2016/2/24 - 30 Cdo 1860/2015 (summary)

Judgement of the Supreme Court dated 24 February 2016, file number 30 Cdo 1860/2015

(international jurisdiction, prorogation clause)

The case dealt with a dispute of the plaintiff and the defendant over the payment of USD 1,077.063 with appurtenances by virtue of a loan contract. In the contract the parties agreed upon prorogation clause determining jurisdiction of the court having local jurisdiction depending on the “creditor’s place of residence”. The court of first instance discontinued the proceeding due to lack of jurisdiction of the courts of the Czech Republic. However, the appellate court altered the decision of the court of first instance. It decided on invalidity of the parties’ agreement on jurisdiction due to inconsistency with the Czech law, and found the Czech courts competent. The defendant lodged an application for appellate review of the decision, and made objection to erroneous determination of law by the appellate court of the plaintiff’s place of residence. The defendant also stated that the parties’ intention was to make a decision on the international jurisdiction, not the local jurisdiction in accordance with Section 89a of Rules of Civil Procedure, as the appellate court concluded.

The Supreme Court stated that in the event of a dispute with an international element the court should always have considered its jurisdiction, including possible existence of the prorogation clause. With regard to an existence of the international element in the case, the appellate court incorrectly considered the prorogation clause as an agreement on local jurisdiction in accordance with Section 89a of Rules of Civil Procedure. Moreover, in the Supreme Court’s opinion, the lower courts should have dealt with the possible existence of the EU regulations which would take precedence over the Act on private and procedural international law. The given dispute is subject to Council Regulation (EC) No. 44/2001. Article 24 of the Regulation contains so-called implied prorogation of jurisdiction creating international jurisdiction of a court otherwise not having jurisdiction, and the defendant should accept proceeding in the given court. Such determination of international jurisdiction takes precedence even over the prorogation clause. The Supreme Court came to the conclusion that the defendant agreed implicitly, and subsequently even expressly, with the jurisdiction of the Courts of the Czech Republic in accordance with Art. 24 of Council Directive (EC) No. 44/2001, and it reversed the decision of both of the courts, and referred the case to the court of first instance for additional examination.