C-25/76

JUDGMENT OF 14. 12. 1976 - CASE 25/76

2. In the case of an orally concluded confirmation issued unilaterally by the

contract, the requirements of the first other party does not amount to

paragraph of Article 17 of the acceptance on his part of the clause

Convention of 27 September 1968 as conferring jurisdiction, unless the oral

to form are satisfied only if the agreement comes within the

Interpretation by the Court of Justice of the Convention of 27 September

1968 on jurisdiction and the enforcement of Judgments in Civil and

Commercial Matters by the Bundesgerichtshof in the action pending before that court between

GALERIES SEGOURA­ , a limited partnership having its registered office in

Brussels,

and

gives the following

SEGOURA v BONAKDARIAN

JUDGMENT

Facts

The facts of the case, the course of the contained inter alia the following clause procedure and the observations 10: submitted pursuant to the Protocol of 3 All disputes are to be decided exclusively June 1971 on the Interpretation by the by the Hamburg courts in accordance Court of Justice of the Convention of 27 with the provisions of law applicable in September 1968 on Jurisdiction and the the Federal Republic of Germany. enforcement of judgments in Civil and

Commercial Matters may be summarized

Judgments in Civil and Commercial Subject to the following conditions we Matters, which provides: have sold and delivered to you on behalf of our Iranian supplier, Firma Hussein If the parties, one or more of whom is Bonakdarian and Brothers, Iran, ex domiciled in a Contracting State, have, warehouse Hamburg free port, customs by agreement in writing or by an oral dues and taxes unpaid, as seen and agreement confirmed in writing, agreed accepted, at your expense and risk in that a court or the courts of a

transit: ... (there followed the description Contracting State are to have jurisdiction of the goods). to settle any disputes which have arisen

or which may arise in connexion with a Bonakdarian's 'Sales, Delivery and particular legal relationship, that court or Condition'

Payment printed on the those courts shall have exclusive

reverse of this confirmation of order juridiction.

JUDGMENT OF 14. 12. 1976 - CASE 25/76

By a judgment of 28 May 1974, rectified observations were submitted on 17 May by an order of 29 July 1974, this latter 1976 by the Commission of the

court quashed the judgment of the European Communities, on 24 May by Landgericht, stated that the Landgericht the Bonakdarian, the respondent to the did have jurisdiction and remitted the appeal, and on 25 May by the Galeries case to that court. Segoura, the appellant.

Segoura appealed on a point of law to the Upon hearing the report of the

Bundesgerichtshof. The 8­th Civil Judge-Rapporteur and the views of the

Chamber of the Bundesgerichtshof Advocate-General, the Court decided to

considered that the case raised questions open the oral procedure without any of interpretation of the first paragraph of preparatory inquiry. Article 17 of the Convention of 27 September and 1968 accordingly, by an order February 1976, it decided, of 18 II — Written observations sub­

of judgments, equal

conclusion of a contract of sale, a treatment for the nationals of all the

vendor has stated that he wishes to Member States, regardless of their

rely on his general conditions of sale nationality. The Convention is also

and if he subsequently confirms the directed towards protecting the rights of

contract in writing to the purchaser the defendant in proceedings pending in and annexes to this confirmation his the State in which judgment is to be general conditions of sale which given. Article 17 of the Convention contain a clause conferring contains a uniform basic rule concerning jurisdiction? the of jurisdiction, which conferring 2. Are the requirements of Article 17 of demands application in a uniform

written confirmation? 1968 Convention was not to impede

SEGOURA v BONAKDARIAN

commercial practice, yet at the same to confirm in writing the clause which

time to neutralize the effects of clauses operates against him.

purporting to confer jurisdiction in contracts which might pass unnoticed. The first of the questions referred to the

Such clauses are therefore to be taken Court should therefore be answered in into consideration only if they are the the following terms: subject of an agreement, which implies the consent of all the parties. In the The requirements of Article 17 of the

of itself satisfy the requirement for (b) Mere reference to general business confirmation in writing laid down in the conditions of sale does not of itself fulfil first paragraph of Article 17 of the the protective aim of Article 17 of the

Convention of 1968. Convention. There must be an express

reference to the agreement conferring The Convention is directed towards jurisdiction to be concluded.

preventing the surreptitious insertion in a contract of clauses conferring Moreover, the confirmation in writing of jurisdiction. Therefore an agreement an agreement conferring jurisdiction

conferring jurisdiction cannot be validly should come from the contracting party concluded merely by reference to general against whom such agreement operates.

conditions of sale. Express reference to Furthermore, it is not consonant either

conferring jurisdiction. The fact of rule, which calls for uniform

attaching the general conditions of sale interpretation and which must be to the confirmation in writing of an construed strictly. Comparison with the

order could certainly constitute an law of the Member States, in particular, invitation to conclude such an agreement lends support to this view. Thus Article .However it fails to satisfy the 1341 of the Italian Civil Code requires

requirement of the first paragraph of express confirmation in respect of an

Article 17 of the Convention. It is agreement conferring jurisdiction. necessary to have confirmation in writing from the contracting party against whom Therefore the second question should

the clause conferring jurisdiction receive the following answer: operates. The first paragraph of Article 17 of the Convention is directed towards The requirements of Article 17 of the

purchaser does not challenge this written conditions of sale into the contract, the

confirmation. other contracting party is able to object

to his doing so. Such a refusal could be The respondent, Rahim Bonakdarian, expressed during the oral negotiations. It takes the view that both of the questions could still be expressed when the other

referred to the Court should be answered party annexes his general conditions of

in the affirmative. sale to the confirmation in writing of the

contract concluded orally. If the other

an agreement in writing. In particular, it sale. The principle of free movement of

is not required that it be signed by both goods within the Community implies parties. In the case of an agreement that trading operations should be able to

jurisdiction entered into be carried out rapidly, without hindrance conferring orally, it is enough if one of the parties and without excessive formality contrary confirms it in writing and the other to practical needs. The first paragraph of

accepts such confirmation without Article 17 of the Convention is intended

challenging it, thus acknowledging that to take this into account. For this reason, the • confirmation accords with the oral at least between merchants and under

agreement. Thus in the first paragraph of normal circumstances, silence on the

(1) (2) of the Convention between transactions is aware that the question of

Germany and Belgium of 30 June 1958. the court which is to have jurisdiction in Under that provision an oral agreement case any disputes should arise is confirmed in writing is an agreement frequently governed by the general

concluded orally and confirmed in conditions of sale of the other

writing to one of the parties by the other, contracting party. Thus in the interests of provided that the former party does not clarity and of certainty in commercial

challenge that confirmation. dealings, when a letter of confirmation is sent to him by the other contracting The oral negotiations on a contract party inter alia confirming a clause

frequently concern only the essential conferring jurisdiction, he should

parties to a contract must be assessed in a clause conferring jurisdiction is quite

accordance with the criteria of good faith usual.

applies also in Community law and in particular to agreements within the The orally concluded contract of sale was

meaning of Article 17. In German confirmed in writing and the general

commercial law, the lack of a response conditions of sale, containing a clause

to a commercial letter of confirmation conferring jurisdiction, were annexed to amounts to agreement, unless the that confirmation in writing. The contents of the confirmation involve requirements laid down in Article 17 of

of confirmation are not of such a kind as without the purchaser's knowledge. In to surprise the recipient, which is such a case, to purport to make the

particularly true of clauses conferring agreement conferring jurisdiction subject

jurisdiction. to any stricter conditions would be to

insist upon a degree of formality The Commission of the European incompatible with commercial practice. Communities points out that Article 17 of the Convention of 27 September 1968 (b) The second of the questions differs has two essential purposes: to ensure from the first in that it lays stress upon legal certainty and to avoid excessive the fact that the contracting parties are formality. merchants and that the purchaser does not challenge the written confirmation of (a) In the light of these two purposes, the contract. On the other hand, it does the first of the questions referred by the not state whether, at the time of the oral Bundesgerichtshof should be answered in conclusion of the contract of sale, the the affirmative. vendor has pointed out that he proposed

In the present case, the contract of sale to make the contract subject to his was first of all concluded orally; this oral general conditions of sale. This point is contract also related to the general however decisive: it is necessary in effect

conditions of sale of the vendor, who had to assume that the orally-concluded

orally-concluded contract; if not, the

Taking into account the fact that the document would not constitute a

vendor referred to his general conditions confirmation and one of the contracting

JUDGMENT OF 14. 12. 1976 - CASE 25/76

parties would be exposed to the risk of 1. The requirements of Article 17 of the

learning of the existence of a clause Convention of 27 September 1968 are

second of the questions referred by the conditions of sale which contain a

Bundesgerichtshof. clause conferring jurisdiction. 2. On the other hand, the requirements

of Article 17 are not satisfied, even in However it must be asked whether dealings between merchants, if a different considerations might not apply vendor, after the oral conclusion of a if the two contracting parties are

merchants. Under the law contract of sale, confirms in writing to of certain the purchaser the conclusion of the Member States, in particular of the contract subject to his general Federal Republic of Germany, the conditions of sale and annexes to this absence of any response to a document his conditions of sale confirmation in writing of a commercial which include a clause conferring contract counts as acquiescence. The confirmation in can contain a jurisdiction, even if the purchaser does writing not challenge this written fresh offer of a contract which is confirmation. considered as accepted if the recipient of

the confirmation in writing does not

immediately challenge it, as he is bound III — Oral procedure to do by virtue of the rules of good faith.

1976, the Bundesgerichtshof referred to the Court of Justice, pursuant to the Protocol of 3 June 1971 on the Interpretation of the Convention of

27 September 1968 on Jurisdiction and the Enforcement of Judgments in

SEGOURA v BONAKDARIAN

Civil and Commercial Matters (hereinafter referred to as 'the Convention'), two questions concerning the interpretation of Article 17 of the said

Convention.

2 It appears from the order making the reference that at the present stage the action, which was brought before the Bundesgerichtshof by way of appeal on a point of law, concerns the jurisdiction of the Landgericht Hamburg to hear an action brought by a trading undertaking established within the area of its jurisdiction against a trading company having its registered office in Brussels, for payment of the balance of the price of a batch of carpets bought in

Payment'

The 'Conditions of Sale, Delivery and printed on the reverse of this

document contained inter alia a clause stipulating that all disputes were to

be decided exclusively by the Hamburg courts.

This document was not confirmed by the purchaser.

3 After the purchaser had received formal notice to pay the balance of the

court, holding that an agreement conferring jurisdiction had been validly concluded between the parties under Article 17 of the Convention.

JUDGMENT OF 14. 12. 1976 - CASE 25/76

4 An appeal on a point of law by the purchaser against this judgment is at

present before the Bundesgerichtshof.

In this connexion, the Bundesgerichtshof has referred to the Court two

questions the interpretation of the first paragraph of Article 17. concerning

6 The way in which that provision is to be applied must be interpreted in the light of the effect of the conferment of jurisdiction by consent, which is to exclude both the jurisdiction determined by the general principle laid down in Article 2 and the special jurisdictions provided for in Articles 5 and 6 of

the Convention.

In view of the consequences that such an option may have on the position of the parties to the action, the requirements set out in Article 17 governing the

validity of clauses conferring jurisdiction must be strictly construed.

'agreement'

By making such validity subject to the existence of an between the parties, Article 17 imposes upon the court before which the matter is brought the duty of examining, first, whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties,

The questions referred by the Bundesgerichtshof

7 The first question is whether the requirements of Article 17 of the

Convention are satisfied if, at the oral conclusion of a contract of sale, a

vendor has stated that he wishes to rely on his general conditions of sale and

if he subsequently confirms the contract in writing to the purchaser and

annexes to this confirmation his general conditions of sale which contain a

accompanied by the text of his general conditions, is without effect, as regards

any clause conferring jurisdiction which it might contain, unless the

purchaser agrees to it in writing.

9 The second question then asks whether Article 17 of the Convention applies

if, in dealings between merchants, a vendor, after the oral conclusion of a

contract of sale, confirms in writing to the purchaser the conclusion of the

In such a case, it is patent that a clause conferring jurisdiction which might

be included in those general conditions did not form part of the

subject-matter of the contract concluded orally between the parties.

JUDGMENT OF 14. 12. 1976 - CASE 25/76

Therefore subsequent notification of general conditions containing such a

clause is not capable of altering the terms agreed between the parties, except

conditions of the party giving the confirmation, and these conditions contain

a clause conferring jurisdiction.

Indeed, in such a context, it would be contrary to good faith for the recipient of the confirmation to deny the existence of a jurisdiction conferred by consent, even if he had given no acceptance in writing.

12 It is therefore possible to give a single answer to the two questions referred to

the Court as follows: in the case of an orally concluded contract, the

requirements of the first paragraph of Article 17 as to form are satisfied only if the vendor's confirmation in by notification of the writing accompanied

13 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

SEGOURA v BONAKDARIAN

As these proceedings are, in so far as the parties to the main action are

concerned, in the nature of a step in the action pending before the

Bundesgerichtshof, the decision as to costs is a matter for that court.

On those grounds,

satisfied only if the vendor's confirmation in writing accompanied by notification of the general conditions of sale has been accepted in writing by the purchaser.

The fact that the purchaser does not raise any objections against

a confirmation issued unilaterally by the other party does not

amount to acceptance on his part of the clause conferring jurisdiction unless the oral agreement comes within the

framework of a continuing trading relationship between the

parties which is based on the general conditions of one of them, and those conditions contain a clause conferring jurisdiction.