-Jonas (Leipold) 'Kommentar zur ZivilprozefSordnung , 19th ed. , paragraph 323 II 2 c andother references.

(28) ~n the case of France: Cour de Cassation of 21 July 1954 D 1955 , 185.

(29) Magistrates ' Court Rules 1952 r 34 (2), and Rayden s ' Law and Practice in Divorce and FamilyMatters ' (1971), p. 1181.

(30) Bromley, 'Family Law , 4th ed. (1971), p. 451 containing references to case-law.

(31) Section 9 of the Maintenance orders (reciprocal enforcement) Act 1972.

(32) A.E. Anton

, '

Private International Law' (1967), p. 470; Graveson

, '

The Conflict of Laws ' (1969),p. 565; Lord President Clyde in Clarks Trustee Petitioners 1966 SLT 249 , p. 251.

(33 op. cit.

(34) The new Convention on limitation of liability for maritime claims, signed in London on 19November 1976 , was not yet in force at the end of the Working Party s discussions.

(35) The Court of Justice of the European Communities has already decided in this sense: see judgmentof 6 October 1976 (Case No 14176).


(36) In 1974 the premium income from overseas business amounted to no less than f 3 045 millionf 520 million of which consisted of business with Member States of the EEC , and 10 % of whichwas accounted for by re-insurance business. A sizeable proportion of this insurance marketconsisted ot'marine and aviation insurance. For these classes alone the overseas premium incomeamounted to f 535 million including f 50 million worth of business with other EEC countries.

(37) Extract from 'pflichtversicherung in den Europaischen Gemeinschaften , a study by Professor ErnstSteindorff, Munich.

(38) The Landgericht of Aachen (NJW 76 487) refused to endorse this standpoint.

(39) Germany: Burgerliches Gesetzbuch, Book 3 , Sections 3-8; France: Code civil , Book 2 , and Book, Title XVII, Title XVIII , Chapters II and III; Italy: Codice civile, Book 3 , Titles 4-6 , Book 6

Title 3 , Chapter 2 , Section III , and Chapter 4.

(40) Megarry and Baker

, '

The Law of Real Property , 5th ed. (1969), p. 71 et seq., p. 79 et seq.

(41) Megarry and Baker op. cit., p. 546.

(42) R. David

, '

Les grands systemes de droit contemporains , 5th ed. (1973) No 311.

(43) Stein-Jonas (Pohle) (note (27)), paragraph 24 III 2.

(44) Code de procedure civile, Article 46, third indent; Vincent

, '

Procedure Civile , 16th ed. (1973) No291.

(45) From past case law: Brunswick Landgericht Recht der internationalenWirtschaftl AuRenwirtschaftsdienst des Betriebsberaters (RIWI A WD) 74 346 (written confirmationmust actually be preceded by oral agreement); Hamburg Oberlandesgericht (RIW/AWD) 1975498 (no effective jurisdiction agreement where general terms of business are exchanged which aremutually contradictory); Munich Oberlandesgericht (RIW/AWD) 75 694; Italian Corte diCassazione No 3397 of 20 October 1975 (written confirmation, containing a jurisdiction clause forthe first time, is not of itself sufficient); Bundesgerichtshof, MDR 77, p. 1013 (confirmation of anorder by the seller not sufficient when the buyer has previously refused the incorporation);Heidelberg Landgericht (RIWI A WD) 76 , p. 532 (reference to general conditions of sale notsufficient); Frankfurt Oberlandesgericht (RIW/AWD) 76 , p. 532 (reference to general conditions ofsale for the first time in the confirmation of the order from the supplier; reminder from the sellerdoes not conclusively incorporate the jurisdiction clause included in the conditions); DusseldorfOberlandesgericht (RIW/AWD) 76 , p. 297 (jurisdiction clause contained in the condition of a billof lading of no effect against persons who themselves have given no written declaration); Pretura ofBrescia, Foro it. 1976 No 1 , Column I 250 (subsequent national law prevails over Article 17);Tribunal of Aix-en-Provence of 10 May 1974, Dalloz 74 , p. 760 (jurisdiction agreements in favourof the courts of the employer s domicile may be entered into even in contracts of employment);Tribunal de commerce of Brussels, Journal des Tribunaux 1976 , 210 (Article 17 has precedenceover contrary national law).

(46) As correctly stated by von Hoffmann (RIW 1 A WD) 1973 , 57 (63); Droz (' Competence judiciaire eteffets des jugements dans Ie marche commun ) No 216 etseq. Weser (' Convention communautairesur la competence judiciaire et l' execution des decisions ) No 265.

(47) In the case of an orally concluded contract, the requirements of the first paragraph of Article 17 ofthe Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civiland commercial matters as to form are satisfied only if the vendor s confirmation in writingaccompanied by notification of the general conditions of sale has been accepted in writing by thepurchaser (Case No 25/76 , (1976) ECR 1851.The fact that the purchaser does not raise any objections against a confirmation issued unilaterallyby the other party does not amount to acceptance on his part of the clause conferring jurisdictionunless the oral agreement comes within the framework of a continuing trading relationship betweenthe parties which is based on the general conditions of one of them, and those conditions contain aclause conferring jurisdiction (Case No 25176).Where a clause conferring jurisdiction is included among the general conditions of sale of one ofthe parties, printed on the back of a contract, the requirement of a writing under the firstparagraph of Article 17 of the Convention of 27 September 1968 on jurisdiction and theenforcement of judgments in civil and commercial matters is fulfilled only if the contract signed byboth parties contains an express reference to those general conditions (Case No 24/76 (1976) ECR1831).

In the case of a contract concluded by reference to earlier offers, which were themselves made withreference to the general conditions of one of the parties including a clause conferring jurisdiction,the requirement of a writing under the first paragraph of Article 17 of the Convention is satisfiedonly if the reference is express and can therefore be checked by a party exercising reasonable care(Case No 24/76).

Official Journal of the European CommunitiesNo C 59/150

(48) For further questions in Section 8 , see paragraphs 22 and 240,

(49) Germany: Article 253 (1) of the ZivilprozefSordnung; France: Article 54 of the Code de procedure, civile.

(50) For details see Droz (note (46)) No 448.

(51) Italy: Article 798 (1) together with Article 395 (1) of the Codice di procedura civile; France:Batiffol

, '

Droit international prive' 5th ed. (1971), No 727.

(52) Article 3 (1) (c) (2) of the German-British Treaty of 14 July 1960; Article 3 (1) (c) (ii) of theFranco-British Treaty of 18 January 1934.

(53) From a comparative law point of view: Walther J. Habscheid

, '

Introduction a la procedure

judiciaire, les systemes de procedures civiles , published by the Association internationale de droitcompare, Barcelona 1968.

(54) Stein-Jonas (Grunsky) (note (27)), introduction to paragraph 511 I 1; Rosenberg-SchwabZivilprozefSrecht , 11th ed. , paragraph 13 5 lIb.

(55) Case No 43/77 (Industrial Diamond Supplies v. Riva).

(56) Cour de Cassation , 25 February 1937 Pas. 1937 I 73.

(57) Exact name and address: If the judgment is to be executed in Scotland Secretary of State for

Scotland, Scottish Office, New St. Andrew s House, St. James Centre, Edinburgh EH1 3 SX;Otherwise Secretary of State for the Home Department, Home Office, 50 Queen Anne s Gate.London SWIH 9AT.

(58) Typical case law examples for Article 54: Hamburg Landgericht (RIW/ A WD) 74, 403 et seq.

Frankfurt Oberlandesgericht (RIW/AWD) 76, 107.

(59) The original and new Member States of the Community, or some of them , are already parties tonumerous international conventions governing jurisdiction and the recognition and enforcement ofjudgments in particular areas of law. The following should be mentioned, including those alreadylisted in the Jenard report:

1. The revised Mannheim Convention for the navigation of the Rhine of 17 October 1868together with the Revised Agreement of 20 November 1963 and the Additional Protocol of 25October 1972 (Belgium , Germany, France, Netherlands , United Kingdom);

2. The Warsaw Convention of 12 October 1929 for the unification of certain rules relating tointernational carriage by air and the Amending Protocol of 28 September 1955 andSupplementary Convention of 18 September 1961 (all nine States) with the AdditionalProtocols of 8 March 1971 and 25 September 1975 (not yet in force);

3. The Brussels International Convention of 10 May 1952 on certain rules concerning civiljurisdiction in matters of collision (Belgium, Germany, France, United Kingdom);

4. The Brussels International Convention of 10 May 1952 relating to the arrest of seagoing ships(Belgium, Germany, France, United Kingdom);

5. The Rome Convention of 7 October 1952 relating to damage caused by foreign aircraft tothird parties on the surface (Belgium, Luxembourg);

6. The London Agreement of 27 February 1953 on German external debts (all nine States);

7. (a) The Hague Convention of 1 March 1954 on civil procedure (Belgium, DenmarkGermany, France, Italy, Luxembourg, Netherlands),

(b) The Hague Convention of 15 November 1965 on the service abroad of judicial andextrajudicial documents in civil and commercial matters (Belgium , Denmark, France, Italy,Luxembourg, Netherlands , United Kingdom),

(c) The Hague Convention of 18 March 1970 on the taking of evidence abroad in civil orcommercial matters (Denmark, France, Italy, Luxembourg, United Kingdom);

8. The Geneva Convention of 19 May 1956 together with its Protocol of Signature on thecontract for the international carriage of goods by road (CMR) (Belgium , Denmark, Germany,France, Italy, Luxembourg, Netherlands, United Kingdom);


9. The Convention of 27 October 1956 between the Grand Duchy of Luxembourg, the FederalRepublic of Germany and the French Republic on the canalization of the Moselle, with theAdditional Protocol of 28 November 1976 (the three signatory States);

10. The Hague Convention of 15 April 1958 on the recognition and enforcement of decisionsrelating to maintenance obligations in respect of children (Belgium , Denmark, Germany,France, Italy, Netherlands);

11. The Hague Convention of 15 April 1958 on the jurisdiction of the contractual forum inmatters relating to the international sale of goods (not yet ratified);

12. The Paris Convention of 29 July 1960 on third party liability in the field of nuclear energy(Belgium , France , Germany), together with the Paris Additional Protocol of 28 January 1964(Belgium, Denmark, France, Germany, Italy), and the Brussels Convention and Annex theretoof 31 January 1963 supplementary to the Paris Convention of 29 July 1960 and the ParisAdditional Protocol to the Supplementary Convention of 28 January 1964 (Denmark, France,Germany, Italy, United Kingdom);

13. The Supplementary Convention of 26 February 1966 to the International Convention of 25February 1961 concerning the carriage of passengers and luggage by rail (CIV) on the liabilityof railways for death or injury to passengers , amended by Protocol II of the DiplomaticConference for the entry into force of the CIM and CIV International Agreements of 7February 1970 concerning the extension of the period of validity of the SupplementaryConvention of 26 February 1966 (all nine States);

14. The Brussels Convention of 25 May 1962 on the liability of operators of nuclear ships andAdditional Protocol (Germany)

15. The Brussels International Convention of 27 May 1967 for the unification of rules relating tothe carriage of passengers' luggage by sea (not yet in force);

16. The Brussels International Convention of 27 May 1967 for the unification of certain rulesrelating to maritime liens and mortgages (not yet in force);

17. The Brussels International Convention of 29 November 1969 on civil liability for oil pollutiondamage (Belgium, Denmark, France, Germany, Netherlands, United Kingdom) and theInternational Convention to supplement that Convention of 18 December 1971 on theestablishment of an international fund for compensation for oil pollution damage (DenmarkFrance , Germany, United Kingdom);

18. The Berne International Conventions of 7 February 1970 on the carriage of goods by rail(CIM) and the carriage of passengers and luggage by rail (CIV), together with the AdditionalProtocol and Protocol I of 9 November 1973 of the Diplomatic Conference for theimplementation of the Conventions (all nine States with the exception of Ireland forProtQcol I);

19. The Athens Convention of 13 December 1974 on the carriage by sea of passengers and theirluggage (not yet in force);

20. Th~ European Agreement of 30 September 1957 covering the international carriage of

dangerous goods by road (ADR) (United Kingdom) and the Additional Protocol of 21 August1975 (United Kingdom) (not yet in force);

21. The Geneva Convention of 1 March 1973 on the contract for the international carriage ofpassengers and baggage by road (CUR) (not yet in force);

22. The Hague Convention of 2 October 1973 on the recognitiem and enforcement of decisionsrelating to maintenance obligations (no Community Member State is a party to thisConvention).

(60) See note (59) (1).

(61 ) The expression ' court' should not be taken as meaning the opposite of other jurisdictions (such astribunals) but means the legal body which is declared competent in each case.

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