Resolution of 26 May 2021, Case No 30 Cdo 812/2021 –⁠⁠⁠⁠⁠⁠ Assignment of a claim before the beginning of the proceedings

Resolution of the Supreme Court of 26 May 2021, Case No 30 Cdo 812/2021

(Assignment of a claim before the beginning of the proceedings; special jurisdiction under Brussels I bis Regulation; consumer and business contracts)

The Supreme Court addressed an extraordinary appeal filed by one of the defendants concerning the assignment of a claim before the beginning of the legal proceedings. The essence of this decision was to assess whether the assignment of the claim had an impact on the question of international jurisdiction. The case contained international element which required courts to resort to the application of the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (hereinafter “Brussels I bis Regulation”).

In the original proceedings, the plaintiff (a British company) sought compensation for damage. The plaintiff acquired the claim asserted against one of the defendants, a Maltese company, prior to the beginning of the proceedings by way of an assignment from an assignor who was a consumer domiciled in the Czech Republic. The defendant objected lack of international jurisdiction.

The court of first instance (regional court) relied upon Art. 7(1)(b), second indent of the Brussels I bis Regulation which states that international jurisdiction is determined by the place where the defendant's services are provided – namely, the Republic of Malta. It thus discontinued the proceedings against the defendant. The appellate court (high court), however, held that, since the assignor entered into the contract with the defendant in the capacity of a consumer, the special jurisdiction provided for in Art. 18(1) of the Brussels I bis Regulation remained applicable even after the claim has been assigned. As a result, the defendant could be sued before the courts of the Member State in which the consumer was domiciled.

The defendant filed an extraordinary appeal to the Supreme Court, giving it the opportunity to address the question of whether consumer protection under Section 4 (Art. 17 to 19) of the Brussels I bis Regulation – specifically, the right to bring an action before the courts of a Member State where the consumer is domiciled – also extends to a business legal person to whom the claim was assigned by the consumer prior to the beginning of the proceedings.

By way of introduction, the Supreme Court noted that the matter of forum actoris has already been addressed several times by the Court of Justice of the European union[1] and the latter concluded that the special jurisdiction applicable to consumers is not applicable to legal persons acting as assignees of consumers’ claims as the assignee was neither the weaker party nor a party to a consumer contract. The protective function of Section 4 of the Brussels I bis Regulation should therefore not be extended to persons who are not entitled to such protection. Moreover, it follows from the interpretation of Art. 18(1) of the Brussels I bis Regulation that the rule of jurisdiction is always limited to specific and particular contracting parties.

The Brussels I bis Regulation is founded on the general principle that jurisdiction lies with the courts of the Member State in which the defendant is domiciled. Exceptions to this rule are admissible only in the circumstances expressly delineated in its Sections 2 through 7. Rules for determining jurisdiction that deviate from this general principle cannot therefore lead to an interpretation that goes beyond the situations envisaged in the Brussels I bis Regulation. This narrow interpretation likewise governs the application of special jurisdiction in consumer disputes under its Section 4.

Hence, the Supreme Court concluded that consumer protection under Section 4 of the Brussels I bis Regulation cannot be extended to legal persons acting as assignees of consumer claims. The conclusions of the Appellate Court were as a result erroneous. Based on the abovementioned, the Supreme Court annulled the judgment of the Appellate Court and referred it back for further proceedings.

[1] Judgment of the Court of Justice of the European Union of 1 October 2002, Verein für Konsumenteninformation v Karl Heinz Henkel, C-167/00, and judgment of the Court of Justice of the European Union of 19 January 1993, Shearson Lehmann Hutton Inc. v TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH, C-89/91.