Conflict of laws [jurisdiction]

Jaba Shadrack, 2009

Falco Privatstiftung and Thomas Rabitsch v. Gisela Weller-Lindhorst (Case C-533/07)

Procedure

The problem falls under the caption of contract in conflicts of law, whereas one party goes beyond the undertaking in an international arrangement concluded between corporations of two countries. The contract itself was framed to be performed in several countries.
Thus, the issue of jurisdiction in determining the dispute arose. In an English case of Assunzione which involved similar controversy as to jurisdiction, the court of appeal held that the proper forum and law ought to be the system of law in which the contract has 'its closest and most real connection'.

Facts

The first plaintiff is a foundation managing the intellectual property rights of the late Austrian singer "Falco" in Vienna, the second plaintiff domiciled in Vienna, whilst a defendant domiciled in Munich who are arguing about royalties regarding DVDs and CDs of one of the late singer's concerts. A licence agreement was concluded between the parties for distribution of DVDs in Austria, Germany and Switzerland. The plaintiffs sued the defendant for payment with regard to the DVDs, on the licence agreement and with regard to the CDs on the infringement of their intellectual property rights.

The first instance court in Austria (Handelsgericht Wien) assumed its international jurisdiction according to Art. 5 (3) Brussels I Regulation arguing that it had jurisdiction with regard to the infringement of intellectual property rights since the respective CDs were sold inter alia in Austria. Due to the close connection between the claim based on the licence agreement and the claim based on the infringement of intellectual property rights, the court assumed jurisdiction for the contractual claim as well. Whilst, the court of second instance (Oberlandesgericht Wien), however, held that it had no jurisdiction with regard to the claim based on the licence agreement arguing Art. 5 (1) (a) Brussels I Regulation was applicable. Since the principal contractual obligation was a debt of money, which had to be fulfilled under German law as well as under Austrian law at the debtor's domicile (Munich), German (and not Austrian) courts had jurisdiction. Further, that jurisdiction could not be based on Art. 5 (1) (b) Brussels I Regulation either, since the licence agreement did not involve the "provision of services" in terms of the Regulation. The plaintiffs appealed to the Austrian Supreme Court of Justice (Oberster Gerichtshof).

Issues

• Whether a contract under which the owner of intellectual right grants the other contracting party such right may be regarded as one of 'the provision of services' in the purview of article 5(1)(b) of Brussels I regulation or not.
• Whether the Austrian courts had jurisdiction to entertain the matter in question or not.

Rules

• Europetrol ltd v. Zambia national Oil co. ltd & TAZAMA Pipelines ltd
• Waeco's case
• Color Drack GmbH v LEXX International Vertriebs GmbH (Case C-386/05)
• Article 5(1)(a)(b)(c), (3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation).
• Article 5(1)(3)of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the Brussels Convention).

Connecting factors

• Lex loci solutionis
  
• Lex loci domicilii
  
• Lex loci delicti
  

Application

With regard to the aforementioned issues, there are two schools of thought that argue vehemently on them. The first school which is evidenced with the France Supreme Court especially in the case of waeco hold the views that the distribution contracts are Contracts for the 'Provision of Services' in the meaning of article 5. On contrary the second school of thought answers the issue in negative by arguing that Art. 5 (1) (b) of Brussels I Regulation has to be interpreted as meaning that a contract under which the owner of an incorporeal right grants the other contracting party the right to use that right (licence agreement) does not constitute a contract regarding 'the provision of services' in terms of this provision.

Conclusion

In my reasoned opinion, i substantiate to the view taken by the court of the first instance (Handelsgericht Wien) in Austria because first, Austria apart from Switzerland and Germany, is also a place in which a contract was to be performed i.e lex loci solutionis. Second, the plaintiffs were domiciled in Austria i.e lex loci domicilii, thus Austria has a real [close] connection to the subject-matter as examplified by the case of Europetrol ltd v. Zambia national Oil co. ltd & TAZAMA Pipelines ltd. Finally, article 5(3) of Brussels I regulation empowers the court in a place where the delict is committed to entertain the matter i.e Lex loci delicti.

From the foregoing discussion, it turns out that in line of the reasoning of the first school the courts in Austria has jurisdiction to rule on the matter, while in view of the second school the court in Austria lacks jurisdiction to hear on the matter.