C-111/01

OPINION OF MR LÉGER — CASE C-lll/01

OPINION OF ADVOCATE GENERAL LÉGER delivered on 5 December 2002 1

1. By order of 22 February 2001, the I— Legal background Oberster Gerichtshof (Supreme Court) (Austria) referred to the Court for a preliminary ruling three questions on the interpretation of Article 21 of the Con- vention of 27 September 1968 on Jurisdic- tion and the Enforcement of Judgments in Civil and Commercial Matters. 2 That A ·— The Convention provision establishes, in essence, that where proceedings involving the same cause of action and with the same subject-matter are brought between the same parties before the courts of different Contracting States the court seised in second place must 2. According to its preamble, the Conven- decline jurisdiction in favour of the court tion is intended to facilitate the recognition first seised. and enforcement of court judgments, in consonance with Article 293 EC, and to strengthen the legal protection in the Euro- pean Community of persons established in the Community. The recital thereto states that it is necessary for that purpose to determine the international jurisdiction of the Contracting States.

Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdic­ 6. In order to understand the case, it is tion in favour of that court.' appropriate to set out the principles of the Austrian law on set-off. As regards the concept of 'set-off', suffice it to note that it is a form of extinguishment of obligations. It has the effect of simultaneously extin­ guishing different obligations between two 5. Article 22, which is concerned with persons who are debtors of each other, to related actions provides that: the extent of the lower debt.

extrajudicial declaration or in proceedings. sementsrechtbank (Regional Court) Dor- It is always retroactive — both debts are drecht (Netherlands) seeking damages of deemed to be extinguished on the date on EUR 2 520 814.26 7 from Gantner. It which the requirements for set-off are asserted that since Gantner had terminated satisfied, not on the date of the declaration a contractual relationship which had of set-off, and the court merely makes a existed for over 40 years, the notice period finding that the set-off has occurred. should have been longer. It emerges from the order for reference 8 that Basch believed itself entitled to EUR 2 700 428.82 9, but considered that EUR 170 852.34 10relating to claims by Gantner which it considered legitimate, should be deducted from that amount. That deduction gives the sum of EUR 2 520 814.26 which it claimed. It accordingly then declared its intention to I I — Factual background and procedure in set off that sum, 11 as established in Nether- the main proceedings lands and Austrian law.

8. Gantner Electronic GmbH 5 is an Aus- trian company which manufactures and sells carrier pigeon clocks. In the context of its business relationship with the Nether- lands company Basch Exploitatie Maats- chappij BV,6 it delivered goods to the latter to be resold in the Netherlands.

11. On 22 September 1999, 1 2Gantner brought an action before the Landesgericht (Regional Court) Feldkirch (Austria) for an order that Basch pay it the purchase price 9. Taking the view that Basch had failed to of goods delivered up to 1999 amounting pay the purchase price of goods delivered to EUR 837 460.18. 13 Gantner did not and invoiced up to June 1999, Gantner plead that debt in the proceedings in the terminated their business relationship. Netherlands.

13. The Austrian court of first instance refused to stay the entire proceedings. It did however suspend the proceedings in relation to the objection of set-off. '(1) Does the concept of "the same cause of action" in Article 21 of the Brussels Convention extend also to the defence of the defendant that he has extin- guished a part of the claim sued for by extrajudicial set-off, where the part of this counterclaim that is allegedly not- extinguished is the subject-matter of a 14. Basch lodged an appeal against the legal dispute between the same parties decision not to suspend the entire proceed- on the basis of an action that has ings. The appeal court, finding that the already been brought earlier in another defence of payment by extrajudicial set-off Contracting State? could give rise to lis pendens between the two sets of proceedings, set aside the decision at first instance.

14 — To distinguish between the two forms of set-off claimed by Basch, the latter set-off shall he referred to hereinafter as an 'objection of set-off' in the sense that the declaration of (2) In the examination of the question intention required by Austrian law was made in the course whether "the same cause of action" of court proceedings. There is no question here, as I indicated in point 6 of this Opinion, of judicial set-off as has been brought, are exclusively the exists in other national legal systems. pleadings of the plaintiff in the pro¬

OPINION OF MR LÉGER — CASE C-111/01

ceedings initiated by a later action the second, on the other hand, in the decisive and the defences and sub- Austrian proceedings is irrelevant from missions of the defendant therefore the perspective of Austrian law 1 5 — in irrelevant, in particular also the either situation, if the legal requirements defence of the procedural objection of for set-off to operate are satisfied, set-off concerning a claim that is the Gantner's claim would in its view be subject-matter of a legal dispute extinguished on the date on which they between the same parties on the basis were fulfilled.16 The Austrian court should of an action that has already been therefore find, Basch contends, that on the brought earlier in another Contracting date on which judgment is delivered State? Gantner's claim does not exist.

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GANTNER ELECTRONIC

pendens within the meaning of Article 21 subject-matter of the dispute. It would in of the Convention. 17 consequence be necessary, in the view of that court, to take the objection of set-off into account in determining whether the action against which it is raised has 'the same cause of action' as a different action brought before the courts of another Con- tracting State (the second preliminary ques- tion).

20. The first question raised is to what extent set-off pleaded as a procedural objection can give rise to lis pendens. The referring court seems to believe that an objection of set-off should be treated as a claim, enabling it to decline jurisdiction 21. If the answer to the first preliminary over that objection as it would over any question is affirmative, it seems evident other application, whether originating or in that the objection of set-off is the same as counterclaim (the first preliminary ques- the proceedings brought in the Nether- tion). It takes the view that, if it cannot lands. Both turn on the existence of the part equate the objection to a claim (and there- of Basch's claim in damages which was not- fore cannot decline jurisdiction over the extinguished by extrajudicial set-off. The objection alone), the question remains Austrian court should therefore decline whether the fact that it has to examine jurisdiction over that objection. Basch's claim is such as to widen the

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OPINION OF M R LÉGER — CASE C-111/01

23. There remains, lastly, the question proceedings were not heard by the same whether, in the hypothesis that an objection court. 21 of set-off should be treated as a claim, the national court should also decline jurisdic- tion over the defence of extrajudicial set- off. That is the subject of the third pre- liminary question.

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GANTNER ELECTRONIC

27. It therefore seems to me that the V — The replies to the preliminary ques- preliminary questions can be formulated tions as follows:

A — The first question

(1) Does the concept of 'the same cause of action' in Article 21 of the Convention 28. The referring court enquires whether extend also to an objection of set-off? the concept of 'the same cause of action' within the meaning of Article 21 of the Convention extends to the objection of set-off pleaded by Basch. The question seeks to ascertain whether an objection of set-off can be treated as a claim, so that the court called upon to rule must, in response to such an objection to a claim which is the subject-matter of other proceedings, decline (2) In ascertaining whether proceedings jurisdiction over that objection as it would have 'the same cause of action', are have to do over a claim. only the pleadings of the plaintiff in the proceedings decisive and, in con- sequence, is the objection of set-off raised by the defendant irrelevant?

29. The reply to that question should be in the negative.

at issue was whether the German court of the Convention 2 8 should be interpreted appointed by the parties under a clause as covering counterclaims in set-off. 29 The attributing jurisdiction as the sole court Court held that the term 'counterclaim' with jurisdiction to hear claims by one of should be reserved for situations where the the parties against the other had jurisdic- defendant seeks the pronouncement of a tion to hear an objection of set-off raised by separate judgment against the plaintiff. If the defendant. The clause attributing juris- the defendant pleads as a pure defence a diction had the effect of precluding the claim which he allegedly has against the defendant from pleading set-off as a plaintiff, that claim is not a counter- counterclaim. The referring court enquired claim. 3 0 whether such a clause could also preclude a plea of set-off as a pure defence. The Court appears to have taken the view that, unless the parties excluded that possibility, the c o u r t s h o u l d t a k e t h e set-off i n t o a c c o u n t . 2 5 Advocate General Capotorti had gone further in his Opinion in the case and, having clearly distinguished an objec- tion of set-off from a counterclaim, had taken the view that the parties could not exclude the objection of set-off from the jurisdiction of the court before which the proceedings had been brought. He had stated that '[t]o consider that the defence should be brought before a different court from that seised of the main action would entail dissolving the unity of the procedure 32. It therefore emerges from the case-law and would disregard the rights of the of the Court that an objection of set-off defence'. 26 must be distinguished from a counterclaim. Admittedly, the aformentioned judgments in Danvaern Production and Meeth did not concern Article 21 but other provisions of the Convention. However, I believe the same conclusion should apply where the issue is one of ascertaining whether there is lis pendens.

33. A single definition of an objection of b — The second question set-off must be adhered to in interpreting all provisions of the Convention, especially because those provisions are capable of being applied in the same dispute. For example, in the present case it is apparent 36. The referring court asks, in substance, from Danvaern Production that Article 6(3) whether an objection of set-off should be of the Convention does not apply because taken into account for the purposes of the set-off was raised as an objection and determining whether the proceedings in not as a counterclaim. The Austrian court response to which it is pleaded have 'the cannot therefore in my view decline juris- same cause of action' within the meaning of diction over the objection of set-off on the Article 21 of the Convention, as other basis of that provision. That being so, proceedings brought before a court of a however, to find that it should none the different Contracting State. less decline jurisdiction, under Article 2 1 , because the objection must be treated as a claim, would lead to a contradiction and would be tantamount to defining the objection differently in the course of a single action. 37. A preliminary point to note, in my view, leaving aside briefly the issue of set-off, is that the two actions brought in the Netherlands and Austria arc not the same within the meaning of Article 21 of the Convention.

34. I consequently take the view that the objection of set-off should not, for the 38. For there to be lis pendens in Commu- purposes of Article 21 of the Convention, nity law there must, according to Article 21 be treated as a claim. of the Convention, be a threefold identity between the t w o actions — unity of parties, of the cause of action and of the s u b j e c t - m a t t e r . W h e r e one of those elements is not the same, there is no lis pendens.

comprising 'the facts and the rule of law 43. The Court has already had occasion to relied on as the basis of the action'. 31 rule that the concept of 'lis pendens' is not Neither the facts nor the rule of law relied the same in all the legal systems of the on are the same in the two actions. Contracting States and that it is not poss- ible, by a rapprochement of the various relevant national provisions, to arrive at a common concept of 'lis pendens'. 33 The Court has accordingly held that the con- cepts referred to in Article 21 of the Convention must be treated as indepen- 40. The facts giving rise to Basch's action dent. 34 I shall therefore endeavour to reply in the Netherlands can be summarised, it to the question raised on the basis of the would appear, as follows: (1) there had text, the underlying logic and the intention been a dealership contract between the two of Article 21 of the Convention. parties for more than 40 years, and (2) Gantner terminated that contract without complying with the notice period which that duration dictated. On the other hand, the facts underlying the action brought by Gantner in Austria are the following: (1) Gantner delivered and invoiced goods to Basch, and (2) the latter has not paid the price of the goods. 44. First, the text of Article 21 of the Convention establishes that there is lis pendens where two sets of 'proceedings involving the same cause of action and between the same parties are brought in the 41. As regards the rule of law, the action courts of different Contracting States'. 35 brought in the Netherlands is based, I contend, on the alleged dealership contract, whereas that brought in Austria is based on the sale of goods. 32

are identical. 36 Proceedings are defined as defence, whatever they may be, can do 'the instrument by which an action is nothing to change it. 40 brought before a court'. 37 The other lan- guage versions of the Convention also refei- to the originating application. For example the Convention uses the expression klagen in German, demanda in Spanish, domande in Italian, vorderingen aanhangig zijn in Netherlands, acções in Portuguese, kanteita 47. However, it is above all imperative, in in Finnish, talan in Swedish and proceed- my view, to keep in mind the underlying ings are brought in the courts in English. logic of Article 21 of the Convention. That provision places an obligation on a court seised of proceedings which are the same as others, brought previously before a court in a different Contracting State, to decline jurisdiction in favour of the first court as soon as the jurisdiction of the latter is established. There is therefore an obligation to decline Jurisdiction. 41 46. Second, under Article 21 of the Con- vention, lis pendens automatically arises as soon as two identical sets of proceedings are brought. The Court has held that the moment at which proceedings are brought is a matter for the procedural law of the State of the court seised. 38 Admittedly, the 48. It is necessary, therefore, to imagine national laws of the Contracting States what will be the consequences of a court establish different formalities for the pur- declining jurisdiction in that way where pose of deeming proceedings to have been only an objection of set-off raised in the brought (service on the defendant, the date second action is the same as the first on which the case is lodged with the proceedings brought. Accordingly, in the court). 39 Those formalities in all cases present case, were it to take the objection of precede the filing of the defence. It follows set-off into account, the Austrian court that proceedings are brought, for the pur- would have a duty to decline jurisdiction, poses of Article 21 of the Convention, since the proceedings brought in the before the pleas in defence are submitted. Netherlands, as we have seen, 42 are not The situation is thus fixed, one way or the the same as those brought by Gantner. The other, and the pleas and submissions in

49. Further, as the Austrian Government has pointed out, 44set-off is as a rule only 51. It is true that, if the procedural law of pleaded in the alternative. In other words, the court before which the objection is the defendant only relies on its claim in the raised gives the force of res judicata to the hypothesis that the plaintiff is found to finding on the defendant's claim, there is have a valid claim. Where the court finds reason to fear a resulting risk of irreconcil- that the debt adduced by the plaintiff never able decisions and refusal of recognition. existed or that it has otherwise already However, the Convention establishes a been extinguished, it will not examine the further mechanism in addition to lis claim pleaded in set-off. Any lis pendens pendens to avoid such a situation. Thus, arising as a result of the objection of set-off Article 22(3) of the Convention affords the is therefore only ever 'in the alternative'. national court the opportunity to stay its That being so, I believe it is here again proceedings where the two actions, inappropriate for the court to decline although not identical, are 'so closely jurisdiction in that to do so would deprive connected that it is expedient to hear and the plaintiff of a decision on its claim since, determine them together to avoid the risk at the time of the decision to decline of irreconcilable judgments resulting from jurisdiction, it is not even certain that the separate proceedings'. court will be called upon to examine the defendant's claim.

53. Furthermore, it appears that some 55. The national court asks whether the national legal systems which, in common finding made, in an action for damages with Austrian law, provide for set-off by arising from the unlawful termination of a unilateral declaration, allow a court to stay dealership contract, on whether such a proceedings as regards the objection of contract existed, is binding in subsequent set-off (as occurred in the main proceed- proceedings on a different claim albeit ings) and even, in certain circumstances, to based on the unlawful termination of the deliver its judgment on the plaintiff's claim same contract. subject to the decision on set-off. 46 That 'provisional' decision can even be enforced. The courts involved can therefore avail themselves of that option and stay proceed- ings on the grounds of related actions under Article 22 of the Convention, solely in relation to the objection of set-off raised by the defendant. The proceedings on the originating application could therefore pro- ceed normally.

(2) In order to ascertain whether proceedings have 'the same cause of action' a court must only take into account the arguments submitted by the plaintiff and, in consequence, the objection of set-off raised by the defendant is irrelevant.

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