International contract – Jurisdiction clause

Residents of the same European Union Member State may give jurisdiction to the Judge of another European Union Member State.

The Court of Justice of the European Union, in a ruling dated February 8, 2024, validated this solution.

It should be remembered that the European Jurisdiction Regulation of December 12, 2012 (No. 1215/2012) provides (Article 25, 1-a) for the parties to choose the competent jurisdiction to hear their disputes.

This jurisdiction must be exclusive and the agreement must be concluded in writing.

Normally, the European Regulation applies to cross-border disputes concerning measures in the field of judicial cooperation in civil matters with cross-border implications (recital 3 of the Regulation).

The case in point concerned a Slovak resident who had lent funds to a Slovak company established in Slovakia.

The loan contract included a clause conferring jurisdiction on the Czech courts.

The Court of Justice upheld this clause.

Regulation 1896/2006 of December 12, 2006 on the European order for payment procedure defines a cross-border dispute as one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seized (article 3, 1).

On several occasions, the Court of Justice of the European Union has ruled on the notion of foreignness required to set up a cross-border dispute.

In its decision of February 8, 2024, the Court of Justice considers that the existence of an agreement conferring jurisdiction to the courts of a Member State other than that in which the contracting parties are established in itself demonstrates the cross-border impact of the dispute in the main proceedings.

In conclusion, in a contract between two companies resident in the same Member State, it is therefore possible to choose a forum selection clause in favor of a court established in another Member State of the European Union.

It is, of course, advisable to find out in advance how the chosen jurisdiction operates.

Our firm and its European colleagues will be happy to assist you in this area.

Thierry Clerc