EUPillar Dr Bettina Breitenbücher v Cornelia Wittke, Court of Session (Outer House) [2008] CSOH 145 (Lord Brodie)

Summary

The pursuer sued for a decree ordaining the defender to execute and deliver a standard security over the property at Cragganard, Scotland pursuant to an alleged undertaking by the defender contained in a letter and for payment of the sum due by the defender under a contract entered by Bluepool AG, a German company of which the pursuer was the Receiver, for the construction of a building at Cragganard. The pursuer was Insolvency Administrator and the Receiver of Bluepool whereas the defender was a German national, resident at Cragganard. It was a matter of agreement between the parties that the contract was governed by the laws of Germany. The defender challenged the jurisdiction of the Court of Session relying on Art 23 of Brussels I on the ground that the courts of Stuttgart had exclusive jurisdiction in clause 11 of the contract. The Court examined the meaning and the effect of the clause under the law of Germany as it was the law governing the contract. The Court held that the clause must be read to mean “only if and when this contract is concluded amongst merchants, the place of jurisdiction shall be Stuttgart” and that therefore if one of the parties to the contract was not a merchant, then no choice of jurisdiction had been made. The Court determined whether the defender’s status had been a merchant under German law and found that the defender should not be regarded as a merchant. Accordingly, the Court held that the parties had not prorogated the exclusive jurisdiction of the Stuttgart courts and that the Court of Session had jurisdiction over the defender by virtue of her Scottish domicile. It could be open to criticism that the Court examined the validity of the jurisdiction clause by asking whether the defender was a merchant under German law. The key point to decide for the Court may have been whether the defender was a consumer according to the autonomous EU definition of consumer under Art 15(1) of Brussels I since the applicability of Art 23 would be dependent on that decision. The defender seemed to have a dual purpose in entering into the construction contract as the building would be used partly for residential and partly for family business purposes. In the light of the judgment of the CJEU in Case C-464/01 Gruber v Bay Wa AG in relation to a person who concludes a contract for goods intended for purposes which are in part within and in part outside his trade or profession, the defender in this case should not have been regarded as a consumer and therefore, the Court should have declined its jurisdiction in favour of the Stuttgart courts. However, it can be argued that Lord Brodie was correct to apply German law to the question of whether the condition for the operation of the exclusive jurisdiction agreement under the terms of the contract (agreed to be governed by German law) that it “concerns business dealings amongst full merchants” was met in this case. It is unfortunate that Lord Brodie did not consider any CJEU case law on Art 23 of Brussels I or any academic authority on how to interpret it. However, he may be correct that the parties are free to create an exclusive jurisdiction agreement in terms of Art 23 of Brussels I which applies only where certain additional contractual conditions are met- in this case that both parties are merchants under the law governing the choice of court agreement.