C-33/78

and

Saar-Ferngas AG, whose registered office is at Saarbrücken-Schafbrücke (Federal Republic of Germany),

on the interpretation of the words "branch" and "agency" within the meaning of Article 5 (5) of the Convention of 27 September 1968,

THE COURT

composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate General: H. Mayras Registrar: A. Van Houtte

The order making the reference to the employee of Somafer stays at Beckingen Court and the written observations occasionally and Ferngas alleges that it submitted under Article 20 of the was with him that it agreed the security Protocol on the Statute of the Court of measures to be taken. Since it did not Justice of the EEC may be summarized receive satisfaction Ferngas summoned as follows: Somafer for payment before the Land­ gericht Saarbrücken. When Somafer demurred that the court had no I — Facts and procedure jurisdiction, Ferngas countered by claiming first that the action related to The company Établissements Somafer, enforcement of a contractual obligation the defendant in the main action and which had to be performed in Germany' appellant on the appeal (hereinafter so that under Article 5 (1) of the referred to as "Somafer"), whose Convention of 27 September 1968 the principal place of business is at Uckange German courts had jurisdiction and alter­ (France) engages in demolition and natively that it related to the operations blasting and in 1974, on behalf of the of a branch, agency or other Ministry of the Interior of the Saarland, establishment within the meaning of blew up a bunker. Since there were in Article 5 (5) of the said Convention and the immediate vicinity of the bunker gas that this also gave the court jurisdiction. mains belonging to Saar-Ferngas AG (hereinafter referred to as "Ferngas"), In the view of Ferngas, the facts which it the plaintiff in the main action and cites, namely the existence of an address respondent to the appeal, the latter took with a telephone number and the safety measures, by agreement or presence of a representative show that without it — the parties are at variance Somafer has an establishment or agency on the issue — to protect the gas mains at Beckingen or that at least by the establishment of this connexion it has and sought reimbursement of the expenses from Somafer. In the Federal created the appearance of such an Republic of Germany Somafer uses in its establishment or agency. In both cases it must be inferred in the circumstances dealings with its customers note-paper headed: that the German courts have jurisdiction. Somafer maintains on the other hand "SOMAFER that its representation is completely Vertretung fur Deutschland [Represen­ dependent on its principal place of tation for Germany] business in Uckange and that its repres­ 6639 Beckingen (Saar) entative for Germany conducted the Tel. 0 68 35/28 24 negotiations with the Saarland auth­ Bankverbindung [Bankers]: Credit orities in close co-ordination with Lyonnais Saarbrücken Nr. [No] 10146" Uckange. Furthermore it does not even At the bottom of this note-paper there have its own office accommodation and appears "Hauptverwaltung Uckange furniture in Beckingen, there is no (Frankreich)" ["Central Administration separate accounting and it is not entered Uckange (France)]. A representative or in the commercial register as a branch

(b) under the law of the States of 3 June 1971 in accordance with Article 20 of the Protocol on the Statute concerned (qualification accord­ ing to the law to be applied in of the Court of Justice of the EEC. the main action); or After hearing the report of the Judge- (c) independently, i.e. in accordance Rapporteur and the views of the Advocate General, the Court decided to with the objectives and system of the said Convention and also open the oral procedure without any with the general principles of law preparatory inquiry: which stem from the corpus of the national legal systems II — Observations under Article (Judgment of 14 October 1976 in 20 of the Protocol on the Case 29/76 LTV Lufttransport- Statute of the Court of untemehmen GmbH & Co. KG v Justice of the EEC Eurocontrol /[1976] ECR 1541)? 2. What criteria apply in the case of the A — Observations of the United last question (1 (c)) for interpreting Kingdom the expressions "branch" and "agency" with reference to capacity The first question. to take independent decisions (inter After stating that in the present case in alia to enter into contracts) and also addition to domicile (Article 2 (2)) and to the extent of the outward mani­ operations of a branch, agency or other festation? establishment (Article 5 (5)) other bases 3. In this connexion are the principles of jurisdiction may be in point such as governing liability for holding oneself the place of performance of a contract out in law to others, i.e. to third (Article 5 (1)), or the place of occurrence parties, to be applied to the question of the harmful event (Article 5 (3)), the whether there is in fact a branch or United Kingdom observes that the basic agency, with the legal consequences principle of the Convention on territorial that anyone who creates the jurisdiction is contained in Article 2 and

the bases of juridiction listed in Section 2 has no close links with the foreign country of the Convention should therefore be in question — should be available only if construed restrictively as the Court has the defendant had established in the already recognized in Case 21/76 Bier v foreign country a basis for conducting Mines de Potasse d'Alsace [1976] ECR business of a firm and lasting character. 1735. Where such an exception is National laws do not offer satisfactory provided for there are considerable criteria in this respect because they have advantages in applying the law of the been adopted in a different context, State before the courts of which the namely: to bring a defendant before a proceedings have been brought for the national court on the basis that the determination of grounds of jurisdiction. plaintiff has no guarantee of obtaining In interpreting the Convention according judgment elsewhere.

domicile. However this method should that Questions 1 (a) and 1 (b) asked by not be applied to the interpretation of the Oberlandesgericht Saarbrücken the provision in Article 5 (5). The forum should be answered in the negative and which this provision establishes is mainly that Question 1 (c) should be answered intended to be invoked in cases of a in the affirmative. commercial nature arising from economic relations which are the The second question objective of Article 2 of the EEC Treaty. Such relations could be hampered if the As regards the concepts of branch and actions to which they give rise could be agency, the United Kingdom considers brought before different courts applying that although the law of certain Member

JUDGMENT OF 22. II. 1978 — CASE 33/78

As regards the independent decision of November 1977 in Case 43/77 Industrial the agent, the question whether he has Diamond Supplies [1977] ECR 2175 gave authority to bind his principals is not a uniform and independent interpretation material so long as persons dealing with of the concept "ordinary appeal" within the representative, operating from an the meaning of Articles 30 and 38 of the appropriate base, have reason to believe Convention. that in so doing they are dealing with the foreign firm. In view of the guiding lines of this case-law the Commission takes the view The third question that the interpretation of the concept of "branch, agency or other establishment" In the United Kingdom's view the must be uniform and based on the application of any rules regarding Convention. The Court of Justice rightly estoppel by conduct are a matter for the began in the judgment of 6 October procedure of the court concerned and 1976 in Case 14/76 De Bloos [1976] not a question arising on the interpret­ ECR 1497 to interpret the concepts in ation of Article 5 (5). question in this way.

B — Observations of the Commission The second question

SOMAFER v SAAR-FERNGAS

The third question At the hearing on 27 September 1968 the In view of the fact that by no means all plaintiff in the main action, represented the Member States apply the principle of by Mr Sroka, of the Saarbrücken Bar, German law based on appearance, the the defendant in the main action, Commission hesitates to recommend its represented by Mr Kammenhuber, also extension to the Convention. Such inter­ of the Saarbrücken Bar, and the pretation does not facilitate the independent application of the Commission of the European Convention and risks resulting in the Communities represented by its Agent neglect, where arising, of the question of Mr Wägenbaur, made oral observations. the existence of criteria of a branch, agency or other establishment. The Commission therefore concludes The Advocate General delivered his

that the simple appearance of a right is opinion at the hearing on 11 October not sufficient to give jurisdiction. 1978.

Decision

1 By order dated 21 February 1978, received at the Court on 13 March 1978, the Oberlandesgericht Saarbrücken referred to the Court under the Protocol of 3 June 1971 concerning the interpretation of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Official Journal 1978, No L 304, p. 77) (herein­ after referred to as "the Convention") three questions on the interpretation of Article 5 (5) of the Convention. According to the provision, interpretation of which is sought, a person domiciled in a Contracting State may, in another Contracting State, be sued: ... "(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated".

(b) under the law of the States concerned (qualification according to the law to be applied in the main action); or

(c) independently, i.e. in accordance with the objectives and system of the said Convention and also with the general principles of law which stem from the corpus of the national legal system (Judgment of 14 October 1976 in Case 29/76 LTU Lufttransportunternehmen GmbH & Co. KG v Eurocontrol [1976] ECR 1541)?"

4 The Convention, concluded pursuant to Article 220 of the EEC Treaty, is intended according to the express terms of its preamble to implement the provisions of that article on the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and to strengthen in the Community the legal protection of persons therein established. In order to eliminate obstacles to legal relations and to settle disputes within the sphere of intra-Community relations in civil and commercial matters the Convention contains, inter alia, rules enabling the jurisdiction in these matters of the courts of Contracting States to be determined and facilitating the recognition and execution of courts' judgments. Accordingly the Convention must be interpreted having regard both to its principles and objectives and to its relationship within the Treaty.

5 The Convention frequently uses words and legal concepts drawn from civil, commercial and procedural law and capable of a different meaning from one Contracting State to another. The question therefore arises whether these words and concepts must be regarded as having their own independent meaning and as being thus common to all the Contracting States or as referring to substantive rules of the law applicable in each case under the rules of conflict of laws of the court before which the matter is first brought. The answer to this question must ensure that the Convention is fully effective in achieving the objectives which it pursues.

8 The scope and limits of the right given to the plaintiff by Article 5 (5) must be determined by the particular facts which either in the relations between the parent body and its branches, agencies or other establishments or in the relations between one of the latter entities and third parties show the special link justifying, in derogation from Article 2, the option granted to the plaintiff. It is by definition a question of factors concerning two entities established in different Contracting States but which in spite of this must be considered in the same way, whether from the point of view of the parent body or of an extension or extensions which the parent body has established in the other Member States or from that of the third parties with whom legal relations are created through such extensions. In these circumstances the need to ensure legal certainty and equality of rights and obligations for the parties as regards the power to derogate from the general jurisdiction of Article 2 requires an independent interpretation, common to all the Contracting States, of the concepts in Article 5 (5) of the Convention which are the subject of the reference for a preliminary ruling.

JUDGMENT OF 22. II. 1978 — CASE 33/78

The second and third questions

9 In the event of the words referred to being interpreted independently, the second question asks what criteria apply with reference to the capacity to take independent decisions (inter alia to enter into contracts) and also to the extent of the outward manifestation. The third question asks

"Are the principles governing liability for holding oneself out in law to others, i.e. to third parties, to be applied to the questions whether there is in fact a branch or agency, with legal consequences that anyone who creates the appearance of such a situation is to be treated as having operated a branch or agency — as is for example the case under German law (cf. Article 21 of the Zivilprozeßordnung [Code of Civil Procedure] Baumbach, 36th Edition Note 2 A, Stein-Jonas, 19th Edition, Note II 2; Oberlandesgericht Köln Neue Juristische Wochenschrift 1953, 1834, Oberlandesgericht Breslau Hochstrichterliche Rechtsprechung 1939 (Case No 111))?"

SOMAFER v SAAR-FERNGAS

the local engagement of staff to work there. Further it also comprises those relating to undertakings which have been entered into at the above- mentioned place of business in the name of the parent body and which must be performed in the Contracting State where the place of business is established and also actions concerning non-contractual obligations arising from the activities in which the branch, agency or other establishment within the above defined meaning, has engaged at the place in which it is established on behalf of the parent body. It is in each case for the court before which the matter comes to find the facts whereon it may be established that an effective place of business exists and to determine the legal position by reference to the concept of "operations" as above defined.

14 The above considerations make it unnecessary to answer the third question.

Costs

15 The costs incurred by the Government of the United Kingdom and by the Commission of the European Communities, which have submitted written observations to the Court, are not recoverable and as the proceedings are, so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

3. The concept of "operations" comprises: — actions relating to rights and contractual or non-contractual obligations concerning the management properly so-called of the agency, branch or other establishment itself such as those concerning the situation of the building where such entity is established or the local engagement of staff to work there; — actions relating to undertakings which have been entered into at the above-mentioned place of business in the name of the parent body and which must be performed in the Contracting State where the place of business is established and also actions concerning non-contractual obligations arising from the activities in which the branch, agency or other establishment within the above defined meaning, has engaged at the place in which it is established on behalf of the parent body. 4. It is in each case for the court before which the matter comes to find the facts whereon it may be established that an effective place of business exists and to determine the legal position by reference to the concept of "operations" as above defined.

Kutscher Mertens de Wilmars Mackenzie Stuart Donner

Pescatore Sørensen O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 22 November 1978.

A. Van Houtte H. Kutscher

Registrar President