Part I General and Introductory, 4 Subject-Matter Scope: Civil and Commercial Matters
From: Civil Jurisdiction and Judgments in Europe: The Brussels I Regulation, the Lugano Convention, and the Hague Choice of Court Convention
Trevor C Hartley
- Subject-matter scope — Jurisdiction under the Brussels-Lugano Regime — Jurisdiction under the Brussels I Regulation — Jurisdiction under the Brussels II Regulation — Jurisdiction under the Lugano Convention — Jurisdiction under the traditional rules
Civil and Commercial Matters
4.01 Subject-matter scope refers to the scope covered by a measure as regards its subject matter, that is to say the branches and areas of the law to which it applies.1 In the case of the instruments with which we are concerned, the relevant provisions are contained in Article 1 of Brussels 2012 and Lugano, and Articles 1 and 2 of Hague.
Structure of the Texts
4.02 The structure of all three instruments is similar. All begin with the statement that the instrument applies in civil or commercial matters; they then specify certain particular matters (which may or may not be regarded as normally falling within the rubric ‘civil and commercial’) to which they do not apply. These specifically excluded matters are very similar in the case of Brussels 2012 and Lugano. The list is significantly longer in Hague. In this chapter, we deal with the general concept of civil and commercial matters; we will consider the matters specifically excluded in the next chapter.
4.03 The concept of civil and commercial matters is crucial in all three instruments. Article 1(1) of all three instruments provides that the instrument in question ‘shall apply in civil and commercial matters’. Brussels 2012 and (p. 46) Lugano add ‘whatever the nature of the court or tribunal’. This phrase is not found in the Hague Convention, though no doubt it is understood.
4.04 The importance of the phrase ‘whatever the nature of the court or tribunal’ is that a civil claim joined to criminal proceedings can nevertheless be within the subject-matter scope of Brussels or Lugano, even though it is ancillary to criminal proceedings.2
The General Concept
4.06 In considering this question, we must keep in mind that all three instruments take effect in England and other EU countries as part of the EU legal system. For these countries, the CJEU has the last word on their interpretation. We must also remember that, in the case of all three instruments, the concept of civil and commercial matters is an autonomous concept: it is not to be interpreted by reference to its meaning in any system of national law.3 Although the meaning of the concept will almost certainly be the same in Brussels 2012 and Lugano, its meaning in the Hague Convention, though no doubt influenced by its interpretation in the other instruments, will not necessarily be the same.4
4.07 As a matter of comparative law, the concept of ‘civil and commercial matters’ is well known. Although the House of Lords (UK Supreme Court) has said that, in the common law, everything which is not criminal is civil,5 the legal systems of the civil law take a different approach. There, the fundamental division is between public and private law. Civil and commercial law means private law; it thus excludes public law in all its forms, including criminal law. This is made clear in Brussels 2012, where Article 1(1) reads:
This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or (p. 47) administrative matters or the liability of the State for acts and omissions in the exercise of State authority (‘acta iure imperii’).
4.08 Lugano 2007 is the same, except that the words ‘or the liability of the State for acts and omissions in the exercise of State authority (“acta iure imperii”)’ do not appear. They were inserted into Brussels 2012 to give effect to the case law discussed below. They were not intended to change the meaning of the provision.
4.09 Article 1(1) of the instruments is based on the Brussels Convention. In the original version of the Brussels Convention, the second sentence (‘It shall not extend, in particular, to revenue, customs or administrative matters’) did not appear because it was regarded as obvious. It was added when the United Kingdom became a Party because it was not so obvious in the common-law context.6 The second sentence is absent in Article 1(1) of the Hague Convention, but the Report states that the limitation of the scope of the Convention to civil and commercial matters was primarily intended to exclude public law and criminal law.7
4.10 Although it is hard to imagine a case that relates to public law to which a public authority is not a party, the fact that a public authority is a party does not necessarily mean that the proceedings will be concerned with public law. This is expressly laid down in the Hague Convention, where it is provided in Article 2(5):
4.11 There is no similar provision in the other two instruments, but the CJEU has consistently taken the same position.8
The reason for using the word ‘commercial’ as well as ‘civil’ is that in some legal systems ‘civil’ and ‘commercial’ are regarded as separate and mutually exclusive categories. The use of both terms is helpful for those legal systems. It does no harm with regard to systems in which commercial proceedings are a sub-category of civil proceedings.
(p. 48) 4.14 However, while it is clear that civil and commercial matters has the meaning understood in civil-law systems, this does not solve all problems of interpretation, since the precise dividing line between public and private law is different in different civil-law systems.9 As we shall see below, the interpretation of the concept has given rise to considerable difficulties in the context of the Brussels Convention and Regulation.
Powers and Obligations
4.15 We will now discuss specific problems. In doing so, we will consider the case law of the CJEU when it has interpreted the concept under the Brussels Convention and Brussels 2000. These judgments are binding with regard to cases decided under Brussels 2012.10 They are not, strictly speaking, binding under the Lugano Convention—Article 1(2) of Protocol 2 to the Lugano Convention merely says that the court hearing the case must ‘pay due account to’ them11—but, in practice, they will almost certainly be followed. Under the Hague Convention, they are not binding at all, though, in so far as the case has to be decided by a court in the European Union, including the CJEU, they will normally constitute the starting point for analysis.12
Nature of the Claim
4.16 Where the claim which forms the subject matter of the proceedings does not concern a civil or commercial matter, the proceedings will not be covered by any of the instruments. For example, if the revenue authority of a State brings proceedings against a taxpayer to determine his tax liabilities, the proceedings would fall outside the subject-matter scope of all three instruments.
4.17 Even if the claim itself is of a private-law nature, it may be excluded if the context in which it arose involved the exercise by a public authority of its governmental (public-law) powers. However, though the principle itself is beyond doubt, it is not always clear when a State is to be regarded as acting in the exercise of its State authority. For this reason, the cases (p. 49) decided under the Brussels Convention and Brussels 2000 are of great importance.
4.18 The first case to consider is the Eurocontrol case.13 Eurocontrol was a public authority, an international organization with legal personality that had the function of controlling air traffic in Europe. It levied route charges on airlines making use of its services. The defendant, LTU, was a German airline. LTU had used the services of Eurocontrol in its operations. Eurocontrol sued LTU in Belgium for payment for the services. The Belgian court accepted that the case concerned a civil or commercial matter. However, when recognition proceedings were brought in Germany, the German court referred the matter to the CJEU.
4.19 The first ruling by the CJEU was that the concept was not to be interpreted according to national law—the law of Belgium or Germany—but was to be given an autonomous interpretation. It then had to provide such an interpretation. The nature of the claim—payment for services rendered—might seem civil or commercial; however, the circumstances in which it arose pointed in the direction of public law. LTU was prohibited from flying unless it made use of Eurocontrol’s air-traffic-control services; so it could avoid paying only by not flying. In its judgment, the CJEU said:14
Although certain judgments given in actions between a public authority and a person governed by private law may fall within the area of application of the Convention, this is not so where the public authority acts in the exercise of its powers.
Such is the case in a dispute which, like that between the parties to the main action, concerns the recovery of charges payable by a person governed by private law to a national or international body governed by public law for the use of equipment and services provided by such body, in particular where such use is obligatory and exclusive.
This applies in particular where the rate of charges, the methods of calculation and the procedures for collection are fixed unilaterally in relation to the users, as is the position in the present case where the body in question unilaterally fixed the place of performance of the obligation at its registered office and selected the national courts with jurisdiction to adjudicate upon the performance of the obligation.
[A] judgment given in an action between a public authority and a person governed by private law, in which the public authority has acted in the exercise of its powers, is excluded from the area of application of the Convention.
(p. 50) 4.21 Here, powers means governmental (public-law) powers. By this is meant the powers the public authority enjoys by virtue of its status as a public authority, powers which are not granted to an ordinary person. Because Eurocontrol had used its public-law powers to require LTU to make use of its services, its claim for payment did not concern a civil or commercial matter.
4.22 A similar result was reached in an English decision on the recognition of a foreign judgment under the common law. The case is United States v. Inkley,15 a case concerning an Englishman who had been arrested in the United States for a crime allegedly committed there. The US authorities agreed to let him leave prison and go to England, provided he undertook to return for trial on a specified date. He entered into a bail-bond agreement with the US Government, which provided that he would pay a sum of money if he failed to return. The agreement contained a choice-of-court clause designating a court in the United States. He did not return, and the US authorities brought civil proceedings in the designated court for payment of the sum in question. A default judgment was given. They then brought proceedings in England to enforce the judgment. The English Court of Appeal held that, under the common law, recognition would be refused if the foreign judgment was penal or was based on a rule of foreign public law. This is the same test as that applicable under the EU instruments. The bail-bond agreement was a contract. However, Inkley would not have entered into it if the US authorities had not used their governmental powers to arrest him and put him in jail. If he had not signed the agreement, he would have stayed in jail. So the Court of Appeal held that the US judgment was not enforceable in England. The result would be the same under then EU instruments: the proceedings did not concern a civil or commercial matter.
4.23 It is one thing to say that a public authority used its governmental powers to force a person to conclude an agreement. It is another thing to say that when it concluded the agreement, the authority was acting in the performance of a public obligation. This question arose in the next case to consider, Netherlands v. Rüffer, a case decided in 1980.16 The case concerned an inland waterway, which was under the administration of the Dutch Government.17 Rüffer was a German. A ship owned by him sank in the waterway and, as it constituted a danger to other ships, it was raised and removed by the Dutch authorities. The Netherlands then claimed reimbursement from Rüffer for the cost of removing the wreck. Under Dutch (p. 51) law, such a claim was in tort and was a matter of private law. In the past, privately owned canals had existed, and the owners of such canals had had a similar right. However, the CJEU held that the claim fell outside the scope of the Brussels Convention. The reasoning is not entirely clear, but it seems that the CJEU was influenced by the fact that the Dutch Government was acting in performance of a public obligation in raising the wreck.18 Another factor was that in the other Member States, the power to clear wrecks from public waterways and to claim the cost from the owners was based on public law.19
4.24 This judgment is controversial and may one day have to be reconsidered.20 At least in so far as the first apparent ground of decision (carrying out a public duty) is concerned, it seems in conflict with a case decided some 20 years later, Baten.21 Mr Baten and his wife were divorced by a Belgian court. It was agreed that Mr Baten would pay maintenance for their daughter but the wife would not be entitled to anything for herself. The wife and daughter then moved to the Netherlands. They were short of money, and obtained assistance from the Dutch social-welfare authority. Under Dutch social-welfare law, if the social-welfare authority gave assistance to an individual, it was automatically subrogated to any claim that the individual might have against any other person for maintenance. Acting under this power, the Dutch social-welfare authority brought proceedings against Mr Baten in a Dutch court. It obtained a judgment, but when it tried to enforce the judgment in Belgium, Mr Baten claimed that the judgment was outside the scope of the Brussels Convention.
4.25 The CJEU rejected this claim. It held that as the social-welfare authority was acting under civil law in reclaiming the money from Mr Baten, the case concerned a civil matter. It said:22
[T]he legal situation of the public body vis-à-vis the person liable for maintenance is comparable to that of an individual who, having paid on whatever ground another’s debt, is subrogated to the rights of the original creditor, or is comparable to the situation of a person who, having suffered loss as a result of an act or omission imputable to a third party, seeks reparation from that party.
4.27 There was, however, a complication. Under Dutch law, when a claim of this kind is brought, the social-welfare authority is not bound by any (p. 52) agreement limiting the obligations of the former husband. On the facts of the case, therefore, it was not bound by the agreement that no maintenance would be paid to the wife. To the extent that the social-welfare authority was seeking to enforce a claim based on the wife’s right to maintenance, it was doing more than the wife could have done: it was exercising public-law powers. To this extent, therefore, its claim fell outside the scope of the Convention.23
4.28 The significance of this case as regards the present discussion is that, in granting assistance to the wife and daughter (and reclaiming the money from the father), the Dutch social-welfare authority was undoubtedly acting in performance of a public obligation. However, as far as the daughter was concerned, it was not making use of a public-law power. This shows that proceedings are not outside the scope of the instruments simply because the public authority is acting in the performance of a public obligation.24
4.29 The distinction may be clarified by two hypothetical examples. Assume first, that, in the State of Ruritania, the government has the power to require a shipowner who wishes to use Ruritania’s inland waterways to enter into an agreement that it will reimburse the government for the cost of removing the ship if it should sink in a situation in which it might be a danger to other ships. A foreign shipowner concludes such an agreement and its ship subsequently sinks in a Ruritanian waterway. The Ruritanian Government removes the wreck and brings proceedings to reclaim the cost. Since it exercised its public-law powers in requiring the shipowner to conclude the agreement, the proceedings would not be covered by the instruments.
4.30 We now take the second example. Assume, on the facts set out in the previous paragraph, that the Government of Ruritanian lacks the resources to remove the wreck. It enters into a contract with a foreign company (X), under which the latter will remove the wreck in return for payment. Clearly any claim against X under this contract would concern a civil or commercial matter, even though the Ruritanian Government was acting in performance of a public obligation in concluding the contract. This is because the Ruritanian Government did not use its public-law powers to force X to conclude the contract. It was a normal business agreement.
4.31 The same distinction appears in more recent cases. Lechouritou25 was an action in a Greek court against the German Government for compensation by the victims of war crimes committed in the course of military operations carried out by German forces in Greece during World War II. The CJEU held that the claim did not concern a civil or commercial matter. Likewise, in Grovit v. De Nederlandsche Bank NV,26 the English Court of Appeal held (p. 53) that an action for libel brought in England against the Dutch central bank for statements made by it in the course of rejecting an application by a money-transaction company for registration in the Netherlands was not a civil or commercial matter. In both cases, the defendant was exercising a public-law power (in the first, the power to carry out military operations; in the second, the power to determine whether a company should be permitted to do business in a country).
4.32 These cases may be contrasted with two other cases. In Sonntag v. Waidmann,27 the CJEU held that a tort action against a teacher in a state school whose breach of duty had caused the death of a pupil during a school trip abroad was a civil matter, even though the school was in Germany, where teachers in state schools are civil servants. Although the teacher was acting in the course of his duties, he was not exercising a public-law power: supervising schoolchildren on a trip abroad is something that anyone is entitled to do.
4.33 Tiard28 is of particular interest. This case concerned the Transports Internationaux Routiers (TIR) system of international road transport. Under an international agreement in force in the Netherlands, truck drivers bringing goods into the Netherlands from abroad were not required to pay customs duties in advance if they had a TIR certificate. These certificates were issued by associations approved by the Dutch Government. The associations were required to guarantee payment of customs duties by the importer; however, they in turn were required to find a guarantor. To do this, the relevant association had turned to a French insurance company, Tiard, which provided the guarantee in return for a fee. In the case, the Dutch Government had brought proceedings against Tiard in a Dutch court. The question then arose whether the proceedings were covered by the Brussels Convention. The CJEU held that they were. Although the Dutch Government was acting under a public-law power in requiring the associations to provide the guarantees (and no doubt also in requiring them to find third-party guarantors), the association was not acting under such a power in obtaining the services of Tiard for this purpose. Tiard was in the business of providing guarantees, and it was acting in the course of that business when it provided the guarantee in question. For this reason, the case concerned a civil or commercial matter.29
4.34 Recently, there has been a trend on the part of the CJEU to widen the scope of civil and commercial. Sapir30 concerned a public-law obligation imposed on Land Berlin (the federal State of Berlin) to compensate victims of Nazi (p. 54) persecution. As a result of a mistake, some were paid too much. So Land Berlin brought proceedings to recover the excess. Were these civil or commercial matters within the meaning of the Regulation? The CJEU held that they were. This may be supported by the following argument: though the original obligation to compensate was imposed by public law, the proceedings to recover the excess were brought under private law. Land Berlin was not exercising any governmental powers; it was simply making a claim under private law that any private person could also have made.
4.35 Sunico31 raised issues that are more complex. In that case, two Danish companies and a Danish individual had taken part in a fraudulent scheme to allow persons resident in the United Kingdom to evade VAT. The UK tax authorities, the Commissioners for Revenue and Customs, sued the Danes in tort in England for a sum equal to the VAT evaded. On a reference from a Danish court, the CJEU held that the UK claim was a civil or commercial matter within the meaning of the Regulation. Although the obligation imposed on the UK residents to pay VAT was a matter of public law, the defendants were not the UK residents, but the Danes. The latter were not themselves liable to UK tax and were not sued on that basis. In suing them, the Commissioners were not exercising any special powers. Nevertheless, the case may be regarded as going to the very edge of what may legitimately be regarded as a civil claim, since it could be seen as an indirect way of reclaiming UK tax. It can hardly be doubted that if the UK taxpayers had themselves been sued in tort for fraudulent evasion of tax, the claim would not have been covered.
4.36 The application of these principles to interim measures was considered by the CJEU in Realchemie Nederland v. Bayer CropScience,32 a case in Germany concerning a patent-infringement dispute between two companies, one Dutch and one German. The German court had made certain orders (interim measures) against the Dutch company and, when they were not obeyed, had imposed penalties on it. These penalties took the form of fines, which were enforceable by the German State. The proceeds were retained by the German State: they were not given to the claimant. Nevertheless, the CJEU held that the orders imposing the fines concerned civil or commercial matters as understood by the Regulation. Its reason was that interim measures must be characterized according to the nature of the claim they are intended to support. Since the substantive claim (patent infringement) was a civil or commercial matter, the interim measure (and the penalty for disobedience to it) had to be given the same characterization.33
(p. 55) 4.37 A recent case, Siemens Aktiengesellschaft Österreich,34 points in the opposite direction. The case concerned proceedings for breach of Hungarian competition law brought in the Hungarian courts by the Hungarian competition authority against an Austrian company (Siemens). The lower court had imposed a fine on Siemens, which it had paid. On appeal, the fine was reduced. In consequence, the fine was repaid in part together with interest. On further appeal, however, the original fine was reinstated. Siemens paid back the money for the fine, but refused to pay back the sum representing interest. The competition authority then brought proceedings against Siemens in Hungary to reclaim the interest. These proceedings took the form of an action for unjust enrichment.
4.38 On these facts, the CJEU held that the claim for unjust enrichment was not a civil or commercial matter and thus fell outside the scope of the Brussels Regulation. Its reasoning was rather sparse. It first pointed out that, while private competition actions are covered by the Regulation, a penalty imposed by an administrative authority in the exercise of the regulatory powers conferred on it under national legislation is outside its scope.35 This is clearly right. As regards the action to reclaim the refund of interest, the CJEU said that, although this did not directly concern the fine, it was intrinsically linked to it. The original refund of the interest by the competition authority followed automatically from the fact that the fine had been reduced, while the obligation on Siemens to pay it back again followed automatically from the decision to reinstate the original fine. From this, the CJEU concluded that the proceedings to reclaim the interest were an administrative matter. In support of this, it cited Netherlands v. Rüffer, discussed above.36 It distinguished Sapir on the ground that in that case the public body had paid the money by mistake, while in Siemens the repayment of interest by the competition authority followed automatically from the decision to reduce the fine.37
4.39 These cases show that the distinction between a civil matter and a public matter is far from straightforward. There is a significant grey area in which the CJEU could legitimately go either way. In the early days, it adopted a restrictive approach; today, however, it seems anxious to extend the concept of a civil or commercial matter as much as possible, thus widening the scope of the Regulation and, with it, the scope of EU law. However, Siemens Aktiengesellschaft Österreich shows that there are limits to this extension.(p. 56)
1 For references relevant to this chapter in general, see Jenard Report, pp. 8–10; Schlosser Report, paragraphs 23–29; Pocar Report, paragraphs 14 and 15; Basedow, ‘Civil and Commercial Matters: A New Key Concept of Community Law’ in Frantzen (Torstein), Giertsen (Johan), and Moss (Giuditta Cordero), Rett og Toleranse: Festskrift til Helge Johan Thue (Gyldendal Norsk Forlag, Oslo, 2007), p. 151.
3 For the Brussels Convention and the Brussels Regulation (2000 and 2012), see the line of cases beginning with the Eurocontrol decision (discussed in para. 4.18, below). Though not binding in the strictest sense, they would undoubtedly be followed with regard to Lugano. With regard to Hague, see paragraph 49 of the Hartley/Dogauchi Report, where it is said, ‘Like other concepts used in the Convention, “civil or commercial matters” has an autonomous meaning: it does not entail a reference to national law or other instruments.’
4 See the statement in the Report quoted in the previous footnote. In the negotiations, the United States was insistent that the case law under the EU instruments would not necessarily apply to the Hague Convention. This was a reasonable position in view of the fact that the United States is not bound by the EU instruments and has had no part in shaping their interpretation.
6 In Tiard, Case C-266/01, ECLI:EU:C:2003:282,  ECR I 4867 (discussed in para. 4.33, below), the CJEU said that the second sentence is intended merely to clarify the meaning of civil and commercial: it does limit or modify the scope of this concept.
12 In the past, the CJEU has shown itself willing to give one interpretation to words in an EU instrument (an EU Treaty) and a different interpretation to the same words in a treaty between the EU and a third country: see Polydor v. Harlequin Record Shops, Case C-270/80, ECLI:EU:C:1982:43,  ECR329; Kupferberg, Case C-104/81, ECLI:EU:C:1982:362,  ECR 3641. However, it would do this only if there was a specific reason for interpreting the provisions differently.
17 There was a dispute between Germany and the Netherlands as to sovereignty over it, but it was agreed in a treaty between the two countries that the Netherlands would exercise river-police functions.
20 See Betlem and Bernasconi, ‘European Private International Law, the Environment and Obstacles for Public Authorities’ (2006) 122 LQR 124 at pp. 132–7.
33 There must nevertheless be some limit to this idea. The German court also had the power to order the imprisonment of a party who disobeyed an order: this could surely not have been enforced under the Regulation.