Under what conditions will an EU Member State court recognize jurisdiction?

The primary instrument currently used in the european Union to establish the civil liability of multinational corporations for human rights violations committed outside the EU is Regulation 1215/2012 of 12 December 2012 (Brussels I Recast) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. ¹

Regulation 1215/2012 sets out, inter alia, the rules of international jurisdiction in civil and commercial matters which are common to the various EU Member States. ² It entered into force on 9 January 2013 and amended the Regulation N. 44/2001 which in turn replaced the Brussels Convention of 27 September 1968. ³

In cross-border disputes, the regulation permits courts in a Member State to determine the state’s international jurisdiction, provided the necessary conditions for the regulation’s application are met. ⁴

General condition for the application of Brussels I Recast Regulation

For Regulation Brussels I Recast to be applied, the corporation must be domiciled in a member State.

Otherwise, under Article 4§1 of the regulation, each Member State determines jurisdiction under its own law. Each Member State has in effect appropriate conflict of jurisdiction rules. In France, for example, Articles 14 and 15 of the French Civil Code allow courts to hear a case if the plaintiff or defendant is French. Furthermore, several countries allow cases to be brought against individuals with personal effects in an EU Member State. This mechanism is known internationally as “the Swedish umbrella rule”, which has its roots in a Swedish rule allowing national courts to prosecute an individual in all types of cases if the individual left his or her umbrella on the soil over which the court has jurisdiction. ⁵

Regulation Brussels I Recast applies regardless of whether a victim bringing action is a resident or national of a third, ⁶ non-EU Member State.

Three options available to victims

People affected by the foreign operations of a multinational corporation domiciled in a Member State have three primary grounds for jurisdiction to bring action in an EU Member State court:

The court with jurisdiction is that of the defendant’s domicile

In general, Article 4§1 of Brussels I Recast provides that, regardless of their nationality, persons domiciled in an EU Member State (in our situation, the multinational) shall be sued in the courts of that state.

The concept of “domicile” for legal persons

A company or legal person’s domicile is considered to be its registered office, central administration or principal place of business (Art. 63 of Brussels I Recast ⁷ ). The Court of Justice of the european Union independently interprets these concepts. ⁸

Thus, under Article 4§1 of Brussels I Recast, a foreign person, for example a worker whose rights have been violated by a multinational corporation, may bring action in the court of a Member State if the principal place of business, registered office or central administration of the parent company in question is located in that court’s territorial jurisdiction.

On this legal basis, between 1997 and 1999, South African workers and citizens filed several claims with English courts against Cape plc, a British company which worked with asbestos in South Africa. ⁹

The court with jurisdiction is that of the place where the harmful event occurred or may occur

Article 7§2 of the Regulation Brussels I Recast allows for a person domiciled in one Member State to be sued in another Member State for tort, delict or quasi-delict ¹⁰ in the courts of the place where the harmful event occurred or may occur. ¹¹

The concept of “place where the harmful event occurred”

The Court of Justice of the european Union has ruled that the place where the harmful event occurred can be understood in two ways.

The place where the damage itself occurred, or
The place of the event giving rise to damage. ¹² For example, if a board of directors makes a decision in a state other than that in which the corporation is domiciled, and that decision causes the harm for which the plaintiff seeks redress, the claim may be brought in the state where the decision was made. ¹³

The concept of “place where the harmful event may occur”

To allow preventive legal action, Article 7§2 of the Regulation Brussels I Recast grants jurisdiction to the place where a harmful event may occur. The admissibility of such action depends, however, on the law of the forum court. The potential risk must also have some degree of materiality (the threat of the harmful event must be serious or immediate). ¹⁴

The court with jurisdiction is that of the place where a branch, agency or other establishment is located ¹⁵

The special jurisdiction rules laid forth in Article 7§5 of the Regulation allow a defendant domiciled in a member State to be sued in the courts of another member State, provided a branch, agency or any other establishment is located in the other member State. Two conditions must be met: 1) the claim must concern operations (see below), 2) the parent company must be located in an EU Member State. The concepts of “branch, agency or other establishment” The Court of Justice has held that the terms “branch, agency or other establishment” do not refer to specific legal situations, but imply:

The secondary establishment’s dependence on the parent company, and
The secondary establishment’s involvement in the conclusion of business transacted. ¹⁶

According to the Court’s rulings, the place of business may enjoy legal personhood provided it has the appearance of permanency and acts publicly as an extension of the parent body domiciled in another Member State. Third parties do not have to deal directly with the parent company headquartered in another Member State, but can transact business at the place of business constituting the extension (branch, agency or other establishment). A legal connection is if necessary established between the parent company and the third party.

The concept of “disputes arising out of operations”

Disputes may involve rights, contractual or non-contractual obligations entered into by the place of business (branch or agency) on behalf of the parent company. the execution of these obligations may take place in the member State where the secondary establishment is registered, or in another member State. ¹⁷ The dispute can also relate to rights, contractual or non-contractual obligations resulting from activities the place of business itself has assumed ¹⁸ in relation to its own management. This applies, for example, to a dispute arising out of employment contracts made by the place of business. ¹⁹

To illustrate, consider a parent company domiciled in an EU Member State with a subsidiary in another EU Member State operating a refinery on behalf of the parent company. The subsidiary contaminates water due to faulty operation at the plant. Under Article 5§5, victims can bring action against the parent company in the subsidiary’s jurisdiction.

Situations in which a branch’s activities cause a tort to occur outside of the European Union are not covered under Article 7§5, but under Article 7§2, discussed above.

Two additional grounds for jurisdiction

Regulation 1215/2012 provides two additional grounds for jurisdiction:

Nexus between claims

If a lawsuit involves several companies domiciled in different Member States, Article 8§1 allows the parties to be sued in a single jurisdiction, provided that one of the companies is domiciled there, and provided there is a nexus between the claims. ²⁰ It is thus possible to bring joint action against a parent company and its subsidiary for harm caused by their activities abroad, provided they are both domiciled in the EU It is also possible to bring joint action against two separate european multinationals operating a joint venture in a third country. However, this possibility does not extend to cases where one of the companies is a non-EU company. In those cases, national civil procedural rules will apply and determine whether the claims can be pursued jointly in the member state or not.

Interim measures

Article 35, in turn, allows plaintiffs to request member State courts to grant interim measures, ²¹ even when another contracting state has jurisdiction to hear the case, provided there exists “a real link between the relief sought and the territorial jurisdiction of the Contracting State’s forum court”. ²²

↥European Community Council Regulation (EC) 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ, L35/1, 20 December 2012. Given that the new regulation is just an amendment of Regulation 44/2001, some of the considerations regarding the latter are still valid today. For this reason, this section still sometimes mentions Regulation 44/2001.
↥Note also the Hague Conference on Private International Law’s 30 June 2005 adoption of the “Convention on Choice of Court Agreements”, which has allowed the creation of a global legal alternative for the resolution of disputes between corporations when the parties have reached an agreement on the choice of forum. It entered into force on the 1st October 2015, after the approval by the e.U.: see http://www.hcch.net. See also an analysis of the impact of the Hague Convention on Choice of Court Agreements’ ratification by the european Community: Commission Staff Working Document of 5 September 2008 (SEC (2008) 2390)). On this subject, see: B. Van Schaak, “In Defense of civil redress: the domestic enforcement of human rights norms in the context of the proposed Hague judgments convention”, Harvard Int’l L.J., 2001, p. 141; B. Stephens, ’Translating Filartiga: A Comparative and International Law Analysis of Domestic Remedies for International Human Rights Violations’, Yale J. Int’l L., 2002, 27, p. 54.
↥The Brussels Convention, however, continues to apply on the one hand to actions begun before 1 March 2002 (Regulation (eC) No 44/2001, op.cit., art. 66.1) and on the other hand to the relations between Denmark and other EU Member States as Denmark is not considered a Member State under the terms of Article 1.3 of the Regulation (Regulation (EC) No 44/2001, op.cit., arts. 21 and 22. On that Member State, see: Agreement between the european Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ, 16 November 2005, L299/62).
↥On this subject, see: european Parliament resolution on the Commission Green Paper on Promoting a european Framework for Corporate Social Responsibility, COM (2001) 366-C5-0161/2002 - 2002/2069 (COS), 30 May 2002, §50.
↥H. Smit, “Common and Civil Law Rules of In Personam Adjudicatory Authority: An Analysis of Underlying Policies”, Hastings Int’l & Comp. L. Rev., 1972, p. 335., in B. STePHeNS, “Corporate Liability: enforcing Human Rights Trough Domestic Litigation”, Hastings Int’l & Comp. L. Rev., 2000-2001, p. 410; Y. Kryvoi, “enforcing Labor Rights Against Multinational Corporate Groups in Europe”, Industrial Relations: A Journal of Economy and Society, Vol. 46, No. 2, p. 366-386, April 2007.
↥CJEC, Group Josi Reinsurance Company SA v. Universal General Insurance Company, 13 July 2000, C-412/98, Rec., p. I- 5940, §§ 57 and 59 (The plaintiff was domiciled in Canada).
↥Article 53 of the Brussels Convention considers the domicile of a company or legal person to be its headquarters, as defined by the rules of private international law in the forum court.
↥EC Regulation 44/2001, op.cit.
↥Lubbe et al. v. Cape plc (CA 30 July 1998) (1998) C.L.C. 1559; Group Action Afrika et al. v. Cape plc (QBD 30 July 1999) (2000) 1 Lloyd’s Rep. 139; Rachel Lubbe et al. v. Cape plc (CA 29 Nov. 1999) (2000) Lloyd’s Rep. 139.
↥CJEC, Athanasios Kalfelis v. Banque Schröder, Münchmeyer, Hengst et Cie, et autres, 27 September 1988, 189/87, Rec., 1988, p. 5579, §17; CJEC, Réunion européenne SA e.a. v. Spliethoff ’s Bevrachtingskantoor BV et Capitaine commandant le navire “Alblasgracht V002”, 27 October 1998, C-51/97, Rec., 1998, p. I-6511, §22: The Court of Justice of the european Communities has ruled that the terms “delict and quasi-delict” should be defined independently and that they comprise “all actions seeking to establish the liability of a defendant not contractually bound according to Article 5§1”.
↥Regulation 44/2001 somewhat modifies the terms of Article 5§3 by replacing the word ”defendant” with “any person” and by adding to the place where the harmful event occurred “or may occur”.
↥See CJEC, Sté Bier et Fond. Rheinwater v. Mines de Potasse d’Alsace, Rec., 30 November 1976, 76.1735; CJEC, Dumez France v. Helaba, 1990, C-220/88; CJEC, Réunion européenne, op.cit., 1998.
↥O. De Schutter, The Role of EU Law in Combating International Crimes, report prepared as part of the International Commission of Jurist’s project: “Corporate Complicity in International Crimes”, p. 34.
↥G. Tritton, Intellectual property in Europe, 2 ed., Sweet & Maxwell, London, 2002, p. 971-975; CJEC, Fiona Shevill, Ixora Trading Inc, Chequepoint SARL and Chequepoint International Ltd v. Presse Alliance SA, 7 March 1995, C-68/93, Rec. C.J.C.e., 1993, p. 415 and following, § 24.
↥Deriving from Article 2§1, these special rules of jurisdiction allow a plaintiff to withdraw action from the state of the defendant’s domicile and bring it before the court of another Contracting State (See CJEC, Group Josi Reinsurance Company SA v. Universal General Insurance Company, op.cit., §34), provided there is a substantial link between the dispute and the court called upon to hear the case (CJEC SAR Schotte GmbH v. Parfums Rothschild SARL, 9 December 1987, 218/86, Rec., p. 4905). The special rules are applicable to companies domiciled in Denmark according to the relevant provisions of the Brussels Convention and also to companies domiciled in Switzerland, Norway and Iceland (the rules are applicable to companies domiciled in Finland and Sweden only for actions brought before 1 March 2002) according to the Lugano Convention (convention on jurisdiction and the enforcement of judgments in civil and commercial matters, signed in Lugano 16 September 1988, OJ, L319, p. 9).
↥CJEC, A. De Bloos SPRL v. Société en commandite par actions Bouyer, 6 October 1976, 14/76, Rec., 1976, p. 1509, §21; CJEC, Somafer SA v. Saar-Ferngas AG, 22 November 1978, 33/78, Rec., 1978, p. 2193, §12; CJEC, Blanckaert et Willems PVBA v. Luise Trost, 18 March 1981, 139/80, Rec., 1981, p. 819, §13 (excluding independent commercial agents, who, while representing the company abroad, “merely transmits orders to the parent undertaking, without being involved in either, their terms or their execution”).
↥CJEC, Lloyd’s Register of Shipping v. Société Campenon Bernard, 6 April 1995, 439/93, Rec., 1995, p. I-981, §22; H. Gaudemet-Tallon, Les Conventions de Bruxelles et de Lugano. Compétence internationale, reconnaissance et exécution des jugements en Europe, 2e éd., L.G.D.J., Paris, 1996, No. 211, p. 158-159.
↥CJEC, Somafer, op.cit., 33/78, §13.
↥Ibid.
↥This condition resulting from Court rulings (CJEC, Athanasios Kalfelis v. Banque Schröder, Münchmeyer, Hengst et Cie, et autres, op.cit., p. 5584, §13; H. Gaudemet-Tallon, op.cit., 1996, No. 222 to 224, p. 165-166), was incorporated as Article 6§1 of Regulation 44/2001.
↥CJEC, M. Reichert, H.H. Reichert and I. Kockler v. Dresdner Bank AG, 26 March 1992, C-261/90, Rec., 1992, p. I-2149, §34: “Article 24 must therefore be understood as referring to measures which, in matters within the scope of the Convention, are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter.”
↥CJEC, Van Ude Maritime BV v. Kommanditgesellschaft in Firma Deco Line ea, 17 November 1998, 391/95, Rec., 1998, p. I-7135; CJEC, Hans-Hermann Mietz v. Intership Yachting Sneek BV, 27 April 1999, C-99/96, Rec., 1999, p. I-2314, §43.