On 25 April 2024, the Court of Justice of the European Union (CJEU) rendered a judgment addressing three requests for a preliminary ruling concerning the interpretation of Article 25(1), of the Brussels I Regulation (recast) (Regulation (EU) No 1215/2012) of the European Parliament and of the Council dated 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “recast Regulation”).
Requests were made by the Audiencia Provincial de Pontevedra of Spain (the “Referring Court”) under Article 267 of the Treaty on the Functioning of the European Union (TFEU). This judgment discusses some intriguing points pertinent to the applicable law in the event of a conflict between national law and EU law.
All three cases are based on similar facts:
The Carrier and Shipper concluded a contract for the carriage of goods by sea on CFR (cost and freight) terms, which was evidenced by a bill of lading. The reverse side of this bill of lading, similarly to the other two cases, contained a jurisdiction clause, worded essentially as follow:
“This bill of lading shall be governed in accordance with English law and any disputes arising therefrom shall be submitted to the High Court of Justice (England & Wales) of London.”
A third party acquired the goods in question and thereby became the Third-Party Holder of the bill of lading. Since those goods arrived at the port of destination in a damaged state, a Subrogated Party (often an insurance company) which had been subrogated to the Third-Party Holder’s rights, brought an action before a Spanish Court, claiming damages from the Carrier.
The Carrier thus challenged the jurisdiction of the Spanish Court based on the jurisdiction clause on the reverse side of the bill of lading. The Referring Court is uncertain whether that jurisdiction clause is enforceable against the Third-Party Holder of the bill of lading despite the fact that the Third Party in question did not expressly, individually and separately consent to it upon acquiring the bill of lading. Further, the Referring Court wondered on the basis of Article 25 (1) of the recast Regulation and relevant EU case law, which national law shall be applied and to what extent to determine the validity of the jurisdiction clause in the bill of lading.
For context, Article 25 (1) of the recast Regulation provides:
If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:
(a) in writing or evidenced in writing;
(b) in a form which accords with practices which the parties have established between themselves; or
(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
The CJEU first confirmed that as the Subrogated Parties in these cases brought their respective actions before 31 December 2020, and therefore before the end of the transition period under 127(1) and (3) of the UK Withdrawal Agreement, the recast Regulation was applicable to the disputes in the proceedings.
In terms of the applicable law of the jurisdiction clause, the CJEU decided that Article 25(1) of the recast Regulation does not provide for the effect of jurisdiction clauses in relation to third parties, nor does it indicate the applicable national law in this regard. In the present case, the Referring Court appears to apply Spanish national law, according to which these jurisdiction clauses will be deemed as void and not to exist if they have not been individually and separately negotiated, even if the acquirer of the bill of lading acquires all of the transferor’s rights and actions over the goods. However, such national legislation has the effect of circumventing Article 25(1) of the recast Regulation, as interpreted by the case law of the CJEU, and is therefore contrary to that provision.
The CJEU recalls the principle of primacy, i.e., when a national court of a Member State is called upon to apply provisions of EU law within the exercise of its jurisdiction, and where it is unable to interpret national legislation in compliance with the requirements of EU law, the court has the obligation to give full effect to the requirements of that EU law in the dispute before it, if necessary disapplying of its own motion any national legislation or practice.
Consequently, the CJEU rules that Article 25(1):
- must be interpreted as meaning that the enforceability of a jurisdiction clause against the third-party holder of the bill of lading containing that clause is not governed by the law of the Member State of the court or courts designated by that clause. That clause is enforceable against that third party if, on acquiring that bill of lading, it is subrogated to all of the rights and obligations of one of the original parties to the contract, which must be assessed in accordance with national substantive law as established by applying the rules of private international law of the Member State of the court seized of the dispute.
- must be interpreted as precluding national legislation under which a third party to a contract for the carriage of goods concluded between a carrier and a shipper, who acquires the bill of lading evidencing that contract and thereby becomes a third-party holder of that bill of lading, is subrogated to all of the shipper’s rights and obligations, with the exception of those arising under a jurisdiction clause incorporated in the bill of lading, where that clause is enforceable against that third party only if the third party has negotiated it individually and separately.
This is a good case to serve as a reminder that the principle of the primacy of EU law is a fundamental pillar of the EU legal order, designed to ensure the uniformity and consistency of EU law. As the European Parliament emphasises on its website, the CJEU upholds the absolute primacy over the domestic laws of the Member States, which must be taken into account by national courts when making judgments and by legal practitioners when interpreting a national law provision of a Member State.
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