C-346/93

KLEINWORT BENSON

OPINION OF ADVOCATE GENERAL TESAURO delivered on 31 January 1995 *

1. The questions referred to the Court by 2. It should be pointed out straight away the Court of Appeal concern the interpreta­ that, although the national court is seeking a tion of Article 5(1) and (3) of the Conven­ ruling on the interpretation of the aforemen­ tion of 27 September 1968 on Jurisdiction tioned provisions of the Convention, in the and the Enforcement of Judgments in Civil main proceedings the question to be deter­ and Commercial Matters ('the Convention'), mined is whether the London courts or the as amended by the Convention of 9 October Glasgow courts have jurisdiction. Thus the 1978 on the Accession of the Kingdom of case involves a conflict of territorial jurisdic­ Denmark, Ireland and the United Kingdom tion between the courts of a contracting of Great Britain and Northern Ireland. State, namely the United Kingdom.

In order to assess the reasons which prompted the national court to make this reference it will be helpful to give a brief account of the relevant national legislation and of the facts underlying the main pro­ ceedings.

4. That scheme is contained in Section 16 of (3) In determining any question as to the the legislation. As far as is relevant for these meaning or effect of any provision con­ purposes, it provides: tained in Schedule 4:

'(1) The provisions set out in Sched­ ule 4 (which contains a modified version (a) regard shall be had to any relevant of Title II of the 1968 Convention) shall principles laid down by the Euro­ have effect for determining, for each pean Court in connection with part of the United Kingdom, whether Title II of the 1968 Convention and the courts of law of that part, or any to any relevant decision of that particular court of law in that part, have Court as to the meaning or effect of or has jurisdiction in proceedings any provision of that Title; and where:

(b) without prejudice to the generality (a) the subject-matter of the proceed­ of paragraph (a), the reports men­ ings is within the scope of the tioned in Section 3(3) may be con-

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sidered and shall, so far as relevant, (2) ... be given such weight as is appropri­ ate in the circumstances.'

1 — Apart from specific adjustments, the national scheme under discussion departs from the Convention, as amended in 'a person domiciled in a part of the United 1978, only in relation to matters of marginal importance. For Kingdom may, in another part of the United present purposes, for example, it should be pointed out that Article 5(3) of the Convention refers solely to the place Kingdom, be sued: where the harmful event occurred and not abo to the place where the harmful event is likely to occur, as the corre­ sponding Schedule 4 provision does. 2 •— That provision in the version currently in force in fact pro­ vides: 'in matters relating to a contract, in the courts for the place of performance of the obligation in question; in matters relating to a contract of employment this place is that where the employee habitually carnes out his work; or if the employee does not habitually carry out his work in any one country, the employer may also be sued in the courts for the place where the Dusincss which engaged the employee was or is now situated'. Although, as will DE seen below, the amend­ ments made by the 1989 Convention on Accession arc not (1) in matters relating to a contract, in the relevant for the purposes of the case before the Court, it is courts for the place of performance of certainly significant that the United Kingdom legislature did not consider it necessary to adjust the corresponding provi­ the obligation in question; sion contained in Schedule 4.

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OPINION OF MR TESAURO — CASE C-346/93

in a rigid, non-dynamic way in the sense that interest-rate swap contracts. In perfor­ although the text of that schedule was that in mance of these contracts, Kleinwort Benson force at a given time it may well not corre­ between 9 March 1983 and 10 September spond to the current text of the Convention. 1987 made payments to the District Council totalling £ 807 230.31.

3 — Under this type of bilateral contract one party undertakes to pay to the other during a certain period and at regular inter­ vals sums calculated on the basis of the difference between a fixed rate of interest and the market interest rate applicable 6. I now turn to the facts underlying these from time to time. The contract does not include tne provi­ sion of any service the principal amount being purely theo­ proceedings. As from September 1982 Klein- retical in the sense that it exists only for the purposes of computing the liability of the parties to pay the differences. wort Benson Ltd (hereinafter 'Kleinwort The essential feature of this type of contract is the fact that it Benson'), an English merchant bank, and the is a speculative contract since the final financial outcome depends on the future movement of interest rates. City of Glasgow District Council (hereinaf­ 4 — Hazell v Hammersmith and Fulham London Borough Coun- ter the 'District Council') entered into seven cil (1992, 2 A. C.1).

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KLEINWORT BENSON

contested the jurisdiction of the London delict, the English courts have jurisdiction to courts and contended that in accordance determine the dispute. It follows that the with Article 2 of the aforementioned Sched­ claim by the District Council that it should ule 4, the courts of the place in which the be sued in the courts of its domicile, that is defender was domiciled had jurisdiction, and to say in the Scottish courts, can be upheld that the action should be brought before the only if it is concluded that an action for res­ Glasgow courts. That line of argument was titution based on the principle of unjust upheld at first instance but Kleinwort Ben­ enrichment, such as that at issue in the main son appealed against that decision to the proceedings, is not covered by either Article Court of Appeal. 5(1) or (3) of the Convention.

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OPINION OF MR TESAURO — CASE C-346/93

templated. In any event it is not possible tual situations which are not governed by for the United Kingdom, even for the pur­ Community law but by national law, where poses of the Brussels Convention, to be the latter contains a renvoi to provisions of deemed to be anything but a single contract­ Community law in order to determine the ing State, and for disputes as to territorial provisions applicable to a purely internal sit­ jurisdiction to come therefore within the uation. On those previous occasions the scope of the Convention. Court declared that it had jurisdiction to give a ruling. 6

It is therefore appropriate, I thirds, to give a 5 — See in this connection Cheshire and North's, Private Inter- brief account of that case-law. national Law, p. 335; Anton and Beaumont, Civil Jurisdic- tion in Scotland, Supplement, 1987, esp. p. 7; and O'Maliey and Layton, European Civil Practice, 1989, paragraphs 41.09 and 36.04. See also with regard to the Court's lack of jurisdiction in regard to the interpretation of the United Kingdom legislation which rendered provisions of the Rome 6 — See Joined Cases C-297/88 and C-197/89 Dzodzi v Belgian Convention on Contractual Obligations applicable to con­ State [1990] ECR3763 and in Case C-231/89 Gmurzynska- flicts internal to the United Kingdom, Jayme and Kohler, Bscher v Oberfinanzdirektion Köln [1990] ECR1-4003; see 'Das internationale Privat- und Verfahrensrecht der EG auf also judgments in Case C-384/89 Tomatis and Fulchiron dem Wege zum Binnenmarkt', in Praxis des Internationalen [1991] ECR 1-127 —Summary publication — and Case Privat- und Verfahrensrechts, 1990, p . 358 . C-88/91 Federconsorzi [1992] ECR 1-4035.

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13. In both cases, the Court pointed out that Article 177 constitutes an instrument for cooperation between the Community judica­ ture and national courts and that it is always for the latter to assess the relevance and per­ tinence of the questions which they submit. It went on to justify its own jurisdiction on The Court's reasoning was more detailed the basis essentially of two arguments. On 8 the one hand, it stressed the fact that 'it is and elaborate in the subsequent Dzodzi and 9 manifestly in the interest of the Community Gmurzynska-Bscher judgments in which it declared itself competent to rule on the inter­ legal order that, in order to forestall future pretation of Community provisions to which differences of interpretation, every Commu­ the national legislation of a Member State nity provision should be given a uniform referred in order to determine the rules interpretation irrespective of the circum­ 12 applicable to situations purely internal to stances in which it is to be applied'. On that State. More specifically, in the Dzodzi the other hand, it pointed out that Article judgment the Court provided the national 177 of the Treaty does not exclude from its court with the interpretation of certain pro­ scope situations such as that under discus­ 10 sion, and more specifically that 'it does not visions of Directive 64/221/EEC, notwith­ appear either from the wording of Article 177 or from the aim of the procedure intro­ duced by that article that the authors of the 7 — Judgment in Case 166/84 Tbomasdünger GmbH v Oberfinanzdirektion Frankfurt am Main [1985] ECR 3001, paragraph 11. 8 — Judgment of 18 October 1990, cited above, paragraphs 26 to 43. 11 — More or less analogous to the facts underlying the Tomatis 9 — Judgment of 8 November 1990, cited above, paragraphs and Fulchiron judgment, cited above. 15 to 25. 12 — Dzodzi judgment, cited above, paragraph 37; Gmurzynska- 10 — Council Directive of 25 February 1964. Bscher judgment, cited above, paragraph 24.

The same reasoning, moreover, has prompted the Court to declare itself compe­ tent to give a preliminary ruling on a provi­ sion of Community law to which reference was made not by a provision of national law but by a contractual provision. That was in order to determine the limit to the financial Without examining its competence to give a liability of one of the parties to the con­ 18 14 ruling in a case of that kind and although tract. it pointed out that 'the terms used in the agreement must not necessarily be inter­ preted as having the same meaning as those used in the directive', the Court nevertheless provided the national court with the inter­ pretation requested. Owing to the fact that 14. An account should also be specifically the scope of the directive and that of the given of the Fournier judgment 15 in which agreement are not identical the Court was the Court ruled on the interpretation of the however careful to point out that it was in concept of the 'territory in which the vehicle the final analysis 'for the national court is normally based' contained in a Commu­ which alone is competent to interpret the nity directive, 16 though it was common agreement between national bureaux to give ground that it was not the directive which to the terms of that agreement the meaning was being applied in that case but an agree­ which it considers most appropriate, without ment between national insurers' bureaux, being bound by the meaning to be conferred which reproduces verbatim certain provi­ on the same term appearing in the directive' (paragraph 23).

17. Having regard to the criteria and the rea­ soning underlying the case-law recalled above, I consider that the reply must be in the negative. Above all, the difference between the two preliminary-ruling proce­ dures under the 1971 Protocol and Article 177 of the EEC Treaty respectively appears 16. The case before the Court is not specifi­ to be formal rather than substantive, not to cally envisaged in the case-law referred to. In say artificial. It is difficult to see why there the first place, this is a reference not under should be a different solution according to Article 177 of the EEC Treaty but under the whether the subject-matter is outside the 1971 Protocol on the Interpretation of the scope of the Convention, as in the case Brussels Convention. Secondly, the majority before the Court, or outside the scope of of cases recalled above concerned a renvoi by Community law, as in Dzodzi. In both cases, national law to Community law, whereas in in fact, the logical requirements and the legal the case before the Court we are confronted basis for the request for a preliminary ruling with an almost verbatim reproduction of the are the same: to provide the national court Convention provisions. with the interpretation it seeks in order to ensure the uniform interpretation and appli­ cation of Community law, or of the Conven­ tion, as the case may be, where that is neces­ sary in order to enable a judgment applying the provision (of Community law stricta senso or of the Convention) to be given.

It must be determined whether these two factors are such as to place the issues in a dif­ ferent light and thus, as maintained by the

In the present case the relevant provision of 18. Having said that, I would say straight­ the Convention does not apply as such but is away that I do not intend to propose that the the model on which the national provision Court should extend the Dzodzi solution to applicable to this case was formulated. In the case before us, but rather that it should any event there are two provisions — the adopt precisely the opposite solution. The national one and the provision of the Con­ arguments which follow, although centred vention on which it was based —· and these on the facts of the case before the Court, are absolutely distinct. They are not only substantively also apply to the preliminary- distinct as to their origin and the context in ruling procedure under Article 177. which they apply, but also the factual situa­ tions which they govern are different. Yet, the Court's competence to rule on the inter­ pretation of the Convention under the 1971 Protocol can only be based on the scope of the Convention. It should generally be clear that when the Convention does not apply, the Court does not have jurisdic­ I thus turn to the reasons, each one decisive 21 tion. in itself, which lead me to consider that the Court should not reply to the question sub­ mitted by the national court. 21 — Similarly, but in relation to the request for an interpretation of Community provisions to which reference was made by national law in order to govern a purely internal situation, the Opinion of Advocate General Darmon in relation to the Dzodzi case already cited is of great interest. Of partic­ ular importance is the illuminating and incisive consider­ ation, drawn of course from the fundamental elements of general legal theory, that 'there is no Community law out- side its field of application: what is important therefore for its proper application is its unity within the scope ratione personae and ratione materiae which it itself determines. 19. In the first place the Convention is not The fact that the concepts which it uses within the limits of its scope may be employed on a unilateral basis in order to intended to be applied to conflicts as to ter­ deal with a given aspect of a piece of national legislation cannot extend the field of application of Community law ritorial jurisdiction between the courts of the and, with it, the competence of the Court of Justice' (para­ same contracting State; it was so stipulated. graph 11 of the Opinion).

21. I am not thereby denying that in order to resolve the different situation of conflicts of territorial jurisdiction, the best solution may not be inspired by that adopted at inter­ national or Community level for conflicts of international jurisdiction. Indeed that may frequently occur in countries with a judicial What is important is that a conflict between system structured differently in the various the courts of Heidelberg and the courts of geographical regions or administrative areas. Naples should be settled in the same manner But none of that requires the provision based as a conflict between the courts of Trier and on a model to receive the same interpretation the courts of Venice, inasmuch as within the as the model provision has in its own system. Community it is useful and necessary that On the contrary, when a legislature takes as analogous conflicts should be resolved in an its model a provision already existing in analogous manner. However, where that another legal order it certainly cannot expect requirement does not have to be satisfied its 'own' provision at all costs to receive in there is no longer any need for, or even util­ its 'own' country the same interpretation as ity in, a uniform and centralized interpreta­ is given in the State of origin of the model tion. In resolving a conflict of territorial provision (consider for example the Napole­ jurisdiction between the courts of Heidel­ onic Code), to the point where the courts of berg and the courts of Trier there is no the State of origin are requested to ensure its requirement to find the same solution as that interpretation. which resolves the conflict between the courts of Naples and those of Venice. It fol­ lows that in such a case since the Brussels Convention does not apply there is no longer any room for the interpretative com­ petence of the Community judicature. That would still hold true, even were the German or Italian conflict rule formulated in the same terms as the relevant provision of the Convention since there is no requirement Finally, it seems to me perfectly normal that that a provision based on a model must nec­ in the legal systems of different countries

Moreover, it is significant that that approach was reaffirmed specifically in regard to facts analogous to those before the Court. In the That is already clear from a reading of the 23 Fournier judgment, cited above, it will be relevant national provision itself which as recalled that in providing the interpretation summarized expressly provides for the possi­ of a provision of a directive reproduced in a bility of adopting modifications intended to private agreement between the insurers' produce divergence between any provision bureaux of the Member States, the Court in of Schedule 4 and the corresponding provi­ sions of the Convention, as affected by any interpretation provided by the Court of Jus­ tice. Furthermore, there is no obligation on 22 — See judgment of 9 February 1982 in Case 270/80 Polydor [1980] ECR329 ; and the judgment in Case 104/81 Haupt- the national court to resolve the dispute with zolhmt Mainz v Kiipferberg [1982] ECR 3641, paragraph 30. See also Opinion 1/91 of 14 December 1991 [1991] the interpretation provided to it by the ECR I-6084), in which the Court confirmed that 'the fact Community judicature. Moreover, even if a that the provisions of the agreement and the corresponding Community provisions are identically worded does not national provision could make provision for mean that they must necessarily be interpreted identically. An international treaty is to be interpreted not only on the binding effect it would be as if it did not basis of its wording, but also in the light of its objectives' exist, inasmuch as it would not be a require­ (paragraph 14). 23 — See paragraph 22. ment which the national legislature could or

would be obliged to sanction. In fact, the The fact that the Court in that case gave the binding effect can stem only from a provi­ interpretation requested, though recognizing sion of the Protocol or of the Convention that it was not binding on the national court, which, in terms of this case, is non-existent. cannot but raise serious doubts. In fact indeed, it is contrary to the very logic of the preliminary-ruling machinery to acknowl­ edge that the interpretation of the Conven­ tion or of Community law requested and given is not binding on the national court. That is all the more so since less than a year earlier in a statement concerning questions of principle the Court rightly pointed out in that regard that 'it is unacceptable that the answers which the Court of Justice gives to the courts and tribunals in the EFTA States are to be purely advisory and without any binding effects. Such a situation would change the nature of the function of the Court of Justice as it is conceived by the 24. It is, then, worthy of note that on one EEC Treaty, namely that of a Court whose 25 occasion the Court of Justice affirmed that judgments are binding'. its interpretation was not binding when the provision forming the subject-matter of its interpretation was not as such applicable to the dispute before the national court. In the Foamier case, mentioned above, the Court in fact provided the national court with the interpretation sought by it and which the parties had submitted to arbitration pursuant to their agreement; at the same time, the Court acknowledged that such interpretation could be non-binding on the national court, since the same terms in the directive and in the agreement were capable of not having the same meaning and that, finally, it was 'for the national court which alone is competent to interpret the agreement between national 25. Moreover, to accept that the Court may bureaux to give to the terms of that agree­ provide an interpretation of a provision for ment the meaning which it considers most future reference ('to forestall future differ­ appropriate, without being bound by the 26 ences of interpretation' ), though not nec­ meaning to be given to the same expression 24 essary for the solution of the dispute before appearing in the directive'. To that extent, the national court and not binding on it, the Court thus recognized that its ruling seems to me to be in open contradiction with under Article 177 could be non-binding.

26. Finally, when the various provisions inspired by Community law or by the Con­ vention itself are borne in mind — and these are no longer exceptional — there is no denying the risks that would be created by a In the latter connection I regard as ruling differing from that which is here can­ unfounded the statement by the Court that it vassed. Specifically in relation to the subject- does not appear either from the wording of matter before the Court, suffice it to cite the Article 177 or from the aims pursued Lugano Convention 29 entered into between thereby that the authors of the Treaty the Member States of EFTA and the Member intended to exclude from the jurisdiction of States of the Community: the majority of the the Court the interpretation of a Commu­ articles of that Convention are in fact repro­ nity provision when it is not applicable to duced verbatim from the provisions of the 28 the case in question, that is to say when Brussels Convention. It should not therefore the question clearly falls outside the scope of be thought that the Community judicature has automatically acquired jurisdiction to interpret the provisions of the Convention when a court of a Member State submits 27 — I reler in particular to the judgments in Case C-343/90 Lourenço Dins [1992] ECR 1-4673 and Case questions in the matter, and the conflict of C-83/91 Meilicke [1992] ECR I-4871, paragraphs 31 to 33; and to the order of 16 May 1994 in Case C-428/93 Monin jurisdiction is between the Community judi­ Automobiles II [1994] ECR 1-1707, paragraphs 13 to 16. 30 Moreover, it should also be emphasized that 'in order to cature and the court of an EFTA country. forestall future differences of interpretation' it would of For an example taken from Community law course be more useful to provide tne national court with the interpretation requested in a hypothetical situation of stridii senso, Article 85 of the Treaty may be the type to be found in the judgment in Foglia v Novello [1980] ECR 745 rather than in the cases such as those cited. It was taken as the model, for example, before the Court now. That is essentially because the first for the Italian legislation on competition, is situation involves cases which are definitely governed by Community law and which, to the extent to which they are reproduced, mutatis mutandis, as Article 2, contrived and perhaps precisely because they are contrived, are capable of occurring in the future, whereas the second situation concerns purely internal situations which there­ fore do not present any 'real' link with Community law (see V. Rodière, 'Sur les effets directifs du droit (social) communautaire', in RTDE, 1991, p. 565, particularly at 29 — OJ 1988 L 319, p. 1. pp. 569 et seq. 30 — See Kohler, 'Ein internationales Zivilverfahrensrecht für 28 — Dzodzi judgment, cited above, paragraph 36; Gmurzynska- Gesamteuropa', in Jayme (Ed.), Heidelberg, 1992, pp. 24 et Bscher judgment, cited above, paragraph 25. seq.

33 — In that connection it has also been maintained that by declaring that it had jurisdiction in the Dzodzi case, the Court forgot 'that it only has powers assigned to it' and It is clear, moreover, that the view I have therefore that 'it exceeded its powers in considering that a power could be assigned to it by national legislation, which formed covers not only a reference under the in both cases is incorrect' (Denis Martin, 'Du bon usage de 1971 Protocol but also the case of a reference l'article 177', in Revue de jurisprudence de Liege, Mons and Brussels, 1991, 1991, pp. 189 et seq.). under Article 177 of the Treaty. In even 34 — I refer to the latest developments in the matter, in particular clearer terms, I suggest that the Court should to those judgments in which the Court has held references for a preliminary ruling submitted to it to be inadmissible, — substantively, and however detailed its inasmuch as the national factual and legislative context was not sufficiently clear and definite: judgment of 26 January reply — reconsider its Dzodzi judgment 1993 in Joined Cases C-320/90, C-321/90 and which I am unable to endorse, above all C-322/90 Tekmarsicabruzzo [1993] ECR I-393, paragraph 6); order of 19 March 1993 in Case C-157/92 Bancbero because in terms of general legal theory it [1993] ECR I-1085, paragraph 4); order of 26 April 1993 in Case C-386/92 Monin Automobiles I [1993] ECR I-2049, flies in the face of the logic of the paragraph 6); and the order of 9 August 1994 in Case 32 preliminary-ruling procedure, actually C-378/93 La Pyramide [1994] ECR I-3999, paragraph 14). The restrictive conditions thus imposed by the Court as resulting — let us admit it — in a misuse of regards the admissibility of references for a preliminary rul­ ing in situations undeniably governed by Community law highlight only too clearly the contradiction with the case- law under consideration. In particular it may legitimately be wondered how the refusal to provide the national court with replies to the questions asked owing to the absence of 31 — Law No 287 of 10 October 1990 laying down provisions a clearly defined legislative and factual framework permit­ for the protection of competition and the market (Official ting a helpful reply to be (liven to the concrete case is rec­ Gazette of the Italian Republic of 13 October 1990, oncilable with its declared jurisdiction in regard to requests No 240). Article 1(4) of the law in question in fact provides for interpretation in relation to cases not governed by that 'the interpretation of the provisions contained in this Community law, whereas in the latter case the Court is pre­ chapter shall be effected on the oasis of the principles of the cluded from knowledge of the national context which in Community legal order in relation to the law on competi­ any case would be of no use to it: by definition its interpre­ tion'. tation, therefore, cannot but be abstract, that is to say detached from the actual case underlying it specifically 32 — Sec to that effect the Opinion of Advocate General Mancini because it concerns a purely internal situation. in the Thomasdünger case, already cited above, at p. 3002.