C-269/95

4. On 28 September 1992 Dentalkit and Francesco Benincasa, an Italian national, concluded a franchise agreement in Florence for the opening and operation of a shop in Munich, where Mr Benincasa stated that he resided. 2. The questions, which have been referred to the Court pursuant to the Protocol of 3 June 1971 on the interpretation of the Brus­ 3 sels Convention by the Court of Justice relate to the concepts of consumer contract and sale of goods on instalment credit terms, both used in Article 13 of the Convention, 5. Under clause 2 of the agreement Dentalkit and identification of the competent court to undertook, inter alia, (a) to allow use of the take cognizance of a dispute concerning an Dentalkit trade mark for naming the sales agreement conferring jurisdiction of the kind outlet; (b) to grant the exclusive right to use referred to in Article 17 of the Convention. the mark within a specified area; (c) to give the necessary assistance in opening the estab­ lishment; (d) to supply a list of products; (e) to supply the goods; (f) to give assistance in * Original language: Spanish. the presentation of the products; (g) to pass 1 — Journal Officiel 1972 L 299, p. 32. 2 — OJ 1978 L 304, p. 1; amended text, p. 77. on the technical and commercial expertise 3 — OJ 1975 L 204, p. 28. and know-how in its possession; (h) to give

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assistance in planning advertising and local business names and marks granted exclus­ sales promotion schemes; (i) to supply cer­ ively for the specified territory. tain printed matter; (1) to provide theoretical and practical training; (m) to carry out an advertising and sales promotion campaign at national level; and (n) not to open any other sales outlet within the exclusive territory.

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10. Mr Benincasa contends that the franchise (b) the clause conferring jurisdiction on the agreement is void on the grounds, first, that courts of Florence did not have the effect it is contrary to Paragraph 138 of the Bürg­ of excluding jurisdiction to hear his erliches Gesetzbuch (German Civil Code, action because he sought the annulment 'BGB') and, second, that the agreement lays of the entire agreement, including that down an obligation for more than two years clause; without complying with Paragraph 11(12)(a), in conjunction with Paragraph 6, of the Gesetz über die Allgemeinen Geschäftsbe­ dingungen (Law on standard business condi­ tions). He also challenges the agreement on the grounds of mistake pursuant to Para­ (c) application of the jurisdiction clause was graph 119 of the BGB and fraudulent mis­ also excluded by point 1 of the first representation pursuant to Paragraph 123 of paragraph of Article 13 and the first the BGB. paragraph of Article 14 of the Brussels Convention so that , in accordance with the third paragraph of Article 17 and Article 15 of the Convention, that clause could not take effect.

15. Consequently the national court took the view that the jurisdiction clause in the franchise agreement was valid and, in accord­ ance with Article 17 of the Brussels Conven­ tion, found that the courts of Florence had 19. In view of the doubts raised regarding jurisdiction. interpretation of the Brussels Convention, the appeal court has referred the following questions to the Court of Justice:

16. The judgment found that the agreement was not a consumer contract, which meant that in this case Article 13 of the Brussels '(1) Is a plaintiff to be regarded as a con­ Convention could not be relied on to defeat sumer within the meaning of the first the jurisdiction clause. It was clear from the paragraph of Article 13 and the first actual wording, as well as the purpose, of the paragraph of Article 14 of the Brussels first paragraph of Article 13 of the Conven­ Convention even if his action relates to tion that an agreement intended to establish a contract which he concluded not for a trade or profession must be deemed to the purpose of a trade which he was have been concluded for the purpose of a already pursuing but a trade to be taken trade or profession. up only at a future date (here: a fran­ chise agreement concluded for the pur­ pose of setting up a business)?

17. In the opinion of the Landgericht Munich I, the other conclusions reached by (2) If Question 1 is to be answered in the applying the German Verbraucherkredit­ affirmative: Does point 1 of the first gesetz (Law on consumer credit) are not rel­ paragraph of Article 13 of the Conven­ evant to the interpretation of Article 13 of tion (contract for the sale of goods on the Brussels Convention, which must be instalment credit terms) cover a fran­ construed independently. Finally, the agree­ chising agreement which obliges the ment in question did not fulfil the other plaintiff to buy from the other party to requirements for a consumer contract. the agreement, over a period of several

(a) in the State of the consumer's domi­ 20. Section 4 of the Brussels Convention is cile the conclusion of the contract entitled 'Jurisdiction over consumer con­ was preceded by a specific invitation tracts'. addressed to him or by advertising,

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and These provisions shall not affect the right to bring a counterclaim in the court in which, in accordance with this Section, the original claim is pending.'

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BENINCASA v DENTALKIT

Where such an agreement is concluded by by a person who has not previously carried parties, none of whom is domiciled in a on a business should be classified as a con­ Contracting State, the courts of other Con­ tract 'for a purpose which can be regarded as tracting States shall have no jurisdiction over being outside his trade or profession', within their disputes unless the court or courts cho­ the meaning of Article 13 of the Brussels sen have declined jurisdiction. Convention.

[...]

25. I shall begin by examining franchise agreements and go on to consider the Court's case-law relating to the term 'con­ sumer contracts' in Article 13 of the Brussels Agreements ... conferring jurisdiction shall Convention. This will lead to my conclusion have no legal force if they are contrary to the that the term is not applicable to agreements provisions of Article 12 or 15, or if the of that kind. courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 16.

(i) Franchise agreements If an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention.

setting out the principal stipulations of the thus developed certain business methods bilateral agreement. In most cases this a grants independent traders, for a fee, the standard-form contract. right to establish themselves in other mar­ kets, using its business name and the busi­ ness methods which have made it successful. Rather than a method of distribution, it is a way for an undertaking to derive financial benefit from its expertise without investing its own capital. Moreover, the system gives 28. The franchisee is legally independent. He traders who do not have the necessary experi- is a genuinely independent trader carrying ence access to methods which they could not on his own business and engaging in com­ have learned without considerable effort and mercial transactions (he purchases goods allows them to benefit from the reputation from his supplier for resale to his customers). 5 of the franchiser's business name.'

29. The Court of Justice considered this form of business from the viewpoint of free­ dom of competition in its judgment of 28 4 January 1986 in Pronuptia, which relates to atypical distribution franchise agreements under which the franchisee merely sells cer­ tain products in a shop which bears the fran­ chiser's business name.

31. Article 1 of Commission Regulation (EEC) No 4087/88 of 30 November 1988 on 30. In paragraph 15 of that judgment the the application of Article 85(3) of the Treaty 6 to categories of franchise agreements also Court outlined the main features of the rela­ presumes that a franchise agreement is tionship between franchisers and franchisees, entered into by two 'undertakings', that is to stressing that the latter are independent trad­ say two economic entities operating on a ers: 7 commercial basis.

— it is only by way of derogation from that general principle that the Convention provides for the cases, exhaustively listed in Sections 2 to 6 of Title II, in which a defendant domiciled or established in a Contracting State may, where the situa­ 33. That judgment begins by referring to tion comes under a rule of exclusive 'the principle, established by case-law [the jurisdiction or of prorogation of jurisdic­ judgments in Case 150/77 Bertrand [1978] tion, be sued in the courts of another ECR 1431, paragraphs 14 to 16 and 19; Case Contracting State. C-26/91 Handte [1992] ECR I-3967, para­ graph 10], according to which the concepts used in the Convention, which may have a different content depending on the national law of the Contracting States, must be inter­ preted independently, by reference princi­ — consequently, the rules of jurisdiction pally to the system and objectives of the which derogate from that general prin­ Convention, in order to ensure that the Con­ ciple cannot give rise to an interpretation vention is uniformly applied in all the Con­ going beyond the cases envisaged by the tracting States. This rule must apply in par­ Convention. ticular to the concept of "consumer" within the meaning of Article 13 et seq. of the Con­ vention, in so far as that concept is the prin­ cipal factor in the determination of rules 9 governing jurisdiction.'

8 — Case C-89/91 [1993] ECR I-139. 35. In paragraph 17 of the judgment the 9 — Paragraph 13. Court observes that 'such an interpretation

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38. The status of consumer referred to by Article 13 is not determined by a pre­ 36. After those detailed observations con­ existing subjective situation: the same natural cerning the principles for construing the person may be a consumer for certain pur­ rules governing jurisdiction, the judgment poses and an entrepreneur for others. The clarifies the definition of 'consumer' for the decisive factor is, therefore, not the personal purpose of Articles 13 and 14 of the Brussels circumstances of the individual but rather his Convention: 'It follows from the wording position under a particular contract, having and the function of those provisions that regard to its scope and purpose. they affect only a private final consumer, not engaged in trade or professional activities (see the Bertrand judgment cited in para­ graph 21 above, and the Expert Report drawn up when the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland acceded to the Convention on jurisdiction and the enforce­ ment of judgments in civil and commercial matters, OJ 1979 C 59, p. 71), who is bound by one of the contracts listed in Article 13 39. Where contracts such as franchise agree­ and who is a party to the action in accord­ ments are concerned, which are clearly of a ance with Article 14.' commercial nature and necessarily relate to a

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trade or profession of the parties, the what would be the criterion for making latter's personal circumstances before the the choice?) would prejudice the legal formation of the contract are irrelevant for certainty which the Brussels Convention the purpose of Article 13. aims to ensure;

(a) national legislation need not coincide from one State to another and may differ slightly in certain respects, depending on 43. I do not agree with that argument: it is the particular case. To rely on one body also opposed by the German Government of legislation rather than another (and itself which, in its written observations, points out that that wider definition of 'con­ sumer' was expressly and intentionally for­ mulated by the national legislature to go 10 — The term 'actividad profesional' used in the Spanish version must, of course, be construed widely so as to include trade. The English version of Article 13 is more concrete as it refers to 'contracts concluded by a person for a purpose which can be regarded as being outside his trade or profes- sion' (emphasis added). The German version also refers to 11 — One of the grounds of the appellant's action in the German both kinds of activity 'berufliche oder gewerbliche court of first instance was that that law applied by analogy Tätigkeit'. to franchise agreements.

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beyond the minimum standard laid down by 46. All this merely confirms the necessity to the Directive which the Law on consumer adhere to the autonomous interpretation of credit was intended to implement so as to the definition of 'consumer' in Article 13 of offer consumers a higher level of protection the Brussels Convention, which need not be than that provided for by the Community linked to the definitions used in individual measure. cases in the respective national legal systems.

45. In the same observations, the German Government adds that in its legal system a narrower definition of 'consumer' is used in other consumer protection measures: for example, the Law on the cancellation of 48. To sum up, it is in my view necessary to doorstep sales (Haustürwiderrufsgesetz). uphold the autonomous interpretation of the term 'consumer' used in the Brussels Con­ vention, as the Court did in the Shearson 12 — Council Directive 87/102/EEC of 22 December 1986 for Lehman Hutton judgment, which means the approximation of the laws, regulations and administra- that the term must be limited to private final tive provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48). 13 — This is also the criterion used in Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29), Article 2 of which defines 'consumer' as 'any natural person who, in contracts covered 14 — Added by Article G.38 of the Treaty on European Union. by this Directive, is acting for purposes which are outside 15 — According to paragraph 19 of the judgment in Case his trade, business or profession', whereas 'dealer or sup- C-192/94 El Corte Inglés [1996] ECR I-1281. In paragraph plier' means 'any natural or legal person who, in contracts 20 of the same judgment the Court stated that Article 129a covered by this Directive, is acting for purposes relating to 'merely assigns an objective to the Community and confers his trade, business or profession, whether publicly or pri- powers on it to that end without also laying down any obli- vately owned'. gation on Member States or individuals'.

Question 2

51. Contracting parties are not normally in a position of equality in the area of business 54. The national court's second question relationships, but that does not mean that falls to be answered only if the Court's reply contracts of that kind, including standard- to the first is that Article 13 of the Brussels form contracts, entered into by businessmen Convention does apply to a contract such as benefit from the special rule in Article 13. that in the present case. In view of my pro-

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posed reply to the first question, it is unnec­ can be regarded as being outside any trade or essary, in my opinion, to answer the second. profession, but also requires it to belong to one of the three categories described in points 1, 2 and 3 of the first paragraph, point 1 being 'contracts for the sale of goods on instalment credit terms'.

55. Should the Court find that Article 13 is applicable, it will have to reply to the second question from the Oberlandesgericht Munich concerning the interpretation of 58. In my view, the reply to this question point 1 of the first paragraph of Article 13, must also be in the negative. Contracts for relating to the sale of goods on instalment the sale of goods on instalment credit terms credit terms. cannot be confused with other contracts which, although entailing successive obliga­ tions, possess features quite different from those of a sale on instalment credit terms.

66. Let me begin with two points which seem to me important: 63. Still less can it be concluded from the fact that the franchisee has to pay at regular intervals a sum equal to 3 % of his annual turnover for the use of the franchiser's busi­ ness names that there is a sale of goods on instalment credit terms. It is quite clear that in such circumstances no bilateral contract for the sale of goods exists, whether by (a) it is not disputed that the jurisdiction instalments or for cash. clause in the agreement in question meets the formal requirements of Article 17 17 of the Brussels Convention;

16 — This footnote relates to the different terms in Spanish for 'jurisdiction clause'. It is not relevant to the English version and has not been translated. 17 — Nor is it disputed that the clause complies with the formal requirements of Italian law as it is a contractual stipulation separately approved in accordance with Articles 1341 and 64. Consequently, if a reply is required to 1342 of the Italian Codice Civile. In any case, there is no the second question, in my opinion the question here of applying national law, whether Italian or German: the issue is whether the clause complies with the Court should answer in the negative. Brussels Convention.

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(b) the jurisdiction clause is in the most gen­ consider the existence of the constituent eral terms possible, as it relates to 'any parts of the contract itself since that was dispute concerning the interpretation, indispensable in order to enable the national performance or other aspect of this con­ court to examine whether it had jurisdiction tract', and it is stipulated that any such under Article 5 of the Convention. dispute must be brought before the courts of Florence.

19 — The objective of the Brussels Convention is precisely to ensure legal certainty — and, specifically, certainty or fore- sccability in designating a competent court: 'the objectives 69. The Court found that the national [of the Convention] include unification of the rules on jurisdiction of the Contracting States, so as to avoid as far court's jurisdiction to determine questions as possible the multiplication of the bases of jurisdiction in relating to a contract included the power to relation to one and the same legal relationship and to rein- force the legal protection available to persons established in the Community by, at the same time, enabling the plaintiff easily to identify the court before which he may bring an action and the defendant reasonably to foresee the court before which he may be sued' (sec the judgment in Case 18 — Case 38/81 [1982] ECR 825. C-125/92 Mulox IBC [1993] ECR I-4075).

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76. Secondly, if one party alleges that there was no consensus ad idem — for example, that there was a mistake as to essential aspects of the subject-matter, rendering the mutual obligations void — the jurisdiction 74. This question is the subject of a well- clause is not necessarily affected because the known academic controversy 20 which has mistake does not extend to the express not been settled. However, I consider that, choice of the competent court. This applies a so far as Article 17 of the Brussels Conven­ fortiori where the alleged grounds of nullity tion is concerned, the Court should take the of the contract relate to its compatibility or same approach as in the Effer judgment and otherwise with the substantive law of a par­ incline towards the view which promotes ticular national system. legal certainty and which, specifically, means recognizing the court chosen in a jurisdiction clause (provided, of course, that the latter

20 — See the recent works of C. Bianchiti, L'autonomie de la clause compromissoire: un modele pour la clause attributive 77. Thirdly, if a court other than that desig­ de juridiction?, Paris, 1995, and A. Rodríguez Benot, Los nated by the parties in a jurisdiction clause acuerdos atributivos de competencia judicial internacional en Derecho comunitario europeo, Madrid, 1994. were allowed to decide on the validity of the

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contract in general, the practical conse­ itself on substantive or on formal grounds. quences would be rather disconcerting. If, Mr Benincasa merely claims that the fran­ for example, such proceedings led to a chise agreement is void in general on decision that the contract in general was grounds based on substantive German law valid, the court in question would immedi­ (alleged infringement of the BGB and the ately have to decline jurisdiction in favour of German Law on standard business condi­ 22 the court chosen by the parties, which has tions). exclusive jurisdiction to settle their differ­ ences. It would be difficult to deny that the latter court in turn would not be competent to rule that the contract or any of its essen­ tial stipulations was invalid, even if by so doing it contradicted the judgment of the first court.

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82. On this point it is inevitable that the between the parties, a helpful reply from the Court's reply cannot be limited to a hypo­ Court of Justice, under the preliminary- thetical interpretation of Article 17 of the ruling procedure, necessitates an analysis of Brussels Convention, unconnected with the the terms of the jurisdiction clause in order, dispute with which the question from the by reference to its characteristics, to provide national court is concerned. Without any the national court with an interpretation of intention to take the place of the competent the Brussels Convention, as requested. national court in interpreting the agreement

Conclusion

83. I therefore propose that the Court reply as follows to the questions from the Oberlandesgericht Munich :

(1) The parties to a franchise agreement for the forthcoming opening of a com­ mercial establishment cannot be regarded as consumers within the meaning of the first paragraph of Article 13 and the first paragraph of Article 14 of the Brussels Convention .