General Terms and Conditions: The Brussels I Regulation
A Dutch wholesaler and a Polish company had become involved in a dispute. The wholesaler brought proceedings before the Rotterdam District Court. The Polish company believed that the Polish court had jurisdiction. After all, it had included a choice of forum for the Polish court in its general terms and conditions. Which court has jurisdiction? Dutch Contract Law Lawyer Gea Flapper, who deals extensively with contract law and general terms and conditions, explains by a recent judgement what you need to look out for when agreeing on a choice of forum clause.
What does the Brussels I Regulation do?
The Brussels I Regulation is a European regulation that regulates jurisdictional power in commercial matters between parties established or resident in the EU, in cases where a claim was filed after 10 January 2015. An exception to these regulations can be made if parties reach consensus on a choice of court clause.
Validity of choice of forum clause
It follows from Article 23 of the Brussels I Regulation that a choice of forum clause can only come about legally in one of the following ways:
1. by a written agreement (including electronic communication);
2. in a form that is customary in the conduct between the parties; or
3. in a form that is customary in international commercial practice.
Choice of forum and requirement that something be set out in writing
If the parties include a choice of court clause in the general terms and conditions, then the requirement that something be set out in writing is only met if the agreement signed by both parties explicitly refers to these general terms and conditions. This is not satisfied when an agreement refers in general to a quotation that in turn refers to the general terms and conditions (including the choice of forum). An agreement (or clause in general terms and conditions) to designate a competent court can only be adopted if the parties have reached an agreement on the designation of the competent court.
Dutch practical example of choice of forum clause
The Rotterdam wholesaler Commodity Line bought a large batch of chia seeds from the Polish company Katolik Group in 2017. This batch of chia seeds did not comply with the purchase agreement because the batch contained a too high percentage of the mycotoxin aflatoxin. The wholesaler then claimed compensation from the Polish company.
Does the Court of Rotterdam have jurisdiction?
It followed from Article 7(1) of the Brussels I Regulation that the Court of Rotterdam had jurisdiction to resolve this dispute. It follows from this Article that in respect of contractual obligations (e.g. a purchase contract), a person resident in another Member State may be summoned in the court where the obligation underlying the claim has been or must be honoured. For the purchase of movable property, the court of the Member State where the movable property is delivered has jurisdiction. The chia seeds were delivered in Rotterdam, so the Court of Rotterdam had jurisdiction.
Choice of forum clause in general terms and conditions
The wholesaler, therefore, started proceedings in the Court of Rotterdam. However, the Katolik Group’s lawyer raised a motion contesting jurisdiction and argued that the court should declare that it had no jurisdiction. According to the Polish company’s lawyer, the court had no jurisdiction because the company had included a choice of forum clause for the Polish court in its general terms and conditions. The choice of forum clause was:
“[…] Disputes which cannot be resolved amicably shall be settled by the competent court with jurisdiction at the registered seat of the Seller and by Polish law.”
Consensus and choice of forum
The court was obliged to examine whether the clause that declared the court to have (no) jurisdiction had been the subject of a consensus between the parties that had been clearly and accurately expressed. The parties’ actual consent is one of the objectives of that provision. Therefore, the court had to investigate whether Commodity Line and Katolik Group had reached such a consensus about the choice of forum.
Contract Law Lawyer in the Netherlands
The purchase agreement did not appear to refer to the Polish company’s general terms and conditions. Therefore, the text of these general terms and conditions did not apply to the contract and there was no consensus on the choice of forum. The choice of forum, therefore, did not apply. It means that the Court of Rotterdam had jurisdiction to judge on this dispute.